New AUKUS Defense Trade Exemption to Take Effect Sept. 1, State Dept. Says

The State Department on Aug. 15 submitted a determination to Congress that the Australia and U.K. export control systems are “comparable” to those of the U.S., clearing the way for both countries to potentially benefit from defense trade exemptions as part of the AUKUS partnership (see 2408070048). The agency said it plans to “shortly publish” an interim final rule to amend the International Traffic in Arms Regulations and implement that exemption, which will take effect Sept. 1.

Both the State (see 2404300050) and Commerce (see 2404180035) departments issued proposed rules to reduce license requirements for trade of defense and dual-use items between the three nations. The State Department said its upcoming interim final rule implementing an ITAR exemption will include a 90-day public comment period “to allow for further refinement.” At least one industry group said the proposed rule was too restrictive and should be revised to remove more barriers to defense trade (see 2406030056).

“The changes implemented by this rule will maximize innovation and mutually strengthen our three defense industrial bases by facilitating billions of dollars in secure license-free defense trade,” the State Department said. “This new trade exemption is just one example of how the AUKUS partners are working together to meet the challenges of the future. This effort will enable deeper cooperation among AUKUS partners to advance peace, stability, and security in the Indo-Pacific and beyond.”

Rep. Michael McCaul of Texas, the top Republican on the House Foreign Affairs committee, said in an Aug. 15 statement that he's “pleased the administration has finally provided the long overdue defense trade exemption to two of our closest allies, Australia and the United Kingdom." But he also said "there are still too many items that are critical to fully implementing AUKUS that are not included in this exemption. Until the Excluded Technologies List is limited to only a handful of items -- as Congress intended -- big government regulation will continue to hamper this crucial alliance’s ability to truly deter a conflict in the Indo-Pacific.”

Sen. Ben Cardin of Maryland, the top Democrat on the Senate Foreign Relations Committee, also applauded the State Department’s certification and said the U.K. and Australia will soon be able to benefit from an "extensive exemption from U.S. export controls." He called it the "first important step with our good friends to improve our ability to protect and defend our countries, our partners, and our interests in the Indo-Pacific region and beyond.”