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Lawmakers seek to ease defense export controls to UK, Australia

House Foreign Affairs to hear from State, Defense officials Wednesday

House Foreign Affairs Chairman Michael McCaul, R-Texas, wants the administration to back legislative changes to weapons export controls for the UK and Australia.
House Foreign Affairs Chairman Michael McCaul, R-Texas, wants the administration to back legislative changes to weapons export controls for the UK and Australia. (Bill Clark/CQ Roll Call file photo)

Lawmakers have high expectations for a new trilateral security partnership between the United Kingdom, United States and Australia to significantly boost not only the three allies’ maritime positions in the Indo-Pacific vis-à-vis China but also to accelerate and deepen their collective abilities in next-generation defense technologies.

But senior Republicans and some Democrats say Congress first needs to smooth the regulatory runway to enable defense cooperation in such highly-advanced areas as hypersonic and counter-hypersonic weapons, artificial intelligence, quantum computing and undersea technologies.

The lawmakers are pushing the administration and State Department to back legislation that would exempt some exports to Australia and to a lesser extent to the U.K. from weapons-related export control rules. Such statutory carve-outs from the current controls are needed to enable timely development and deployment of the next-generation technologies.

Some lawmakers also say the administration is dragging its feet.

“The State Department was not moving forward on any of this with ITAR and the exemptions,” said House Foreign Affairs Chairman Michael McCaul, R-Texas, using the acronym for the International Traffic and Arms Regulations, the defense export control regime administered by the State Department. ITAR regulates direct commercial sales between U.S. companies and foreign entities.

McCaul said one sign of administration reluctance to back the legislative effort was the difficulty getting State Department and Pentagon officials to testify at a hearing. They are finally scheduled to do so Wednesday on progress modernizing export controls to support AUKUS, as the security partnership is called. 

“It was only until we did that, that they started to respond and they were worried about us even going forward at that time,” McCaul said about getting the hearing on the calendar. The Wednesday hearing was rescheduled from earlier in May after an administration witness fell sick.

Senate and House foreign affairs panels have jurisdiction over the defense export control regime ITAR, but lawmakers see the must-pass annual defense policy measure as a logical vehicle for any bills coming out of the foreign affairs committees that would make export control changes. 

AUKUS has two major components. The first pillar would see the U.S. and U.K. sharing technical submarine expertise and industrial shipyard manufacturing capacity with Australia to help it acquire and deploy up to five Virginia-class nuclear-powered submarines in the 2030s. The second pillar involves close collaboration in developing next-generation weapons capabilities in things like hypersonic missiles, new space and undersea capabilities, and artificial intelligence.

The lawmakers’ effort to change ITAR to make it less cumbersome for British and Australian companies to co-develop sensitive weapons-related technologies with American firms is particularly in service of the second pillar. 

The administration has indicated ITAR needs change, as does the Foreign Military Sales process, to enable AUKUS cooperation, but doing so requires balancing conflicting interests. The State and Defense departments oversee Foreign Military Sales.  

Jessica Lewis, assistant secretary of State for Political Military Affairs, said the department has developed an “interim” authorization mechanism for AUKUS as it thinks through more “systemic changes,” including ones that would require legislation. Her comments came in the testimony provided for the postponed House Foreign Affairs hearing. Lewis is scheduled to be one of the witnesses Wednesday.

“The top priority remains balancing the need to effectively protect technology with the need to ensure our regulatory frameworks do not hinder broader information and technology sharing,” said Lewis.

McCaul, Senate Foreign Relations ranking member Jim Risch of Idaho, and Democrats such as Senate Armed Services Chairman Jack Reed of Rhode Island have somewhat differing views with the administration over how to balance the risk of industrial espionage, intellectual property theft, and export control violations with the desire to rapidly develop new technologies that allies can use in their competition with Russia and China.

Legislative action in play

McCaul, who is working on a bill to exempt the U.K. and Australia from some ITAR rules, said State has been more reluctant to grant broader exemptions for Pillar II technologies to Australian firms.

The University of Sydney’s United States Studies Centre issued a report last week urging the White House to issue an executive order to streamline export controls processes for Australia and the U.K. for emerging technologies slated for co-development by the security partnership.

There are worries among stakeholders in all three AUKUS countries that the indiscriminate and far-reaching application of ITAR will impede Australia’s acquisition of the nuclear submarines under Pillar I and disincentivize collaboration on the next-generation of advanced military capabilities under Pillar II, the centre said in its executive summary.

Risch introduced legislation this month that would establish a fast-track Foreign Military Sales process to export defense items to the U.K. and Australia and require the State Department to issue an open general export license “for export, reexport, transfer, and retransfer of certain defense articles and services to or between the United States, Australia, Canada, and the United Kingdom.”

Risch’s bill, nicknamed the TORPEDO Act, has received praise from experts, including one of the Obama administration’s lead officials for overseeing export control regulations for dual-use technologies.

“With respect to Australia, I’m a big advocate for substantial changes to the International Traffic and Arms Regulations. With respect to implementing AUKUS, there’s legislation out there, the TORPEDO Act, which I’ve read, which seems terrific,” Kevin Wolf, a senior fellow at Georgetown University’s Center for Security and Emerging Technology and a former assistant secretary of Commerce, said at a House Foreign Affairs Oversight subcommittee hearing earlier this month on export controls. 

“It’s basically what we tried to do when I was in government with respect to the export control reform effort in order to allow the government to spend more time focusing on countries of concern, reduce the burden on trade by and among… close allies so long as there were sufficient protections in place,” he continued.