US Firms Prepare to Scrutinize ITAR Exemption Rule for AUKUS

U.S. defense companies plan to closely monitor the implementation of the International Traffic in Arms Regulations (ITAR) exemption for Australia and the U.K. to ensure it meets its promise of reducing licensing burdens for defense trade, industry representatives told a congressional panel last week.

The FY 2024 National Defense Authorization Act, which President Joe Biden signed into law in December 2023, authorized the ITAR exemption as part of the Australia-U.K.-U.S. (AUKUS) Enhanced Trilateral Security Partnership (see 2312070054). The State Department is developing a rule to carry out the exemption (see 2404110006).

“If implemented correctly, the ITAR exemption for Australia and the U.K. will unlock the full potential of AUKUS," said Dak Hardwick, vice president for international affairs at the Aerospace Industries Association, according to prepared testimony. “However, if the legislation is not implemented correctly and the scope of Congress’ intent is unnecessarily narrowed, the new system will mirror the old, thus returning all three nations to the status quo, nullifying all other efforts dedicated to AUKUS’ success, and leaving us less capable of jointly responding to shared threats.”

One particular item the industry will scrutinize is the Excluded Technologies List (ETL), which is a list of technologies within U.S. Munitions List categories that would require an ITAR license regardless of the exemption, Hardwick told the House Foreign Affairs Committee. An “expansive” ETL would run counter to congressional intent to promote closer technological collaboration through AUKUS, he testified.

Mark Webber, vice president for international global programs and policy at Lockheed Martin Corp., said the upcoming rule should create an export system that is simpler than getting a traditional license. For sensitive technology that is ineligible for the exemption, the government should avoid requiring multiple authorizations. “One ‘yes’ should be sufficient to permit a free flow of cooperation among the AUKUS partners,” Webber testified.

Nicola Johnson, vice president for government affairs and strategic communications at General Atomics Aeronautical Systems Inc., said the rule should ease U.S. export controls on unmanned aircraft to promote AUKUS-like cooperation. Unmanned aircraft are currently ineligible for ITAR exemptions, forcing U.S. companies to use a slow export approval process that can cause them to lose sales to foreign competitors, such as China, Israel and Turkey, she said.

The U.S. government intends to publish the draft rule for the ITAR exemption "in the coming weeks," Webber said. The State Department said April 19 that it expects to finalize the AUKUS ITAR exemption over the next 120 days.

Meanwhile, as part of AUKUS, the Bureau of Industry and Security released an interim final rule April 18 that will reduce export licensing requirements for Australia and the U.K. under the Export Administration Regulations (see 2404180035).