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'High' Chance of AUKUS Failure Without ITAR Reform, Researchers Say

Concern is “growing” within the U.S., Australia and the U.K. that “indiscriminate and extraterritorial application” of the International Traffic in Arms Regulations will hurt the Australia-U.K.-U.S. (AUKUS) partnership and “slow-roll cooperation on existing technology transfer,” the Sydney-based U.S. Studies Centre said in a report released this month. The report warned that “another failure” to reform the ITAR could “carry significant consequences for the three countries’ shared defence technology advantages vis-a-vis China and, therefore, their ability to deter regional conflict.”

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The group and others have called for revisions to the U.S. defense trade regulations to better allow technology sharing across borders (see 2302170022, 2303170045 and 2303140018), and Congress is working on legislation that could relax certain ITAR restrictions with close U.S. allies (see 2305050063). The report, authored by former Defense Department official and current American Enterprise Institute fellow William Greenwalt and U.S. Studies Centre fellow Tom Corben, said “significant reforms” are needed to make the regulations “more material in their application, positively discriminatory in favour of AUKUS countries, and more streamlined in their functional processes.”

They suggest the White House issue an executive order that streamlines export controls processes and procedures among AUKUS nations, “addressing existing specified US technologies, predominately allied-produced technologies, and classes of emerging technology slated for co-development under AUKUS.” This effort should include “AUKUS-specific” licenses and open general licenses, which would cover “broad categories” of defense products. The State and Defense departments should also create a list of “legacy technologies to which these measures will apply,” the report said, and create new licenses “to enable future cooperation” and “ease the operational use and maintenance of these items.”

The report also recommends that any “AUKUS country-aligned sustainment organisations” working on non-U.S. equipment should be exempt from the ITAR within U.S. borders. “The extraterritorial application of the ITAR should be abolished for parts and components of defence articles (not containing sensitive mission data) that are returned to AUKUS Original Equipment Manufacturers for repair or maintenance,” the report added, “and the ITAR should not be attached to non-US AUKUS intellectual property.”

The report also said Congress has a role to play, saying lawmakers should consider legislation to clarify “executive branch discretion to streamline export controls processes and procedures among the AUKUS nations,” including by allowing for “broad-based cooperation and work on new innovative technologies.”

The report said the “biggest legal impediment” may be the White House’s ability to “overcome the ITAR taint,” a term that refers to foreign-produced items that become subject to ITAR restrictions if they incorporate ITAR-controlled technology. The “easiest way” to bypass the taint may be granting Australia and the U.K. a “specific exception beyond the bounds” of the ITAR’s existing defense trade cooperation treaties, which “could provide the types of authorities that could make AUKUS work in practice.”

The report said Congress could also “legislate to abolish the taint for the AUKUS nations,” but they warned that a law eliminating the taint likely wouldn’t have an immediate impact because the U.S. would need to create regulations to implement it. To speed up the process, it may be best for Congress to “clarify and enhance executive branch discretion in the ITAR’s application,” the report said, including over various ITAR licenses and exceptions.

It’s “clear that US export control regimes must be refashioned if AUKUS is to be realised to its full potential,” the report said. “Without them, the chances of failure are uncomfortably high."