Wow AUKUS is for Real! Exports to Australia and UK Just Got Way Easier

The US Government just placed Australia and the United Kingdom (UK) in nearly the same position as Canada for dual-use exports under the Export Administration Regulations (EAR) and is poised to go even further with a proposed brand new AUKUS exemption under the International Traffic in Arms Regulations (ITAR). 

Why? These decontrols flow out of the AUKUS Trilateral Security Partnership. On September 15, 2021, the Australian, the UK, and US governments agreed to create AUKUS, a trilateral security partnership, with the goal “to deepen diplomatic, security, and defense cooperation in the Indo-Pacific region, including by working with partners, to meet the challenges of the twenty-first century.” After sniping at the acronym, which sounds a bit like a goose honking, many skeptics said, “oh yeah? Is this like the Australia and UK ITAR license exemptions? Will it actually be usable?” I am happy to say that it looks like the skeptics were wrong.

What does this mean for your exports? 

EAR Decontrols of Dual Use Items

As a result of a US Bureau on Industry and Security rule (BIS) that went into effect April 19 and was recently updated, very little on the Commerce Control List (CCL) still requires a license for export to Australia and the UK. The best way to see this is to look at the revised Country Chart, which shows almost no X’s (indications that a license is required) for export controlled items with the exception of items subject to Chemical and Biological weapon column 1 controls, and a list of firearms and related items that are contained in a new footnote 9:

⁹ A license is required to these destinations for items in the following ECCNs: 0A501 (except 0A501.y), 0A502 for shotguns with a barrel length less than 18 inches (45.72 cm), 0A503, 0A504.i, 0A505.a, and .x, 0D501 (except “software” for commodities in ECCN 0A501.y or “equipment” in ECCN 0B501 for commodities in ECCN 0A501.y), 0D505 for “software” for commodities in ECCN 0A505.a and .x and “equipment” in ECCN 0B505.a .and .x, 0E501, 0E504, and 0E505 for “technology” for “development,” “production,” operation, installation, maintenance, repair, overhaul, or refurbishing commodities in 0A505.a and .x; for “equipment” for those commodities in 0B505; and for “software” for that “equipment” and those commodities in 0D505.

What has been removed? License requirements for national security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) reasons for control for the destinations of Australia and the UK. This means that the following no longer require a license to Australia and the UK:

• “600 series” items – those lesser military items removed from ITAR controls during Export Control Reform,
• Many 9x515 satellite-related items.
• ECCN 0A919 items,
• missile technology-controlled items, and
• significant items (SI) (i.e.,hot section technology for the development, production or overhaul of commercial aircraft engines, components, and systems).

BIS also removed military end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) of certain IR cameras, systems, or related components. Oddly enough, firearms and stun guns (ECCN 0A503) listed in footnote 9 still require a BIS license or other authorization to the UK and Australia. 

A Real Proposed ITAR Exemption with Some Strings

On May 1, the Directorate of Defense Trade Controls (DDTC) published a proposed regulation that will create a new ITAR exemption for Australia and the UK, and expedited license processing times for Canada, Australia, and the UK for the items still requiring a license. The new exemption, which will be contained in 126.7 of the ITAR provides that no license or other approval is required “for the export, reexport, retransfer, or temporary import of defense articles, the performance of defense services, or engagement in brokering activities” provided:

1. The transfer must be to or within the physical territory of Australia, the UK, or the United States.
2. The transferor and recipient must approved either ITAR registrants that are not debarred or authorized users who will be published on the DDTC website.
3. The defense articles and services cannot be excluded in a chart in new Supplement 2 to part 126. 
4. The transferor must maintain records available to DDTC “including a description of the defense article or defense service; the name and address of the recipient and the end-user, and other available contact information (e.g., telephone number and electronic mail address); the name of the natural person responsible for the transaction; the stated end use of the defense article or defense service; the date of the transaction; and the method of transfer.”
5. The value of the transfer cannot exceed Congressional certification limits.
6. Various and sundry other ITAR requirements apply (for example you cannot be debarred, you must obtain a DSP-83 non-transfer and use assurances for all significant military equipment, etc).
7. You must include a destination control statement and observe all ITAR 123.9(b) requirements.
8. Transfers of classified defense articles and services must comply with National Industrial Security Program Operating Manual (NISPOM) and, for Restricted Data, the Atomic Energy Act of 1954 for the United States and similar UK and Australian requirements.

What ITAR items are excluded in the chart in new Supplement 2 to part 126? First, let’s give a shout out to whoever at DDTC designed the new Supplement 2 chart. Unlikely the painful and tricky exclusion chart in Supplement 1 to part 126 (the exclusion chart for the Canadian exemption and the UK or Australia Treaty exemptions) it is easy to read and organized by both USML number and the kind of exclusion. For example, at a glance, you can immediately see that source code, manufacturing know-how, and classified manufacturing know-how from certain USML categories are excluded. Also gone are the infamous X’s, the double exclusionary language, and the infamous footnotes without end contained in Supplement 1. The proof of this Supplement 2 chart pudding will be in the eating, but it certainly is legible and promises to be workable.

Expedited Licensing Times for Everything Else to Canada, as Well as Australia and the UK

But what if the items you are exporting to Australia and the UK are excluded because they listed in the Supplement 2 to part 126? You are not out of luck as it turns out as a new ITAR section 126.15 establishes expedited licensing times for the export of defense articles or services to Australia, the UK and Canada for items that do not qualify for the new AUKUS exemption or the old Canadian exemption. License for the export of defense articles or services related to a government-to-government agreement between Australia, the UK or Canada, and the United States “must be approved, returned, or denied within 30 days of submission.” For other license applications, the “review shall be completed no later than 45 calendar days after the date of application.” These seem like quite short deadlines, and we hope that they do not result in Returns without Action (RWAs) or license holds solely to meet the deadlines.

What Else?

It seems that DDTC has realized that lots of people hold more than one passport and many of them hold SECRET and above security clearances. DDTC has proposed a license exemption authorizing the transfer of classified defense articles to citizens of Australia or the United Kingdom who:

1. Are dual nationals of another country.
2. Are authorized users, or regular employees of an authorized user of the exemption in § 126.7.
3. Hold a security clearance approved by Australia, the United Kingdom, or the United States that is equivalent to the classification level of SECRET or above in the United States.
4. Are either:
   • Within the physical territory of Australia, the United Kingdom, or the United States.
   • A member of the armed forces of Australia, the United Kingdom, or the United States acting in their official capacity.