On April 19, 2024, the State Department issued a press release declining to certify that Australia and the UK had sufficient reciprocal export controls regulations for the ITAR exemption to take effect. The State Department expects to finalize the exemption during the next 120 days after Australia or the UK publish their reciprocal arrangements for public comments.

Beginning in mid-April, the Commerce and State Departments took a series of significant steps to support the implementation of the Australia, United Kingdom, and United States Trilateral Security Partnership known as AUKUS. On April 19, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an Interim Final Rule (IFR) to remove license requirements for many items set forth on the Commerce Control List (CCL) of the Export Administration Regulations (EAR) for export, reexport, or transfer to Australia or the UK that had previously required authorization from BIS. Comments on the IFR are due on June 3, 2024.

On May 1, 2024, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) issued a proposed rule to implement an exemption in the International Traffic in Arms Regulations (ITAR) for the export, reexport, or retransfer of defense articles and defense services, including classified defense articles, between the physical territories of Australia, the UK, and the U.S. Comments on DDTC’s proposed rule are due on or before May 31, 2024. The proposed rule would be implemented as soon as the U.S. Government certifies that Australia and the UK have implemented comprehensive export controls comparable to the ITAR. To date, the State Department declined to certify that Australia and the UK have implemented these reciprocal arrangements. However, on April 19, 2024, the U.S. State Department issued a press release noting continued progress for integration between the three countries and indicated that it expects to finalize the proposed exemption within the next 120 days.

Enhanced Trilateral Security: Australia, the United Kingdom, and the United States

As announced on September 15, 2021, AUKUS intends to strengthen the collective security and common defense interests of the U.S., Australia, and the UK in the Indo-Pacific region and to “foster deeper integration of security and defense-related science, technology, industrial bases, and supply chains.” AUKUS includes two Pillars. Pillar 1 focuses on trilateral submarine cooperation. Pillar 2 focuses on advanced capabilities, including sharing technology and increasing interoperability between the armed forces of the three nations. The following capabilities have been identified:

• Advanced cyber, artificial intelligence (AI), and autonomy;
• Quantum technologies;
• Hypersonic and counter-hypersonic capabilities;
• Electronic warfare;
• Innovation;
• Information-sharing; and
• Additional underseas capabilities.

The National Defense Authorization Act (NDAA) for Fiscal Year 2024 which became law on December 22, 2023, enacted provisions to enable enhanced defense trade between and among Australia, the UK, and the U.S. in support of AUKUS.

BIS’s IFR Reduces License Requirements and Expands the Applicability of Certain License Exceptions in Australia and the UK

License requirements removed for many defense-related items

Under BIS’s IFR, Australia and the UK will have nearly the same minimal export licensing requirements under the EAR as Canada. The IFR removes list-based license requirements for exports, reexports, and transfers (in-country) to or within Australia or the UK for items that are controlled for national security (NS) column 1 (NS1), regional stability (RS) column 1 (RS1), and missile technology (MT) 1 (MT1) reasons.

• Less Sensitive Military Items: Because Australia and the UK are not subject to NS2 or RS2 controls, the IFR removes all NS and RS controls for Australia and the UK. As a result of this change, “600 series” items (i.e., less sensitive items on the Wassenaar Arrangement Munitions List, such as parts and components for military platforms), no longer require a license for export, reexport, or transfer to Australia or the UK. Consistent with removal of the license requirement for MT1 reasons, dual-use items covered under the MTCR Annex and not controlled under the ITAR will no longer require a license under the EAR to Australia or the UK.
• Commercial Spacecraft: Similarly, many commercial satellites and related items classified under Export Control Classification Numbers (ECCNs) in the “500 series” (i.e., 9x515 ECCNs) no longer require a license to Australia or the UK. However, 9x515 items subject to the license requirement in section 742.6 of the EAR (Special RS1 license requirement applicable to certain spacecraft and related items) still require a license to all destinations, including Australia, Canada, and the UK. The items subject to these restrictions are spacecraft and related items classified under ECCN 9A515.a.1, .a.2, .a.3, a.4., .g., and ECCN 9E515.f.
• Non-U.S. Origin Military Commodities: The IFR also removes licensing requirements for ECCN 0A919 items to Australia and the UK. ECCN 0A919 items are “military commodities” (i.e., an article, material, or supply that is described on the ITAR’s U.S. Munitions List or the Wassenaar Arrangements Munitions List) that (A) are located and produced outside the U.S., and (B) (1) incorporate more than a de minimis amount of U.S.-origin controlled content classified under ECCNs 6A002, 6A003, or 6A993.a, (2) incorporate more than a de minimis amount of U.S.-origin “600 series” controlled content, or (3) are direct products of U.S.-origin “600 series” technology or software.
• Dual-Use Cameras and Sensors: The IFR removes license requirements for exports, reexports, and transfers to or within Australia and the UK of certain cameras, systems, and related elements. Specifically, a license is no longer required to export, reexport, or transfer to or within Australia or the UK, certain items controlled under ECCN 6A003 that will or are intended to be used by a “military end-user.” Additionally, a license is no longer required to export, reexport, or transfer certain optical sighting devices for firearms, sensors, and cameras controlled under ECCNs 0A504, 6A002, 6A003, 6A993, or 8A002 that will be or are intended to be incorporated into a “military commodity” controlled by ECCN 0A919.
• Significant Commercial Aircraft Engine Systems and Components: Finally, no license is required to export, reexport, or transfer to Australia or the UK certain items controlled under ECCN 9E003 (significant items (SI) – hot section technology for the development, production, or overhaul of commercial aircraft engines, components, and systems).

