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The Defence Trade Controls Regulations: Can the Government make them user friendly?

The deadline for industry to submit comments on the proposed Defence Trade Controls Regulations was 17 February 2012. International Trade Advisors made a submission outlining our recommendations for additional revisions and guidance that would make becoming an Approved Australian Community Member more attractive to small and medium sized Australian companies. Our submission addressed the following areas of the Defence Trade Controls Regulations:

Marking Requirements-  

We believe the hardware marking requirements, as drafted, could be very expensive for companies to comply with, thus making Community membership unattractive. Our recommendation is to limit marking to accompanying documentation such as invoices and shipping documents. Our submission also requested further clarification on marking requirements for intangible defence articles, such as data, technology and the provision of defence services.

Approved Community Member Verification-

Under the Treaty, defence articles can only be traded without a license between Approved Community Members. We believe a centralised list of Approved Community Members should be published by the U.S. and Australian governments and that this list should reflect suspensions, cancellations and voluntary withdrawals from the Approved Community to aid Community members in their compliance efforts. Without such a list, it will be difficult for companies to verify a business partner’s Community membership status. We also requested clarification on the process of discontinuing Community Membership, should a company decide to do so.

Lists of Treaty Eligible Items-

The U.S. and Australia are both keeping lists of defence articles that are eligible for, and exempt from, trade under the Treaty. U.S. export reforms are making significant changes to the USML and it is possible that the U.S. and Australian lists of defence articles may not be consistent in what can and cannot be traded under the Treaty. For some articles, U.S. export reforms may remove the benefit of trading under the Treaty altogether. We requested that the Australian Government provide information about how it intends to work with the U.S. government to harmonise their respective lists and maximise Treaty benefits.

Offences-

The Regulations require that Approved Community Members in Australia file an Annual Compliance Report with the Australian Government to retain their membership status. International Trade Advisors requested clarification as to whether or not this report is intended to also serve as a voluntary disclosure of violations under the Defence Trade Controls Act. We requested that language be written into the Regulations to provide a mechanism for voluntary disclosure, similar to ITAR 127.12.

We are hoping that the Australian Government will incorporate our recommendations as well as recommendations by industry members to make applying for Australian Community membership more attractive to small and medium sized businesses. Without widespread participation by Australian companies, there won’t be a large benefit from the Treaty to the either the American or Australian defence industries.

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