While Australia and the United States have made significant progress towards creating a ‘defence free-trade zone’ through major regulatory harmonisation efforts, AUKUS defence technology cooperation will be hamstrung without further reform, argues a new report from the United States Studies Centre (USSC) at the University of Sydney.

AUKUS enablers? Assessing defence trade control reforms in Australia and the United States by AEI Non-Resident Senior Fellow Dr William Greenwalt and USSC Research Fellow Tom Corben traces the historic – yet incomplete – progress that US and Australian lawmakers have made towards harmonising their respective defence trade control regimes.

Among other advantages, reforms proposed in the last 12 months promise to remove licences for over 70-80% of defence exports to Australia previously subject to onerous US Government regulations. However, ongoing concerns between the 3 countries over national competitiveness, international non-proliferation treaty obligations, and the risks of industrial espionage by China or other competitors have seen a significant number of items and services made ineligible for license-free trade, captured on an Excluded Technologies List (ETL).

“The efforts by Australia, the United Kingdom and the United States to harmonise their defence trade control regimes represent a promising starting point for greater trilateral defence cooperation,” said USSC CEO Dr Michael J. Green. “This report by the USSC details the work that still needs to be done to fully realise the AUKUS goal of creating a trilateral defence innovation base.”

The report describes how the ETL could hinder AUKUS Pillar I and Pillar II projects. Combined with enduring structural disincentives present in US export controls, this list could present a notable obstacle to trilateral high-end technology sharing, co-innovation and co-development. It could also deter innovative commercial companies working on emerging technologies, entities widely viewed as critical to competition with China and Russia.

Recommendations

Beyond defence trade controls, the AUKUS countries will also need to consider how best to organise for further industrial security alignment and harmonisation efforts, specifically:

  • The United States and Australia will need to address real and potential sources of ‘taint’ residing in their respective regulatory definitions, particularly concerning the terms ‘defence services’ and ‘technical data,’ to ensure that commercial and dual-use entities are not dissuaded from participating in AUKUS projects.
  • Establish an AUKUS industrial security consultation mechanism in anticipation of further regulatory harmonisation efforts, similar to that created to implement the expanded US National Technology and Industrial Base (NTIB).
  • To revise the ETL, adopt a common national policy position that defines a ‘strong presumption of sharing’ for discrete technology categories related to AUKUS Pillar II found on the Missile Technology Control Regime (MTCR).

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