AUKUS ITAR changes not much help for Pillar 2 tech: US Studies Centre experts

SYDNEY — The much ballyhooed reforms of the ITAR arms export system for AUKUS are not likely to help development of advanced weapons for Pillar II, the cluster of capabilities such as hypersonics, autonomy, AI and other advanced weapons, according to a new report from the Australian-based US Studies Centre.

The report, “AUKUS Enablers? Assessing defense export control reforms in Australia and the United States”, cautiously concludes that at the top-level, the “AUKUS-driven reforms may succeed where previous efforts failed, realizing a long-standing objective of creating a ‘defense free-trade zone’ between Australia and the United States.”

And yet, the authors — Bill Greenwalt of the American Enterprise Institute, and Tom Corben of the US Studies Centre — warn that there are major hurdles that have not been addressed by recent reform efforts, and which need to be handled if AUKUS is to reach its full potential.

“However, reform efforts could come to naught if further regulatory adjustments are not made and if lingering barriers to implementation endure,” they write. “Indeed, stakeholders in all three countries worry that enduring structural challenges posed by the ITAR and the exclusion of many AUKUS-relevant technologies from the proposed US licensing exemption will stymie cooperation through AUKUS Pillar II and hamper alliance initiatives on precision-guided weapons.”

The Australian defense minister, Richard Marles, has hailed the ITAR reforms as a “generational” change and Australian officials have generally been eager to comply with American requirements that they amend Australia’s arms export system to make it much more American. The ITAR system, of course, is infamous for its often slow and complex processes, overseen by the US State Department’s Political-Military Bureau.

The reforms, which go into effect Sept. 1, are being made to help Australia buy and build nuclear attack submarines as part of the AUKUS agreement between Australia, the UK and the US. While nuclear technology is not governed by ITAR, many of the components and systems on the two Virginia-class subs Australia is expected to buy are covered. The buying of the Virginia class boats and then the building of the SSN Aukus fleet has been dubbed Pillar I of the AUKUS agreement, with Pillar II focused on a variety of new technology developments, potentially with other countries outside of the core three AUKUS nations.

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During a briefing about the report here this morning, Greenwalt said “Pillar Two, except for those [systems] with unique military technologies with unique military contractors, will be impossible to execute” under the reformed system.

One of the biggest problems, the report notes, is the Excluded Technology List (ETL). Each country will have one, which requires arms export licenses between the three countries, except where specific legislation exempts them. If a technology or weapon such as hypersonics or artificial intelligence is on that list it will be subject to standard treatment as outlined in the ITAR.

This means, the authors say, that those will be subject to “the ITAR’s well-documented ‘taint’ effect, which has historically disincentivized US allies and commercial companies from engaging in technology sharing and co-development projects with the Pentagon.” The list “deliberately captures technologies central to Pillar I and Pillar II projects alike, omitting these articles and services from license-free trade for reasons of national competitiveness, international treaty obligations, and anxieties over industrial security threats posed by China, Russia, and other competitors,” the report says.

Although no weapons have yet moved through the new process, Greenwalt and Coben write that “early indications are that the 3 countries are missing an opportunity to craft a shared defense export control framework devoid of the well-understood structural problems associated with the ITAR. To make matters worse, there is a significant risk that many AUKUS-related technologies could be excluded from the very framework intended to facilitate their wider sharing and co-development.”

They recommend minimizing the number of excluded technologies, and addressing deep cultural and political barriers to” improve implementation.”

The authors call on the United States to “clarify how its proposed licensing exemption will apply to: the manufacture and co-production of US-origin defense technologies in Australia; Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) to Australia; and commercial products modified for military applications overseas subsequently included in AUKUS co-development projects.”

For its part. Australia should hire more people for the defense export control office and defense industry security program “in anticipation of a surge in the number and complexity of requests for assistance,” the authors write.