Understanding the Implications of the Australian Government's Proposed Export Control Changes
- Arne Mielken
- Feb 14, 2024
- 5 min read
Exploring the Potential Impact of Australia's Proposed Export Control Changes on Global Trade
The Defence Trade Controls Amendment Bill 2023 (Bill), which was introduced on November 30, 2023, proposes amendments to the Defence Trade Control Act 2012 (Cth) (DTC Act) in the Australian federal parliament. The law is being reviewed by a legislative committee, and the committee's report is anticipated in April 2024.
A number of proposed amendments would carry out Australia's commitments under the AUKUS agreement by eliminating the need for a permission for the shipping of most restricted goods from Australia to the US and the UK, so facilitating technology transfer between AUKUS partners more quickly. However, the Bill will also add three new offences, so businesses that deal with goods on the Defence and Strategic Goods List (DSGL) both within and outside of Australia would need to put better compliance measures in place.
Three new offences
The purpose of the proposed law is to amend the DTC Act by introducing three new criminal offences for engaging in the following without authorization, with no exceptions:
Giving technology that is listed on the DSGL to a foreign person living in Australia is regarded as a presumed export offence. For the purposes of this felony, an organization's distribution of DSGL technology to an officer or employee who is a "foreign person" may be considered a supplier.
Re-supply offence: giving technology or items identified on the DSGL to (i) a foreign citizen or (ii) a foreign person after they have already been exported or supplied from Australia to a place outside of Australia and need a permission. The Re-Supply Offence, like the Deemed Export Offence, may be applied to resupplies given by an organisation to an official or employee who is considered a "foreign person."
Giving foreign nationals access to certain services related to technology or weapons goods listed in Part 1 of the DSGL is considered a services offence. Hiring Australian subject matter experts may become more challenging for organisations as a result of this infringement.
The Bill states that breaching any of the new offences will result in a maximum penalty of ten years in jail and/or 2,500 penalty units, which are presently valued at AUD 782,500 for individuals and AUD 3,912,500 for businesses.
Exclusiveness
There are several exceptions to the new authorization requirements, including the following ones:
supplies made in compliance with the terms of the Australia-United States Defence Trade Cooperation Treaty; supplies to a person who holds a relevant security clearance; and, with respect to the Services Offence only, limited specific assistance by way of performing maintenance or providing train access. The term "AUKUS exception" refers to supplies made between Australian citizens, citizens of the United Kingdom and the United States, body corporations, and governments that comply with the applicable supply rules.
Additional exceptions to any additional violations specified by the regulation are permissible.
Practical features
Under the new offence provisions, businesses would also be required to expand their present processes for screening for foreign counterparties and supply agreements to include due diligence checks for supplies made within Australia. For example, companies need to be aware of the dates on which they will provide DSGL services or content to "foreign persons" in Australia. The difficulty of compliance is anticipated to increase even in situations where an exemption exists, such as record-keeping and subject-matter screening for officers and employees, projects, and transactions.
Next course of action
The Bill is difficult, and it raises a number of practical and interpretation concerns. After just a short industry input on an earlier draft, the Bill has been sent to the Senate Foreign Affairs, Defence and Trade Legislation Committee for examination and report. The Committee will accept submissions until February 1, 2024, and reports are expected by April 30, 2024. According to the Bill's page on the Defence website, the Australian Government will consult with stakeholders on further exclusions to be added in the Defence Supply Chain Liability Act (DSGL) and the Defence Trade Controls Regulation 2013 (Cth) between December 2023 and early 2024.
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