Australia’s defence export controls tightened by Defence Trade Controls Act 2012
On 31 October 2012, Parliament passed the Defence Trade Controls Bill 2011. Royal Assent was given on 13 November 2012.
The new Act has two purposes:
- To strengthen Australia’s defence export controls
- To implement the Australia – United States Defense Trade Cooperation Treaty (Treaty).
The Act is intended to address gaps in the existing export control regime, which focuses on exports of physical goods. With the growth of technology, many defence export services can be provided over the Internet or through brokers and are not covered by the existing controls. For example, a CD containing information of a military benefit (e.g. an aircraft technical guide) is currently controlled and requires a permit or licence to be exported physically from Australia. The existing export control regime does not regulate the intangible transfer of the same information however (e.g. via the Internet, email, fax, phone, conference presentation, etc.), nor brokers who could arrange the transfer of the same information to third parties.
Registration and permit regime
The Act regulates dealings in technology (including software) listed in the Defence and Strategic Goods List (DSGL), the provision of services related to DSGL-listed technology and goods, and dealings in items covered by the Treaty. It creates a registration and permit regime for the brokering of DSGL-listed goods, technology and related services. It also creates offences and imposes substantial penalties (which can include imprisonment for 10 years) for persons who:
- Supply DSGL technology without a permit
- Arrange for others to engage in dealings relating to goods listed in the DSGL, or to DSGL technology, without a permit
- Publish/disseminate DSGL technology to the public.
Although a small number of the Act’s provisions came into operation on 14 November 2012, many of the substantive provisions await proclamation of their commencement date.
The date proclaimed cannot be a date earlier than the day on which the Treaty enters into force (i.e. when Australia and the United States exchange notes confirming that each country has completed the necessary domestic requirements). It may take several months for both countries to complete all of the necessary administrative arrangements. However, if no date is proclaimed within two years of the Treaty’s entry into force, the Act provides for those provisions to commence automatically thereafter.
The offence provisions do not commence until two years after the Treaty enters into force.
The DSGL includes defence, military and dual-use goods and technologies. Dual-use goods are commercial items with a legitimate civil application that can also be adapted for military use or could be used in weapons of mass destruction programs. The categories of controlled dual-use items include, for example, nuclear materials, electronics, computers, sensors and lasers, navigation and avionics, telecommunications and information security, chemicals, materials processing, aerospace and propulsion.
Entities that are expected to be affected by the Act include any Australian businesses or individuals supplying, or brokering the supply of, DSGL-listed goods, technology or related services to someone outside of Australia.
Academic institutions could also be affected. This could occur, for example, in instances where an institution engages with an overseas counterpart institution or business relating to items listed in the DSGL (e.g. research partnerships, consulting, training, etc.). The intangible transfer of DSGL technology might also occur through other channels – such as presentations at overseas conferences, or through post-graduate courses taught at an overseas campus of the institution.
To discuss the potential impact of the Act on your organisation's operations, contact your usual Deloitte Customs and Global Trade adviser.
Tel: +61 2 6263 7059
Tel: +61 3 9671 7518