New ITAR exemption streamlines AUKUS defence trade

The U.S. government has introduced a new exemption under the International Traffic in Arms Regulations (ITAR), aimed at simplifying defence trade among AUKUS nations—Australia, the UK, and the U.S.—according to a press release.

The exemption, which came into effect on 16 August 2024, eliminates the need for ITAR licences or approvals for the export and re-transfer of defence articles and services between members of the AUKUS Authorised User Community (AUC).

The AUC, established on 2 September 2024, is a designated group of individuals and organisations approved to use the exemption. According to the Ministry of Defence (MOD), its “initial priority is to establish government-to-government transfers; and manage applications for onboarding the initial industry pilot group members” under the UK-U.S. Defence Trade Co-operation Treaty (DTCT).

British companies involved in the handling of ITAR-exempted items, particularly those on the United States Munitions List (USML), are encouraged to join the AUC to take full advantage of the new regulations.

To be considered for AUC membership, potential applicants must submit an Expression of Interest (EOI) form, completed by a senior official with the necessary authority. The MOD’s International and Industrial Cooperation Team (IIC) will then review and validate the form before providing applicants with a timeline for processing. The MOD has said that applicants are asked to submit only one form per legal entity and must have access to Microsoft Forms software, which the EOI system utilises.

Along with membership in the AUC, there are several obligations tied to the exemption. These include compliance with specific requirements outlined in U.S. Federal Registry Notices, and the use of “HMG’s new Open General Licence (OGL) for AUKUS,” which covers “the export of dual-use items or military goods, software or technology” between AUKUS nations. However, some goods and technologies are not included in the exemption.

The MOD notes that “certain goods and technology are set out in an excluded technology list” based on international obligations or specific requests from the U.S., Australia, or the UK.

The MOD’s onboarding process, which is being rolled out in phases, aims to assess the suitability of each applicant in collaboration with the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC). The MOD’s guidance emphasises that “particular attention will be paid to the risks of diversion to undesirable consignees or end-users.” Initial membership is focused on entities already part of the DTCT or the Defence Suppliers Forum, with further applications processed based on operational requirements and timelines.

Industry stakeholders have raised concerns about the phased approach, but the MOD assures that this method will help ensure “benefits to be realised early and risks to be managed.” It has pledged to continue working closely with relevant trade associations, including those representing small and medium-sized enterprises (SMEs), to facilitate access to the AUC.

Once onboarded, AUC members will be able to utilise the ITAR exemption immediately. However, compliance is critical, as members must register for the new UK OGL and fulfil the necessary conditions.

The introduction of the ITAR exemption signals a significant shift in the way AUKUS nations collaborate on defence technologies, with the potential to streamline processes and enhance cooperation. As the guidance highlights, the exemption is expected to simplify “the export, re-export, re-transfer (in-country), or temporary import of Defence articles,” making it easier for the three nations to work together while maintaining strict regulatory oversight.