By David Brunnstrom
WASHINGTON (Reuters) – The U.S. State Department said on Friday it expects to finalize new trade exemptions for the AUKUS defense project with Australia and Britain within the next 120 days, signaling a further delay in the move but offering the prospect of a positive outcome. result in the project to combat China.
The 2024 National Defense Authorization Act requires President Joe Biden to determine, within 120 days of its signing into law on December 22, whether Australia and Great Britain have export control regimes “comparable to the United States” and therefore qualify for the exemptions. The 120 days are reached on Saturday.
“Exemptions in our export control systems, within a framework of standards shared with Australia and the United Kingdom, are critical to harnessing and maximizing the innovative power that resides in our defense industrial bases,” said the State Department.
“We hope to finalize the new trade exemptions – based on stakeholder input – over the next 120 days,” he said.
The State Department’s statement indicated a delay in Biden’s positive determination, but the legislation requires him to review the issue in another 120 days.
A statement from the British government said it “warmly welcomes the significant progress” to advance AUKUS.
“The UK and Australia are on track to meet the requirements of the NDAA and benefit from the exemptions,” he said. “We are confident that within the next 120 day period we will have met all requirements for full implementation of the ITAR exemptions.”
Senior Republican lawmakers this week expressed concern about delays to AUKUS if Biden did not grant exemptions from strict export controls for defense items covered by the U.S. International Traffic in Arms Regulations (ITAR).
In comments shared with Reuters, Michael McCaul, Republican chairman of the House Foreign Affairs Committee, said the exemptions were necessary to allow companies to develop advanced capabilities quickly without “bureaucracy and burdensome regulations.”
Jeff Bialos, a former senior Defense Department official and now a partner at the law firm Eversheds Sutherland, said the State Department has resisted blanket exemptions for Britain and Australia since they were first proposed by the Pentagon, nearly 25 years ago while he was in office.
He called the State Department’s statement “forward-leaning” and said he now expects the three countries to submit draft waivers that cover each other’s export control rules.
“One of the criteria is that other countries also have a system that allows exports to the USA to be exempt. It’s reciprocal,” he said.
On Thursday, the US Commerce Department said it was relaxing its export control requirements for Australia and Britain to promote cooperation under AUKUS, which was formed in 2021 to address shared concerns about China’s growing power.
However, Commerce only addresses the licensing of a few defense-related items, and not the broader range of items covered by the ITAR regime, which is governed by the State Department’s Office of Political-Military Affairs.
The first pillar of AUKUS deals with the supply of nuclear-powered submarines to Australia, while Pillar II calls for more immediate cooperation on high-tech defense items such as quantum computing, undersea capabilities, hypersonics, artificial intelligence and cyber technology.
In announcing its move, the Commerce Department said that both Australia and Britain “have robust export control systems and have taken additional steps in recent months to improve technological protection.”
It stated that Britain’s National Security Act 2023 provides for enhanced protections against the unauthorized disclosure of certain defense-related information.
It stated that Australian law provides for controls on the re-export of items originally exported from Australia, disclosures of controlled technology to certain foreign nationals within Australia and the provision of defense services.
(Reporting by David Brunnstrom; Editing by Chizu Nomiyama and Jonathan Oatis)
