AUKUS Countries Drafting List of Covered Tech Under New Trade Exemption

The U.S. is currently drafting a list of technologies that will be covered by its new defense trade authorization, which will be used to expedite defense technology transfers under the Australia-U.K.-U.S. partnership. Although the new mechanism won’t require any new authorities from Congress, it’s designed to eventually be supplanted by broader revisions to U.S. defense trade regulations, the Directorate of Defense Trade Controls said this week.

Until then, the AUKUS Trade Authorization Mechanism (ATAM) will serve as an “interim measure to streamline defense trade of U.S. origin items while we pursue bold legislative changes,” DDTC said in a July 10 fact sheet. The change “offers an immediate solution to expedite and secure defense transfers,” the agency said, and will lead to “seamless and speedy defense trade.”

The agency is seeking input from the U.K. and Australia on defense items that should be included in the list of ATAM covered technologies, a DDTC spokesperson told Export Compliance Daily. “Soon as we get those and the relevant regulations published,” the person said, “ATAM will be ready to go."

The mechanism, previewed by an agency official in May (see 2305240061), will “provide a consistent framework that will cover Direct Commercial Sales (DCS)” and “some items that were previously sold as Foreign Military Sales (FMS) (government-to-government agreements) but may be handled as DCS,” DDTC said in a July 10 fact sheet. It will rely on “existing authorities, both to increase the speed and efficiency of defense trade while doing so in a way that is familiar, and therefore easier, for U.S. exporters.”

The agency said the tool will help “address concerns regarding how the speed and efficiency of the Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) processes would be inadequate for the expected increase in volume of AUKUS-related defense trade.” The ITAR has faced a recent uptick in criticism from researchers, industry and lawmakers, who say the regulations unnecessarily prevent technology sharing with close U.S. allies, including within AUKUS (see 2303130035, 2302170022, 2303170045 and 2303140018). House lawmakers are working on legislation they say could lift some of those restrictions (see 2304200036), and the Senate recently introduced a bill that could create new export authorizations under the ITAR (see 2305050063).

While those legislative changes are moving through Congress, DDTC said it’s focusing on establishing the scope of the AUKUS trade authorization tool, including the technologies and communities in each AUKUS country that will be covered. After it defines the scope, exporters will be required to check their proposed transfers against that “basic and transparent criteria” to see if their shipment qualifies.

Due to congressional notification requirements, DDTC said it will need to notify Congress of “shipments under this authorization exceeding $100 million at least 15 days prior to the shipment.” It also said trade “beyond the UK or Australia, or transfer to a non-AUKUS program or a community not eligible to receive it, would require standard non-ATAM authorization,” DDTC said.

The agency also published a “Myths and Facts” document on U.S. defense export controls, which was partly used to respond to criticism levied against the ITAR. DDTC called it a “myth” that securing an export license “takes too long under the ITAR,” saying there are “many exemptions” to speed up defense transfers.

DDTC also said it’s a myth that military exercises “must build in a buffer of anywhere between 6 to 18 months to obtain the necessary U.S. export control approvals prior to the commencement of the exercise,” pointing to a proposed rule last year designed to address restrictions surrounding exports for military training exercises. “If implemented as a final rule,” the agency said, it would expand the ITATR’s definition of activities that are not exports, reexports, retransfers or temporary imports to include situations where the armed forces of a foreign government takes defense articles outside a previously approved country (see 2212150028). It also said State Department authorizations “do not take 6-18 months. Authorizations for commercial transactions regulated under the ITAR take on average 40-45 days.”

The agency addressed a range of other statements that it said are myths, including that the ITAR unnecessarily prevents U.S. companies from building munitions production facilities abroad, that the ITAR prevents certain foreign companies and government entities from allowing “skilled dual nationals to work on projects that require access” U.S.-origin defense technology, that the ITAR controls “non-sensitive items such as bolts and screws, which hinders production, maintenance, and refurbishment timelines,” and more.