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


The fiscal 2024 National Defense Authorization Act, 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 technology cooperation between the United States and its AUKUS partners.

While a new quarterly review process in the NDAA offers some hope, the law nevertheless leaves the outcome on this key issue very much in doubt and subject to the vicissitudes of a historically reluctant export control bureaucracy.

Specifically, the final NDAA text restates a long-standing requirement in existing law that the United States must make a determination of the “comparability” of Australian and U.K. export control systems to the U.S. system as a condition precedent to the establishment of paradigm-changing, country-specific exemptions from the International Traffic in Arms Regulations, or ITAR. This provision was put in place in 2000 by Congress, working closely with allies in the State Department’s Bureau of Political-Military Affairs, precisely to defeat ITAR exemptions that the Clinton administration sought to establish for Australia and the U.K. Over the 20-plus years since its enactment, this comparability standard, administered by the bureau, has in fact served as a “poison” pill to deeper technology sharing.

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

Why the resistance to change? Fundamentally, opponents of ITAR exemptions believe that efforts to move away from the traditional case-by-case export licenses, with provisos and exclusions that limit their scope, would open the tech transfer floodgates and put U.S. technology-based military dominance at risk. In effect, the Bureau of Political-Military Affairs and its allies have assigned more value to preserving our antiquated and cumbersome export control system than broadening coalition cooperation and bringing more commercial innovation into defense systems.

Thus, in this historical context, Congress missed a generational opportunity in the FY24 NDAA to adopt the exemptions without requiring that the onerous standards in existing law be met. In short, its Groundhog Day again.

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

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

This process, if reasonably managed with a “get to yes” rather than “get to no” attitude, could cement AUKUS as an important Biden administration accomplishment. However, the reality is that the Bureau of Political-Military Affairs, which administers ITAR, will be at the center of the comparability determination. In practice, the question is whether, as some have suggested, the bureau has changed its attitude and now is supportive of, rather than resistant to, establishing the exemptions.

The burden, thus, is on the administration to put into place guide posts and safety rails to ensure that the exemptions get done and are not, yet again, doomed to failure by the opponents of serious export control reform.

Specifically, in this uncertain context, there are two things the Biden administration should do to keep the process on track and produce 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 is using reasonable, reachable standards of “comparability” rather than standards designed to “get to no.” This means clear timelines and deadlines, with at least weekly meetings between the administration’s senior leadership team and the bureau, during which progress is reviewed — with ultimate judgments made by the overall U.S. AUKUS coordinator in consultation with the State Department’s AUKUS adviser and the Defense Department’s policy arm.

Further, any bilateral or trilateral meetings with Australia and the U.K. should include other administration officials — not only the bureau. In essence, a bureaucratic “supervise and surround” approach should be used, under which officials with a broader perspective, more willing to make trade-offs in favor of AUKUS collaboration, would be in charge.

Second, the administration should in parallel work to ensure the standards enabling businesses to qualify for the ITAR exemptions are reasonable. While the “trusted community” concept of eligibility (i.e., a set of vetted enterprises) makes sense, the U.S. AUKUS coordinator as well as counterparts from the State and Defense departments again must ensure the details are workable for traditional defense contractors and commercial firms alike. Technology-based exceptions to the ITAR exemptions should also be kept to a minimum to ensure the deep technology sharing anticipated under the second pillar of AUKUS can proceed in advanced areas like unmanned systems.

In summary, while the FY24 NDAA didn’t rise to the occasion on AUKUS collaboration, the process it established, combined with good will and a strong administration push, can become a tool to achieve what long has alluded us.

Jeffrey P. Bialos is a partner with the Eversheds Sutherland law firm, where he also serves as co-head of the Aerospace, Defense and Security Group. He previously served as deputy undersecretary of defense for industrial affairs during the Clinton administration.

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