US State Dept 'fully expects' to finalize new AUKUS trade exemptions in next 120 days


By David Brunnstrom

WASHINGTON (Reuters) -The U.S. State Department said on Friday it fully expects to finalize new trade exemptions for the AUKUS defense project with Australia and Britain in the next 120 days, signaling a further delay in the move, but offering the prospect of a positive outcome in the project to counter China.

The 2024 National Defense Authorization Act requires President Joe Biden to determine within 120 days of his signing it into law on Dec. 22 whether Australia and Britain have export control regimes “comparable to the United States” and thereby qualify for the exemptions. The 120-days is reached on Saturday.

“Exemptions in our export control systems, within a framework of shared standards with Australia and the UK, are key to harnessing and maximizing the innovative power residing in our defense industrial bases,” the State Department said.

“We fully expect to finalize the new trade exemptions – based on stakeholder input – over the course of the next 120 days,” it said.

The State Department statement indicated a delay in a positive determination by Biden, but the legislation requires him to revisit the issue in another 120 days.

A statement from the British government said it “warmly welcomes the significant progress” to advance AUKUS.

“UK and Australia are on track to meet the requirements of the NDAA and benefit from the exemptions,” it said. “We are confident that by the next 120-day period we will have completed all the requirements for full implementation of the ITAR exemptions.”

Senior Republican lawmakers this week expressed concern about delays in AUKUS if Biden did not grant the exemptions from strict export controls for defense items covered by U.S. International Trafficking in Arms Regulations (ITAR).

In remarks shared with Reuters, Michael McCaul, Republican chair of the House Foreign Affairs Committee, said the exemptions were needed to allow businesses to develop advanced capabilities quickly without “burdensome bureaucracy and regulations.”

Jeff Bialos, a former senior Defense Department official now a partner with the Eversheds Sutherland law firm, said the State Department has resisted blanket exemptions for Britain and Australia ever since they were first proposed by the Pentagon nearly 25 years ago while he was in office.

He called the State Department statement “forward leaning” and said he now expected the three countries to put forward draft exemptions covering each other’s export control rules.

“One of the criteria is that the other countries also have a system that will allow exports to the U.S. to be exempt. It’s reciprocal,” he said.

On Thursday, the U.S. Commerce Department said it was scaling back its export-control requirements for Australia and Britain to foster cooperation under AUKUS, which was formed in 2021 to address shared worries about China’s growing power.

However, Commerce only handles licensing of some defense-related items, not the broader range of items covered by the ITAR regime, which is governed by the State Department’s Bureau of Political-Military Affairs.

AUKUS’s first pillar deals with supply of nuclear-powered submarines to Australia, while Pillar II calls for more immediate cooperation in high-tech defense items such as quantum computing, undersea capabilities, hypersonics, artificial intelligence and cyber technology.

In announcing its move, the Commerce Department said both Australia and Britain “have robust export control systems and have taken additional steps in recent months to enhance technology protection.”

It said Britain’s 2023 National Security Act provides for enhanced protections against the unauthorized disclosure of certain defense-related information.

It said Australian legislation provides for controls on re-exports of items originally exported from Australia, disclosures of controlled technology to certain foreign persons within Australia, and the provision of defense services.

(Reporting by David Brunnstrom; Editing by Chizu Nomiyama and Jonathan Oatis)



Source link