State Department Releases Proposed Rule on AUKUS ITAR Exemption

The State Department on April 30 released proposed regulations to implement an exemption from International Traffic in Arms Regulations licensing requirements for Australia and the U.K. under the Australia-U.K.-U.S. (AUKUS) Enhanced Trilateral Security Partnership.

The 15-page proposed rule, issued “in the interest of preparing” for a potential determination under the FY 2024 National Defense Authorization Act (NDAA) that Australia and the U.K. have comparable export control systems to the U.S., includes a preliminary list of defense articles and services excluded from eligibility for the new exemption.

It also adds to the scope of the exemption for “intra-company, intra-organization, and intragovernmental transfers to allow for the transfer of classified defense articles to certain dual nationals who are authorized users or regular employees of an authorized user within the United Kingdom and Australia,” and would set new expedited license review procedures for Australia, the U.K. and Canada. Comments are due May 31.

A State Department official told reporters that the U.S. worked “very closely” on the exemption with the Australian and British governments, which have developed complementary exemptions.

“Taken together, these exemptions are designed to facilitate secure and efficient defense trade between the United States, the U.K. and Australia, thereby allowing for deeper security cooperation and innovation between and among the AUKUS partners,” the official said. “The ITAR exemption alone would support billions of dollars in license-free defense trade between and among our three countries.”

The exemption will cover the "vast majority of current licensed defense trade" between the U.S. and Australia and the U.K. Excluded items include those covered by the Missile Technology Control Regime and the Nuclear Suppliers Group, as well as certain landmines, the official said.

The State Department plans to start meeting with American, Australian and British industry representatives next week to discuss its proposal, and it aims to finalize its rule by mid-August. While some lawmakers have criticized the State Department for missing the NDAA-mandated mid-April deadline for finalizing the exemption, Undersecretary for Arms Control and International Security Bonnie Jenkins said April 23 that the State Department expects to meet the new deadline (see 2404240068).