International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States

DEPARTMENT OF STATE <CFR>22 CFR Part 126</CFR> <DEPDOC>[Public Notice: 12377]</DEPDOC> <RIN>RIN 1400-AF84</RIN> <SUBJECT>International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of State. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of State (the Department) proposes to amend the International Traffic in Arms Regulations (ITAR) to support the goals of the AUKUS partnership, the enhanced trilateral security partnership among Australia, the United Kingdom, and the United States. This exemption is designed to foster defense trade and cooperation between and among the United States and two of its closest allies. It is reflective of our nations' collective commitment to implement shared security standards on protecting defense technology and sensitive military know-how. To achieve this, the Department proposes to amend the ITAR to include an exemption to the requirement to obtain a license or other approval from the Department's Directorate of Defense Trade Controls (DDTC) prior to any export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among authorized users within Australia, the United Kingdom, and the United States. The Department also proposes to add a list of defense articles and defense services excluded from eligibility for transfer under the proposed new exemption; add to the scope of the exemption for intra-company, intra-organization, and intra-governmental transfers to allow for the transfer of classified defense articles to certain dual nationals who are authorized users or regular employees of an authorized user within the United Kingdom and Australia; and revise the section on expediting license review applications by referencing new processes for Australia, the United Kingdom, and Canada. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Send comments on or before May 31, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties may submit comments by one of the following methods: • <E T="03">Email: DDTCPublicComments@state.gov,</E> with the subject line “Australia, the United Kingdom, and the United States ITAR Exemption” • <E T="03">Internet:</E> At <E T="03">www.regulations.gov,</E> search for this notice using Docket DOS-2024-0013. Those submitting comments should not include any personally identifying information they do not desire to be made public or information for which a claim of confidentiality is asserted. Comments and/or transmittal emails will be made available for public inspection and copying after the close of the comment period via the Directorate of Defense Trade Controls website at <E T="03">www.pmddtc.state.gov.</E> Parties who wish to comment anonymously may submit comments via <E T="03">www.regulations.gov,</E> leaving identifying fields blank. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Ms. Engda Wubneh, Foreign Affairs Officer, Office of Defense Trade Controls Policy, U.S. Department of State, telephone (771) 205-9566; email <E T="03">DDTCCustomerService@state.gov,</E> ATTN: Regulatory Change, ITAR Section 126.7 Australia, the United Kingdom, and the United States Exemption. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> On September 15, 2021, the leaders of Australia, the United Kingdom, and the United States announced an intention to deepen “diplomatic, security, and defense cooperation to meet the challenges of the twenty-first century” through the creation of AUKUS, an enhanced trilateral security partnership. Reflective of the goals of AUKUS, on December 22, 2023, President Biden signed the National Defense Authorization Act (“NDAA”) for Fiscal Year 2024, Public Law 118-31, which, among other matters, established new authorities and requirements relating to defense trade between or among Australia, the United Kingdom, and the United States. These new authorities and requirements are contained in section 1343 of the NDAA for Fiscal Year 2024, which created a new section 38(l) in the Arms Export Control Act (AECA) (22 U.S.C. 2778(l)). Certain of these requirements include a determination and certification as to whether Australia and the United Kingdom have implemented systems of export controls that are comparable to those of the United States in several specified areas. If one or both partner nation's systems are determined and certified to meet the listed standards related to export controls in the AECA, and if the partner nation has implemented a comparable exemption from its export controls for the United States, the Department would immediately implement an ITAR exemption, subject to certain statutory limitations, for the partner nation(s) to which the positive certification applies. A separate provision, section 1344 of the NDAA for Fiscal Year 2024, calls for regulatory action to establish an expedited decision-making process for license applications to export certain commercial, advanced-technology defense articles and defense services to Australia, the United Kingdom, and Canada. These proposed amendments stand to enhance security cooperation and collaboration with two of our closest allies. The Department is proposing an ITAR amendment in the interest of preparing for a future exemption and obtaining public feedback to shape a final rule following any positive certification. The proposed new exemption, designed to implement the provisions of new section 38(l) of the AECA, would be located in ITAR § 126.7 and would provide that no license or other approval is required for the export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among designated authorized users within Australia, the United Kingdom, and the United States provided certain requirements and limitations are met. These include a list of excluded defense articles and defense services not eligible for the exemption, which can be found in a proposed new Supplement No. 2 to Part 126. The scope of excluded defense articles and defense services remain subject to revision and the Department welcomes comment on proposed Supplement No. 2 to Part 126. Further details regarding the requirements and limitations of the proposed exemption are as follows: • In § 126.7(b)(1), the exemption may only be used for transfers to or within the physical territory of Australia, the United Kingdom, or the United States, per AECA section 38(l)(1)(C)(2). • In § 126.7(b)(2), the pool of eligible members, known as authorized users, is created to facilitate secure defense trade and cooperation. Australia and the United Kingdom's members will undergo an authorized user enrollment process, in coordination with DDTC, and those members will be listed through the DDTC website. Members located in the United States must be registered with DDTC and not debarred under ITAR § 127.7. The UK and Australia authorized users may request that DDTC provide confirmation of the status of U.S. authorized users. As these lists are subject to change, DDTC will confirm the eligibility of parties under this exemption prior to the transfer ( <E T="03">e.g.,</E> export, temporary import, reexport, etc.) of defense articles or defense services. • In § 126.7(b)(3), the defense articles and defense services listed in Supplement No. 2 to Part 126 are not eligible for this proposed exemption. These items are excluded from eligibility under the proposed exemption because (1) they are exempted from eligibility by statute, including AECA section 38(j)(1)(C)(ii), or (2) are specifically exempted by either the UK, Australia, or the United States, per AECA section 38(l)(4)(A). For those items excluded from eligibility to be transferred under this proposed exemption by the United States, the U.S. government assessed that the defense articles and defense services in the list require a license or other approval from DDTC due to their importance to the national security and foreign policy interests of the United States. These items are, however, subject to the expedited licensing procedures listed in § 126.15 and may be reviewed and revised during the lifetime of the exemption. The Department notes that Supplement No. 2 to Part 126 lists the USML entries in column 1 that represent the location of the excluded defense articles and defense services within the USML. A USML category's listing in column 1 does not indicate the entire USML category is excluded; only the portions of those entries that are further described in column 2 are excluded. When reviewing the list of exclusions, careful review of all relevant entries is required. For example, when determining whether manufacturing know-how and source code described in USML Category IV(i) is excluded, entries such as exclusions for technical data designated as Missile Technology (MT) or directly related to anti-tamper articles may apply, and manufacturing know-how and source code are each addressed in separate exclusion entries: ○ <E T="03">IV(a), (b), and (g):</E> Manufacturing know-how and source code directly related to articles in these paragraphs are both excluded. ○ <E T="03">IV(c):</E> Manufacturing know-how directly related to articles in this paragraph is not excluded, but directly related source code is excluded. ○ <E T="03">IV(d) and (h):</E> Manufacturing know-how directly related to articles in these paragraphs is excluded, but directly related source code is not excluded. • In § 126.7(b)(4), transferors that use this proposed exemption must abide by this requirement for recordkeeping purposes, and such records must be made available to DDTC u ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 33k characters. 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