Defence Strategic Review: ‘Decisive action’ urged with US

Australia’s most senior defence industry players have warned that US controls on sharing defence technology will be the biggest obstacle to the success of the AUKUS partnership.

Anthony Albanese and US President Joe Biden in San Diego in March. Picture: Getty Images

Australia’s most senior defence industry players have warned that US controls on sharing defence technology will be the biggest obstacle to the success of the AUKUS partnership, and that the need for urgent reform is poorly understood by the US Congress or sections of the US government.

In roundtable discussions convened by the US Studies Centre at the University of Sydney, dozens of defence industry representatives urged “decisive action” on US export controls, which treat top-tier US allies such as Australia in the same way as lesser strategic partners.

The Australian industry participants will be key to delivering future AUKUS capabilities but have until now been largely excluded from the 18-month planning process on the nuclear submarine plan and the “Pillar Two” agenda to co-develop new military technologies.

Defence Minister Richard Marles acknowledged last month that overcoming US export controls would be “a big task”, but is yet to lay out a strategy to deal with the issue beyond noting the deep support for AUKUS at the highest levels of US government.

A USSC paper on the roundtables said the defence industry was concerned that despite the recognition in both the US and Australia of growing strategic risks, the approach to technology sharing between the allies had not changed to reflect the evolving challenges.

There was a consensus across the Australian defence sector that US International Traffic in Arms Regulations, known as ITAR, were “the biggest impediment to realising a truly integrated defence industrial and technology enterprise”.

“Australian industry stakeholders are concerned that key departments across the US system do not share their sense of urgency regarding export control reform, and are not prioritising efforts to address the specific challenges that have already been identified,” the paper said.

“Though they are encouraged by the Pentagon’s efforts to align the department behind AUKUS, Australian stakeholders are generally pessimistic that other crucial parts of the US system – particularly the Department of State – are moving with the same purpose.”

The defence industry figures pointed to the already-serious delays the ITAR system poses for securing parts for routine sustainment of military hardware, and that these controls can tie up Australian-developed intellectual property that enters the US system.

They were particularly concerned with how the ITAR system would affect co-operation under AUKUS’s so-called Pillar Two – which covers advanced undersea capabilities, quantum technologies, artificial intelligence, advanced cyber capabilities, hypersonic missiles and electronic warfare. They warned the government’s planned Guided Weapons and Explosive Ordinance enterprise to build advanced US-designed missiles in Australia would also be undermined unless ITAR constraints could be overcome.

Some of the defence industry stakeholders called for the US to discriminate in favour of Australia to fast-track licence approvals and technology transfer requests for AUKUS programs, while others urged an AUKUS “carve out” from the ITAR system.

While reforms were at the top of the agenda for Australian defence industry, many of roundtable participants “fear that this view is not shared by key constituents within the US system”.