Certain license exceptions expanded to apply to Australia and the UK and certain reporting requirements no longer apply to Australia and the UK

Australia and the UK are now eligible for the same treatment as Canada under License Exceptions Aircraft, Vessels, and Spacecraft (AVS) and Additional Permissive Reexports (APR). Specifically, License Exception AVS now authorizes exports to vessels or planes of Australian or UK registry or airlines’ installations or agents (consistent with the removal of MT1 licensing requirements for Australia and the UK). License Exception APR now authorizes reexports of items from Australia or the UK to any destination as long as an export from the U.S. to that destination would be authorized under any license exception. Additionally, License Exception APR now authorizes reexports from a foreign destination to Australia or the UK if such items could be exported from the U.S. to Australia or the UK without a license.

Under License Exception Encryption Commodities, Software, and Technology (ENC), Australia and the UK are subject to the same reporting requirements as Canada for items described in paragraphs (b)(2) and (b)(3)(iii) (i.e., semi-annual reporting requirements for (1) exports of those items to any destination except Canada, Australia, and the UK, and (2) reexports from Canada, Australia, or the UK).

Exports of certain thermal imaging cameras controlled under ECCN 6A003 in high volumes (i.e., more than one hundred cameras) pursuant to a license exception do not require reporting to BIS if those exports are to Australia or the UK (previously, only exports to Canada were exempt from this reporting requirement).

Finally, section 734.17 of the EAR describing precautions for internet transfers of encryption items eligible for License Exception ENC now states that appropriate measures include access control systems to check the address of every requestor or transferor to confirm the address is not a domain name or internet address of a foreign government-end user outside of the U.S., Australia, Canada, or the UK.

Certain items still require a license for export, reexport, or transfer to Australia and the UK and certain reporting requirements remain for Australia and the UK

Exports, reexports, or transfers of the following items to Australia or the UK still require a license:

• Items controlled for Chemical & Biological Weapons Column 1 (CB 1) reasons and pursuant to the Chemical Weapons Convention (CW) (and a license is still required for Canada);
• Certain crime control items identified under ECCNs 0A982, 0A503, and 0E982 (though a license is not required for Canada);
• Any item controlled for surreptitious listening (SL) reasons (i.e., items that can intercept wire, oral, or electronic communications) (and a license is still required for Canada); and
• Certain items controlled for short supply reasons (i.e., petroleum products except crude oil, unprocessed western red cedar, and horses for export by sea) (and a license is still required for Canada).

Finally, certain reporting and clearance requirements that had applied previously applied to Australia and the UK still apply. Specifically, Electronic Export Information (EEI) must be filed for:

• Exports of all “500 series” or “600 series” items to all destinations, including Australia, Canada, and the UK;
• All items subject to the EAR that will be transhipped through Australia, Canada, or the UK to a third destination where exports directly from the U.S. to that third destination would have required EEI or a license; and
• Exports of certain firearms and ammunition (and these exports also require submission of a properly completed Department of Homeland Security, CBP Form 4457).

DDTC’s Proposed Exemption would authorize defense articles and defense services to Australia and the UK

Proposed license exemption for Australia and the UK

On May 1, 2024, DDTC proposed a new license exemption under the ITAR for export, reexport, or retransfer, and brokering of defense articles, including technical data, and defense services to and within Australia and the UK. The proposed license exemption would include classified defense articles and defense services. Items set forth on the Excluded Technology List at new Supplement No. 2 to part 126 would be ineligible for this proposed exemption (but would be eligible for the proposed expedited license procedures described below).

To be eligible for the proposed license exemption, the defense articles or defense services must be exported, reexported, or transferred to or within the physical territories of Australia, the UK, or the U.S. and must be for authorized end users. Australian and UK members will undergo an authorized user enrollment process with DDTC and will be listed on DDTC’s website as “Authorized Users.” U.S. members must be registered with DDTC as well and not debarred.

Proposed amendment to authorize access to classified defense articles by certain dual nationals of Australia or the UK

Additionally, the proposed rule also amends section 126.18 to authorize specific dual nationals of the UK or Australia to receive classified defense articles as long as those dual nationals: (1) are authorized users or regular employees of authorized users eligible for the proposed new exemption, (2) hold a security clearance approved by Australia, the UK, or U.S. that is equivalent to SECRET or above in the U.S., and (3) are either within the physical territory of Australia, the UK, or U.S., or are a member of the Australian, UK, or US armed forces and acting in their official capacity.

Updated, specific license review timelines for applications to Australia or the UK of items not eligible for the proposed exemption

Finally, the proposed rule sets forth a timeline to review license applications for exports of certain commercial, advanced-technology defense articles and services to or between the physical territories of Australia, Canada, or the UK with government or corporate entities. Applications for requests for government-to-government agreements between Australia, the UK, or Canada and the U.S. must be approved, returned, or denied within thirty calendar days of submission. All other license applications must be approved, returned, or denied within forty-five calendar days of submission.