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Defense companies and industry groups have urged the State Department to expand export licensing exemptions included in a proposed rule intended to help implement the AUKUS agreement or risk undermining the intent of the trilateral defense cooperation deal.

AUKUS, an agreement among the U.S., Australia, and the United Kingdom, is designed to enhance sharing of information and technology among the three allies. It notably allows Australia to join the U.K. in accessing U.S. nuclear propulsion technology for military submarines.

The U.S. Department of State proposed a rule in April to amend the International Traffic in Arms Regulations (ITAR) to support the AUKUS implementation by easing and updating export licensing requirements.

The proposal attracted 28 comments by the deadline, most of which were from defense firms and industry groups. These comments broadly supported the rule's intent but highlighted several concerns about the proposed amendments to ITAR, suggesting that they might counteract the AUKUS objectives if not addressed.

Trust in AUKUS Partners' Export Controls

The Aerospace Industries Association (AIA) emphasized that the State Department should fully trust that Australia and the U.K. have comparable export control systems to the ITAR. The National Defense Authorization Act (NDAA) 2024 stipulates that most exports to these countries should be exempt if their controls are comparable to U.S. standards.

Despite all three countries being part of international agreements like the Wassenaar Arrangement and the Missile Technology Control Regime, the State Department has not clarified how it will certify that Australia and the U.K. have comparable systems. The National Foreign Trade Council echoed this concern.

The proposed ITAR changes include requiring assurances from Australia and the U.K. that significant military equipment won't be reexported without U.S. approval. Critics argue this undermines the notion of comparable export controls.

See-Through Rule Scrutiny

A controversial aspect of the proposed rule is the "see-through rule," which subjects any defense items developed using U.S. data or components in Australia or the U.K. to ITAR jurisdiction. The National Defense Industrial Association (NDIA) and other commentators argue this undercuts AUKUS's purpose by imposing unnecessary scrutiny on trusted allies.

Restrictive Physical Territories Requirement

The AUKUS exemption from export controls would only apply to transfers within the physical territories of the three countries. Defense contractors like BAE Systems and industry groups like the Professional Services Council (PSC) argue this restriction is too limiting. They suggest including possessions, military bases, and military exercise locations to ensure the exemption's effectiveness.

Excluded Technology List Concerns

The proposed rule includes an excluded technology list (ETL) that outlines defense items and services not covered by the AUKUS exemptions. Commentators argue that the list is too broad, especially regarding what is considered "missile technology." The PSC and BAE Systems noted that key technologies essential to AUKUS goals, like hypersonics and uncrewed underwater vehicles, should not be excluded.

BAE Systems and other groups also raised concerns about the exclusion of submarine-related technologies, which could hinder Australia's development of indigenous submarine manufacturing capabilities.

Defense companies and industry groups are calling for the State Department to expand and clarify the proposed ITAR amendments to align with the AUKUS agreement's objectives. They emphasize the need for trust in the export controls of Australia and the U.K., the elimination of overly restrictive provisions, and the careful revision of the excluded technology list.

A representative for the State Department did not immediately respond to a request for comment on Monday. The agency will need to address these comments when finalizing the proposed rule. The U.S. Department of Commerce's Bureau of Industry and Security is also amending its Export Administration Regulations for AUKUS, with comments due by midnight on Monday.