With the news that the Australian/US Defence Trade Treaty has finally come together, there is hope that the process for technology transfers between the two nations will become much easier.
Previously, Australian defence companies had to negotiate complex US defence export procedures and apply on every single occasion for approval to collaborate and export. Under the new regime, companies can obtain a global authorisation under the Approved Community (AC) framework. The treaty has been six years in the making but the finer detail of how it will operate on the ground, remains to be seen.
The treaty will also line up with a similar arrangement with the UK. The treaties create ACs of government and private sector entities that may receive defence articles and defence services under the treaties. Under the treaties, it will be possible for most US defence articles to be exported into, and within, these communities without prior licenses or other authorizations pursuant to the ITAR as long as the exports are in support of certain:
- Combined military and counter-terrorism operations;
- Cooperative security and defence research, development, production, and support programs;
- Mutually agreed security and defence projects where the end-user is the Government of the UK or the Government of Australia; or
- US Government end-use.
The US and the UK, and the US and Australia must jointly agree on which projects, programs and operations qualify for processing under the terms of the treaties. UK and Australian re-transfer or re-exports of items originally exported pursuant to either treaty to a person outside the respective Approved Communities will require US government approval and UK or Australian authorization as appropriate.
According to the Defence website, “For Treaty eligible projects, the Treaty is expected to allow:
- reduced delivery time for new defence projects;
- improved sustainment, by permitting transfers within the AC without further Australian or US approvals;
- a more efficient way for US companies to share technical data with the Australian Community without licences;
- consistent compliance requirements across the Australian Community; and,
- the avoidance of delays sometimes associated with the export licensing process.
“Participation in the Treaty is voluntary, and the Treaty provisions will only apply to organisations and individuals who have been approved for membership. Membership to the AC will not affect current export authorisations or the ability to operate under the existing export control regime.”
As part of the implementation paperwork provided on the US State Department’s Directorate of Defense Trade Controls (DTC) outlines, both governments will publish the list of Approved Companies periodically. Members are assigned an AC Identification Number (ACID) once approved for membership in the community. But what happens when a company or their facilities, for whatever reason, do not make it into the AC? Will every business who wants to do work with the US have to get themselves an ACID?
At the moment, the Defence website says that “Australian Community members will be obliged to meet Treaty standards in protective measures for goods and technology, personnel security clearances and compliance. These standards will be published by Defence and included in the Australian Community Manual. The Government will absorb the costs involved in processing applications and personnel security clearances. The Treaty security standards will be appropriate for the protection of sensitive unclassified technology.”
Applicants must submit an application to join the Australian Community to Defence. Once submitted, Defence will assess the application against the following criteria:
- The organisation’s export compliance history.
- Whether the approval of the organisation would prejudice the security, defence or international relations of Australia.
- Whether the application identifies existing or future involvement in Treaty-eligible trade activities.
- The extent of Foreign Ownership, Control and Influence over an organisation (to be examined by the Defence Security Authority).
- Whether the organisation has a facility capable of storing Treaty articles (to be accredited by the Defence Security Authority).
After Defence has processed the application it will be forwarded to the DTC for bilateral determination of membership. Successful applicants will receive a notice from Defence advising them of their approval for membership of the Australian Community.
If all this seems a little overwhelming, it is. There will be a lot of paperwork involved in getting an ACID and figuring out what it means for your business. For larger companies, the paperwork and effort will no doubt have a pay off in the short term. But for businesses looking to crack into the scale and opportunities that the US offers, it’s another set of forms to complete.
We will wait and see what the treaty means for Australian industry as the dust settles on the paperwork.