AUKUS Interim Final Rules Increase Exemptions and Exceptions to US Export Control Regulations
In 2021 Australia, the United Kingdom, and the United States entered into AUKUS, a trilateral security pact, to enhance defense and security cooperation among these nations. AUKUS focused on the goals of (1) supporting collective security and defense interests, (2) deepening information and technology sharing, and (3) fostering integration of security and defense-related science, technology, industrial bases, and supply chains. While the agreement was entered into in 2021, it was not until recently that a series of Interim Final Rules (IFRs) were issued to reflect the implementation of certain AUKUS provisions by amending the Export Administration Regulations (EAR) and the International Trafficking in Arms Regulations (ITAR). The amendment of the EAR and ITAR through these AUKUS-related IFRs have significantly altered the manner in which regulatory controls apply to exports traded between Australia, the UK, and the US.
On April 19, 2024 the Department of Commerce’s Bureau of Industry and Security (BIS) issued its first AUKUS-related IFR to amend the EAR and support the AUKUS partnership.[1] This IFR introduced more flexible licensing policies and streamlined processes for the export of items subject to the EAR to AUKUS-party countries with the goal of enhancing joint security and technological capabilities. In doing so, BIS permitted certain commerce-controlled military items, missile technology-related items, and certain engine-related items from the Commerce Control List (CCL) to be exported or reexported to Australia and the UK without a license. In fact, even the multilateral Missile Control Technology Regime (which controls portions of navigation technology and previously restricted to even Canada) was liberalized under the amended change.
On August 20, 2024, the Department of State Directorate of Defense Trade Controls (DDTC) then issued its first AUKUS-related IFR to also support the AUKUS partnership by initiating changes and expanding the existing ITAR license exemption scheme.[2] Additionally, the DDTC IFR exempts intra-company, intra-organization, and intra-governmental transfers of classified defense articles to certain dual nationals residing in Australia or the UK. While the DDTC IFR creates a new AUKUS license exemption, not all defense articles are subject to the exemption. The AUKUS license exemption excludes certain enumerated defense articles from the license exemption on the “Excluded Technology List” (ETL). In addition to loosening license requirements for the export of certain technologies between Australia, the UK, and the US, the DDTC IFR provides a mechanism for the expedited review of license applications when, despite the existence of AUKUS-related exemptions, export to an AUKUS-party country continues to require a license. Furthermore, in some instances this expedited review extends to license applications to Canada.
Overall, the implementation of AUKUS-related exemptions within the EAR and ITAR offer excellent growth opportunities for companies engaged in the development and sale of advanced technology. The implementation of AUKUS has provided member countries advantages virtually unparalleled in the streamlined export of previously regulated technology. Companies seeking to tap into a foreign customer-base would do well to first consider Australia and the UK where AUKUS-related regulation offers them the opportunity to take advantage of simplified regulatory schemes, expedited license processing, and decreased legal risk while bringing their products to market.
[1] Export Control Revisions for Australia, United Kingdom, United States (AUKUS) Enhanced Trilateral Security Partnership, 89 Fed. Reg. 28594 (April 19, 2024) (to be codified at 15 CFR Parts 734, 738, 740, 742, 743, 744, 754, 758, 772, 774).
[2] International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States, 89 Fed. Reg. 67270 (August 20, 2024) (to be codified at 22 C.F.R. pt. 126).