Defence Trade Controls Bill introduced to Parliament

Signing of the Defence Trade Co-operation Treaty

In September 2007, then President George W Bush and then Prime Minister John Howard signed the Australia-United States Defence Trade Co-operation Treaty in Sydney.

What the Treaty covers

In summary, the Treaty foreshadows a new regime for the exchange of certain sensitive defence information and materiel between trusted member organisations without the need for export approvals and permits on a case by case basis.

Once implemented, benefits for industry should include:

• reduced administrative overheads; and
• potentially, more work for Australian players partnering with US contractors.

Defence contractors who are not admitted to the new scheme will have to continue to make do with the current ITARs-based system, which will continue to operate in parallel.

Treaty implementation – a drawn-out process

Unfortunately, as with similar arrangements between the US and Britain, legislative implementation of the Treaty itself is proving to be a drawn-out process.

Legislation passed through the US Congress a little over three years after the signing of the Treaty. As for Australian legislative action, the Defence Trade Controls Bill 2011 (Cth), which is required for implementation of the Australia-United States Defence Trade Co-operation Treaty, was introduced into the Commonwealth House of Representatives on 2 November 2011, more than four years after the signing of the Treaty.

One week after its introduction into the House of Representatives, the Australian Bill was referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee. That Committee is set to report by 12 April 2012.

Draft Regulations for industry comment

In the meantime, an exposure draft of Regulations under the Bill is due for release before the end of the year. There will be a further round of consultation with the defence industry on the Bill, including review by the Defence Trade Cooperation Treaty Advisory Panel which was established in May 2011 to provide expert advice to Government on the Bill.

According to the Bill's Second Reading Speech, draft Regulations will address matters including:

• requirements to be satisfied by an employee or contractor for Australian Community membership;
• key conditions of approval for Australian Community membership;
• exceptions to Treaty offences;
• record keeping and compliance reporting requirements for Australian Community members;
• processes for being approved as an intermediate consignee;
• exceptions to the offences for supply of technology or the provision of defence services;
• record keeping requirements for permit holders and brokers;
• identification cards for Authorised Officers; and
• 'other administrative matters'.

The Maddocks Defence Team would be happy to assist any clients wishing to participate in or make submissions to the consultation process on the Regulations.

What then?

The Defence organisation will have its own implementation requirements, including fact sheets, policy guides, application forms and the establishment of 'domestic and bilateral operating processes'.

Entry into force will then require a further diplomatic Exchange of Letters.

Following entry into force, a pilot (or 'Pathfinder') program will be run to develop confidence in the processes.

Given the above it is evident that there is some way to go before the new framework is in place and fully operational.

For further information about this eAlert, please contact a member of our team.

Sean Field | Senior Associate
+61 3 8615 0397
sean.field@maddocks.com.au