Posted 25/01/2024 by Karen Elphick
The Australia, UK and US enhanced defence and security partnership (AUKUS Partnership) can be expected to bring significant change to Australia’s defence trade control framework. Ahead of Parliament debating the Defence Trade Controls Amendment Bill, this article provides background by briefly explaining Australia’s current defence export regulatory framework.
The framework seeks to balance the inherent tensions between supporting defence industry by promoting trade; maintaining national security by sharing critical materials and technology, as appropriate, or protecting it from strategic competitors; and maintaining Australia’s ethical and legal commitments to international security by restricting proliferation of weapons.
As Senator Farrell, Minister for Trade and Tourism said:
Increasingly, economic policy and national security policy are intertwined – a resilient Australian economy underpins national security. Australia is economically stronger when global trade flows freely ... But how we trade, who we trade with, and what we trade needs to reflect our current strategic moment and the challenges we face.
As such, maintaining leadership in global arms control, non-proliferation and disarmament efforts is a fundamental pillar of the Australian Government’s response to international security challenges, especially in the Indo-Pacific region. The government also recognises that a sovereign industrial capability is operationally critical but that Australia cannot sustain a local industry by selling to the Australian Defence Force alone.
The Defence export strategy 2018 identifies that exports provide defence industry with greater certainty for future investment and support high-end manufacturing jobs. However, the strategy also accepts Australia’s commitment to arms control and counter-proliferation:
Global opportunities also carry global responsibilities. Defence exports affect Australia’s national interests and can contribute to supporting security and stability, both regionally and globally [para 1.5].
Australia fulfils its international obligations while continuing to export by maintaining a robust defence export controls system, explained below.
Defence and Strategic Goods List
Australia’s defence-related export control framework is built around the Defence and Strategic Goods List (DSGL). The Customs (Prohibited Export) Regulations 1958 (PE Regulations) and the Defence Trade Controls Act 2012 (DTC Act) define prohibitions and regulations by reference to the DSGL:
The DSGL is a compilation of military and commercial goods and technologies that Australia regulates. The goods, software and technologies on the list are agreed in conjunction with members of various international non-proliferation and export control regimes. These items either have a military use, or can be used to develop weapons of mass destruction. The DSGL also contains Australia-specific controls relating to firearms and explosives.
Part 1 of the DSGL covers defence and related goods – inherently lethal goods and technologies designed or adapted for use by armed forces.
Part 2 of the DSGL covers dual-use goods – equipment and technologies developed to meet commercial needs, but which may also be used either as military components or for the development or production of military systems or weapons of mass destruction.
The Defence Minister formulates and publishes the DSGL under paragraph 112(2A)(aa) of the Customs Act 1901 (see also regulation 2, PE Regulations).
Other goods destined for military end use
The Defence Minister is given additional power to prohibit the export of goods not on the DSGL if the minister suspects that the goods may be for a military end‑use that would prejudice the security, defence or international relations of Australia (section 112BA of the Customs Act).
Permits for export of DSGL goods – PE Regulations
The export of goods and technology specified in the DSGL is prohibited, unless the Defence Minister has granted permission (regulation 13E of the PE Regulations).
The Defence Minister can grant permits for export, but only if satisfied that the export of the goods, or of any DSGL technology contained in the goods, would not prejudice the security, defence or international relations of Australia. The Defence Minister must consider 12 criteria listed in a table in regulation 13E(4), PE Regulations and any other matters they consider appropriate.
About half the listed criteria relate to threats to Australia’s military and strategic interests. The other half relate to damage to Australia’s international relations more generally and our commitment to international law and international peace and security.
Permits to supply, arrange or publish DGSL technology – DTC Act
Part 2 of the Defence Trade Controls Act 2012 (DTC Act) plugs some loopholes that would exist if only export of technology was banned.
It is an offence to supply (which includes access) DSGL technology, arrange for other persons to supply DSGL goods or DSGL technology, or publish DSGL technology, unless the Defence Minister has granted permission (section 10 DTC Act).
If the minister is satisfied that the supply would not prejudice the security, defence or international relations of Australia then the minister may issue a permit (subsection 11(4) DTC Act). The criteria the minister must consider are the same as those listed in the PE Regulations.
Special defence relationships, special rules – Part 3 of the DTC Act
The Australia-United States Treaty on Defense Trade Cooperation (DTC Treaty) was negotiated in 2007 and agreed to remove certain defence export restrictions between Australia and the US. Part 3 of the DTC Act implements the DTC Treaty. Part 3 created a framework for 2-way trade between Australia and the US in specific defence articles that are listed in Part 1 of the Defense Trade Cooperation Munitions List (DTC Munitions List). Part 2 of the DTC Munitions List identifies technologies not covered by the special trade framework.
Goods on Part 1 of the DTC Munitions List may be transferred between members of the defined Australian community and the United States community through approved registered brokers without the need for an export licence for each item. Participation in the DTC Treaty framework is voluntary, and the DTC Act provisions do not affect export permits granted under the PE regulations.
Process for obtaining defence export permits
Defence Export Controls is the regulator within the Department of Defence that considers applications made under either the PE Regulations or the DTC Act. It issues several types of permits for the export and supply of military and dual-use goods and technologies.
Exports that comply with the requirements of the DTC Act are not prohibited from export by the PE Regulations and therefore those exporters are not required to apply for a permit under the PE Regulations.