Is the FY24 NDAA a missed opportunity for AUKUS technology sharing?

The National Defense Authorization Act for Fiscal Year 2024, soon to be signed into law, should be applauded for including important provisions that enable the trilateral security partnership known as AUKUS between Australia, the United Kingdom and the United States. Unfortunately, however, Congress missed a generational opportunity to ensure enhanced technological cooperation between the United States and its AUKUS partners.

While a new three-month review process in the NDAA offers some hope, the law still leaves the outcome on this key issue in great doubt and subject to the vicissitudes of a historically reluctant export control bureaucracy.

Specifically, the final text of the NDAA relinquishes a long-standing requirement in existing law that the United States must determine the “comparability” of Australia’s and United Kingdom’s export control systems with the US system as a precondition to establishing paradigm-shifting, specific for each country exempted from the International Traffic in Arms Regulations or ITAR. This provision was introduced in 2000 by Congress, working closely with allies in the State Department’s Bureau of Political and Military Affairs, precisely to repeal the ITAR exemptions that the Clinton administration was trying to establish for Australia and the United Kingdom through For the last 20 years since its introduction, this bureau-administered comparability standard has actually served as a “poison” pill for deeper technology sharing.

As a workaround, the Bush administration eventually negotiated — and the Senate ratified — treaties to create the same ITAR exemptions that would be available to a “trusted community” of private sector entities. However, Congress and its allies struck back and passed the Security Cooperation Act of 2010, which made treaty exceptions unusable.

Why the resistance to change? In essence, opponents of ITAR exemptions believe that efforts to move away from traditional case-by-case export licenses, with stipulations and exceptions that limit their scope, would open the floodgates to technology transfer and put U.S. military dominance at risk. technology based. Indeed, the Bureau of Political and Military Affairs and its allies have placed more value on preserving our outdated and cumbersome export control system than on expanding coalition cooperation and bringing more commercial innovation to defense systems.

Thus, in this historical context, Congress missed a generational opportunity in the FY24 NDAA to enact the exemptions without requiring compliance with the burdensome standards in existing law. Long story short, it’s Groundhog Day again.

Opponents of ITAR exemptions will no doubt applaud this outcome and instead point to provisions of the NDAA that they say enhance the ability of AUKUS participants to export products and technology through traditional means and beyond the scope of any new ITAR exemption. Unfortunately, however, these mechanisms, while useful at the border, do not eliminate the inherent limitations of technology sharing under narrow per-case licenses.

The NDAA does offer some hope on this critical issue, however, by establishing a mandatory process: quarterly determinations by the President on whether Australia and the UK meet export control comparability standards and, if not, what steps are needed to meet it.

This process, if wisely managed with a “getting to yes” rather than a “getting to no” attitude, could solidify AUKUS as a major achievement of the Biden administration. The reality, however, is that the Bureau of Political and Military Affairs, which administers the ITAR, will be at the center of determining comparability. In practice, the question is whether, as some have suggested, the bureau has changed its mind and now supports rather than opposes the establishment of exemptions.

The onus is therefore on the administration to put in place the guideposts and safety rails to ensure that the exemptions are implemented and not again doomed to failure by opponents of serious export control reform.

Specifically, in this uncertain context, there are two things the Biden administration needs to do to keep the process on track and create usable ITAR exemptions with greater technology sharing with close allies.

First, the Biden administration should establish a rigorous internal process to ensure that the bureau uses reasonable, achievable “comparability” standards, not standards designed to “get to no.” This means clear timelines and deadlines, with at least weekly meetings between the administration’s senior management team and the bureau during which progress is reviewed – with final judgments made by the US AUKUS overall coordinator in consultation with the State AUKUS advisor department and the Ministry of Defense policy arm.

In addition, any bilateral or trilateral meetings with Australia and the UK should involve other administration officials – not just the bureau. In essence, a bureaucratic “watch and circumvent” approach should be used, where officials with a broader perspective, more willing to compromise in favor of cooperation with AUKUS, would be in charge.

Second, the Administration should work in parallel to ensure that the standards that allow businesses to qualify for ITAR exemptions are reasonable. While the concept of “trusted community” eligibility (ie, a set of vetted businesses) makes sense, the US AUKUS coordinator, as well as his State Department and Defense Department colleagues, must again ensure that the details are applicable to both traditional defense contractors as well as commercial companies. Technology-based exceptions to the ITAR exemptions should also be minimized to ensure that the extensive technology sharing envisioned in the second pillar of AUKUS can continue in advanced areas such as unmanned systems.

In summary, while the FY24 NDAA was not up to par in cooperation with AUKUS, the process it established, combined with good will and strong administrative pressure, could become instrumental in achieving what has long been hinted at.

Jeffrey P. Bialos is a partner at the law firm Eversheds Sutherland, where he also serves as co-head of the Aerospace, Defense and Security Group. He previously served as Under Secretary of Defense for Industrial Affairs during the Clinton administration.

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