Regulatory intelligence for US exporters

State Dept. Working on New ITAR, AUKUS Exemptions, Official Says

The State Department is working on a new trade authorization that would expedite technology transfers among the U.S., the U.K. and Australia, said Jessica Lewis, assistant secretary of the State Department’s Bureau of Political-Military Affairs. Lewis, testifying before the House Foreign Affairs Committee May 24, said she’s also open to legislation that could reduce export licensing burdens, especially as part of the Australia-U.K.-U.S. (AUKUS) partnership.

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“We're really looking for new exemptions,” Lewis told Rep. Michael McCaul of Texas, the committee’s top Republican. “We need more of these, and we want to come and sit down and work with you and your excellent staff in getting that legislative language exactly right.”

Lewis’ comments came amid an uptick in recent criticism from researchers, industry and lawmakers, who say the International Traffic in Arms Regulations unnecessarily prevent technology sharing with close U.S. allies, including within AUKUS (see 2303130035, 2302170022, 2303170045 and 2303140018). McCaul and other House lawmakers are working on legislation they say could lift some of those restrictions (see 2304200036), and the Senate introduced a bill this month that could create new export authorizations to expedite shipments to Australia, Canada and the U.K. (see 2305050063).

Lewis said the State Department is also exploring how it can ease licensing requirements and is working on what she called an “AUKUS Trade Authorization Mechanism,” which will provide companies with an “interim solution” by “expediting and optimizing technology sharing and defense trade among only the AUKUS partners.”

Under the authorization, certain exports and technology transfers will be “pre-approved” and not subject to case-by-case license application review, Lewis said. She said the agency plans to release a list of AUKUS project areas that fall within the scope of the authorization, a list of technologies that “can’t receive this preferred treatment” and a list of approved “communities or entities” in each country that can “access these technologies.”

The authorization will allow transfers to proceed “without any further need” for a license, Lewis said, although exporters will need to maintain certain records of their transfers “so that we can conduct appropriate compliance checks and follow up on any reports of third-party exploitation.”

“The idea is that if we know what is included under the AUKUS program, if we know technologies that cannot be included” and if “we know who's receiving it, then we'll be able to, in essence, pre-approve and have these transfers move forward without needing a license on the front end.” She said she views this authorization as a complement to "broader legislative change” to the ITAR.

Lewis also said the State Department is considering a new “blanket exemption” under AUKUS for third-party transfers. “What that means is for items that are U.S. defense articles that are controlled by one country,” she said, “that they can be moved to another country within AUKUS without needing authorization.”

McCaul said he is eager to see the exemptions, but more can still be done. “Many, both private sector and our partners, including Australia, have told me how important these exemptions are to speed up the process,” he said. “We'd like to move. I think time is of the essence here.”