House Advances Bills to Create UK, Australia Defense Export Exemptions

Despite some opposition from Democrats, the House Foreign Affairs Committee this week advanced multiple bills designed to ease technology sharing restrictions within the Australia-U.K.-U.S. (AUKUS) partnership. Two bills would create new license exceptions for certain defense exports to Australia and the U.K., and another would authorize the sale of Virginia Class submarines to Australia to help the Biden administration implement AUKUS, a deal that commits the U.S. to delivering the submarines within the next decade (see 2303130035).

The two bills that would create new licensing exemptions for Australia and the U.K. -- the Keeping our Allies Leading in Advancement Act, or Koala Act, and the Bilateral Resilience in Industry Trade Security Act, or the Brits Act -- add to a growing list of legislative efforts aimed at modernizing the International Traffic in Arms Regulations (see 2307140019, 2305050063 and 2304200036).

The bills would “essentially” help in “taking red tape away" from defense exports to both countries. Rep. Michael McCaul, the committee’s top Republican, said during a July 26 markup: “We need to work together to get government inefficiencies out of the way of defense innovation and collaboration with our closest allies."

Rep. Young Kim, R-Calif., who introduced the Koala Act, said Australian companies are “facing significant bureaucratic barriers in working with our defense industrial base” because of the “very strict” ITAR. She said some technology transfers “can take between 90 to 100 days just to get the approval, despite the fact that, in Australia's case, these transfers are never denied.” She also said compliance with the ITAR is “costly, and often discourages smaller companies that sell innovative technology from entering the defense contracting business.”

“A small business simply cannot afford to front millions in compliance costs,” Kim said, “which means we are losing out on an opportunity to incorporate more innovation in our defense ventures.”

The two bills, which were advanced along party lines, faced pushback from Democrats who said the measures would each create too broad an export exemption. Rep. Gregory Meeks, the committee’s top Democrat, said the exemptions would remove the comparability standard in the Arms Export Control Act, which requires any country seeking a licensing exemption to demonstrate it has “comparable defense trade controls to our own,” he said, noting that the Biden administration also opposes the bills.

“This standard is part of existing statutory requirements, and prematurely lifting them risks compromising our national security,” Meeks said. He also said it will allow “unfettered transfers of our most sensitive defense technology, including to private sector foreign firms which risk exposure to, or theft by, our most capable adversaries, especially China."

Republicans, including McCaul, argued that the U.S. should be able to sufficiently trust the U.K. and Australia to protect sensitive U.S. technologies. “The time for delays is over,” he said. “This bill is to move forward" and the U.S. should treat Australia and the U.K. "both equally as allies.”