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Status update on Australia’s Strengthened Export Controls

weightsThe passage of the Defence Trade Controls Act 2012 (the Act) will result in strengthened export controls on the intangible supply (fax, email, phone, video conferencing, or providing access to information) of Australian produced technology listed on the DSGL. Though the Act was passed in late 2012, there is no requirement for industry to comply with its strengthened export control provisions until May 2015, when the two-year transition period for testing the impact of the new controls has concluded.

Currently, the Australian Government is conducting a series of pilot programs to determine how the new strengthened export controls in the Act will impact industry and academia. A Steering Group comprised of industry, government and university representatives has been tasked with testing the impact of the legislation through conducting pilot programs and with making recommendations to Government on changes to the legislation and policy solutions. Member of the Steering Group were appointed by the Minister of Defence and include:

• Professor Ian Chubb AC, Chief Scientist (Chair)
• Professor Peter Høj, Vice Chancellor of the University of Queensland as co-Deputy Chair;
• Mr Ken Peacock AM, co-Deputy Chair (industry);
• Professor Warwick Anderson, CEO National Health and Medical Research Council;
• Professor Aidan Byrne, CEO Australian Research Council;
• Professor Mike Calford, Vice Chancellor-Research, University of Newcastle;
• Mr David Gillard, from BAE Systems as a industry representative;
• Mr Michael Edwards (Boeing Australia), industry representative;
• Mr Ohad Katz (Raytheon), industry representative;
• Dr Alex Zelinsky, the Chief Defence Scientist; and
• Dr Rob Porteous from the Department of Innovation, Climate Change, Science, Research and Tertiary Education.
• Secretary: Michael Shoebridge, Dept of Defence

Of note is that there are no representatives from Australian SMEs in the defence sector or industry in general. Most members are from prime defence contractors or the research sector.

After the two year transition period has concluded, companies, universities and organizations undertaking the intangible supply of DSGL listed technologies will need to request a permit from DECO before supplying the technologies to an entity outside of Australia (in-country transfers are exempted from the permit requirement).

There has been very limited outreach to industry on how these new regulations will impact business. In fact, most SMEs I have spoken to are either unaware of these new controls on intangible transfers and/or have not taken any steps to ensure compliance.

There are seven pilot programs being conducted by the Steering Group, which include one SME; Electro Optical Systems. Other pilot program participants include Boeing/CSIRO, ANSTO, The University of Queensland, Curtin University, the Queensland Institute of Medical Research, National Plant Biosecurity CRC.

Following their March 2014 meeting, some of the recommendations the Steering Group is making to the Minister include the creation of open licenses for lower risk items to low-risk destinations, extending the duration of permits to five years, removing the controls on the verbal supply of DSGL technology and creating exemptions for contractors supporting APS, ADF and Police.

There is much work to be done in advance of the end of the two year transition period in May 2015, when offence provisions will come into effect, including creating a mechanism for the voluntary self-disclosure of violations. In addition, a layman’s guide to interpreting the legislation and its requirements would be helpful for industry.

Pilot programs are now entering their final phase of testing. Once the pilot programs have concluded (late 2014), the Steering Group will make its final recommendations for amendments to the Act to the Minister. There will then need to be extensive outreach and training on the final legislative requirements. DECO is hoping to create an on-line tool to assist industry and academia in self-assessing whether a permit will be required for a particular intangible supply, but the creating of such a tool has yet to be confirmed.

Industry is advised to closely follow what is happening with amendments to the Act and to create internal policies, procedures and protocols to assist their organisation’s compliance with the Acts strengthened export controls. The Steering Group is next scheduled to meet on 7 August 2014. Additional information can be found on the Steering Group’s website: https://exportcontrols.govspace.gov.au/

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