Trade Group: AUKUS ITAR Exemption Hindered by Limited Scope, Authorized User Process
Most respondents to an Aerospace Industry Association survey on the AUKUS defense trade exemption said they view the change positively, although they believe the scope of the exemption may need to be expanded and the State Department’s Excluded Technology List should be revised. They also said the U.S., Australia and the U.K. should publish clearer guidance on the authorized user enrollment process to address “inconsistencies across the three jurisdictions.”
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
AIA released the survey results and a set of recommendations last week, just over a year after the effective date of a State Department rule that created an exemption for defense trade among the U.S., Australia and the U.K., which was meant to remove export control barriers for a range of items that had previously faced strict license requirements under the International Traffic in Arms Regulations (see 2408160019).
AIA President Eric Fanning said the AUKUS ITAR exemption has helped ease “some restrictive hurdles” and led to “greater industry collaboration across the AUKUS ecosystem.” But he also said “barriers to seamless integration remain, such as an expansive Excluded Technologies List and reexport restrictions.”
The survey results showed that just over 73% of respondents said they “perceive” the State Department’s rule to be positive, 20% feel neutral, and just under 7% perceive it negatively. One respondent called the exemption an “incredible opportunity to streamline defense trade” among the three countries. “While there are still some administrative elements being sorted out, the overall impact has been tremendous,” the respondent said. “We're frequently using it for tech data sharing and support for quick turn demos/exercises that will all inevitably lead to increased collaboration/sales within the 3 countries.”
Other responses were more critical. One respondent said most of the equipment they make isn’t eligible for the export exemption, and even if it were, the exemption would save the company just 45 to 90 days waiting for an export license, which “doesn't really move the needle too much.” Others said the Excluded Technology List -- which includes technologies that still require a license despite the Directorate of Defense Trade Control’s ITAR exemption (see 2410010030) -- is too long.
Some also complained about the process surrounding authorized users -- the list of companies eligible to use the exemption. “The Authorized User process in the UK and Australia are a mystery,” one person said, according to AIA. “There is no published guidance on the process.”
In its recommendations, AIA said the government should review the “relatively limited scope” of the AUKUS exemption, taking industry feedback into account, along with a “particular focus on addressing territorial restrictions and reexports and retransfers.” The exemption specifically includes territorial restrictions that “preclude support” to AUKUS armed forces deployed outside their physical territories or the ability to provide maintenance, repair and overhaul services.
“This restriction limits the AUKUS partners in their ability to operationalize enhanced military readiness or counter potential aggression in the Indo-Pacific in real time,” the association said. “AIA and our members are eager to support the U.S. Department of State in removing this limitation issue through the regulatory process.”
AIA also noted that companies still need U.S. government approval to reexport or retransfer U.S.-origin defense articles, “even among close allies,” which “disrupts the development of secure and resilient trilateral supply chains.” This blocks U.S. defense articles and technical data from being “easily adopted” into joint projects without a U.S. license, slowing production and increasing costs.
In addition, AIA urged the three AUKUS nations to develop “consistent, clear, and compatible terms, conditions, and guidance” for enrolling as an authorized user, calling that the “largest challenge to industry adoption” of the exemption. Companies have faced “unclear timelines and limited responsiveness” from partner nations while trying to enroll, and many have had to hire lawyers for help or abandon efforts to enroll.
Because there's a “limited number” of authorized users, companies also sometimes have to forgo using the exemption if they’re shipping items to several entities and one or more aren’t enrolled as an authorized user, AIA said. That's an especially big issue with logistics companies helping with a shipment, such as freight forwarders or warehousing companies, it noted. The association added that it’s unclear whether forwarders must also be authorized users.
This has “deterred companies and their shipping partners from accruing risk of using the exemption and instead proceeding with standard export licensing.”
The Excluded Technology List also needs to be revised to be “easy to understand and not restrict industrial cooperation” that Congress intended to authorize, AIA said. Companies believe the scope is “overly broad” and inconsistent across the three nations. “For example, critical technologies related to unmanned aerial systems, underwater capabilities, and warfare are included on the ETL,” AIA said, “thus restricting the opportunities for codevelopment of advanced capabilities and further interoperability amongst the trilateral defense industrial base.”
The association called on the three governments to continue working with industry to improve the exemption, or they risk it going unused. “Ongoing industry-government dialogue on the exemption may provide clarity as to why industry has refrained from using the exemption in certain cases or provide feedback to industry on how to better leverage the exemption for AUKUS projects.”
A State Department spokesperson declined to comment.