The Senate committee considering legislation to introduce new export controls for defence can look forward to a busy summer sorting through complaints. Businesses both big and small and academics, researchers and others have made no secret of their disdain for parts of the proposed regime.
The bottom line though is we need this new layer of security if AUKUS is going to deliver on its promises. The US military machine is still the mightiest and most sophisticated on the planet and if we want to get inside the tent, we have to play by Washington’s rules.
On November 30 Defence Minister Richard Marles introduced to parliament the Defence Trade Controls Amendment Bill 2023. It’s been referred to the Senate foreign affairs, defence and trade legislation committee which is considering submissions until February 1.
Among other things, the legislation introduces new rules around the handling and access to defence and sensitive commercial equipment and information. Export controls are nothing new – most developed countries restrict what can and cannot be sent out of the country as a matter of course. Such controls apply to both defence and advanced commercial capabilities including those applicable to advanced computing, chemical, biological and nuclear weapons.
What’s different about the proposed new regime is that it would apply inside Australia to foreign nationals who seek to work with sensitive material. While other areas of Australia’s protective security environment have similar outcomes, like the security clearance regime, this is the first time ín-country transfers to some foreign nationals will require a permit under Australian export control laws. The organisations responsible for such people, be they universities or businesses, will have to apply for a new operating licence before their work could go ahead.
You can understand why this is not viewed with a whole lot of enthusiasm. While most industrial countries have the same baseline level of export control regulations, the US is an outlier. Its export control regime is notoriously complex and loathed internationally because the controls on US-origin defence technology apply even when that technology is bought by another country. With around 60 per cent of Australian military capabilities originating from the United States, Australian defence projects, defence industry and academia frequently encounter situations where they must seek access permission and permits from Washington.
However, the new rules are a necessary precursor if AUKUS is to play out as planned. Pillar one of AUKUS is all about nuclear submarines. Pillar two is focused on defence trade and, as the explanatory memorandum to the new bill notes “realising the full potential of AUKUS will not be possible without major changes to the way that AUKUS partners co-operate on defence industrial and technology issues”.
The bill proposes to introduce an offence for the unauthorised transfer of defence and advanced commercial technology to foreign persons within Australia operating without a government permit. Historically, the US has been the only country with a similar offence so yes, we would be taking our cue from that country and there should be some safeguards in place.
The regulations required to enact the legislation will need to be carefully drafted to prevent unintended consequences. A grace period should be considered to allow the Australian defence and dual-use ecosystem to adjust to the new measures.
However, it should be pointed out that what is proposed differs from the American equivalent in a few important respects. Unlike the United States export control regime, the bill specifically exempts dual nationals from this offence which means it only applies to non-Australian citizens and permanent residents (not just anybody who has dual citizenship or foreign connections). The bill also exempts foreign persons from the United States, United Kingdom and 25 other countries considered “safe”, including NATO countries and Japan.
Consequently, the new export control offence is confined to citizens of countries that Australia does not want to be sharing sensitive technology without a thorough risk assessment. Given the current security environment, it seems only prudent to carefully scrutinise the security, background and intent of non-citizens from countries like Iran, China and Russia before giving them access to our most advanced defence and commercial technologies.
Indeed, while this new layer of security is being forced upon us by AUKUS, it’s probably something we should have in place regardless of the new security pact.
In a domestic environment where foreign espionage and the ramifications of industrial intellectual property are more concerning than ever before, the proposal to develop a more robust system where greater emphasis is placed on proper assessment of the risks and benefits before granting a foreign person access to Australia’s advanced technologies is not only logical but also a step that should have occurred well before now.