The highly anticipated reforms of the International Traffic in Arms Regulations (ITAR) arms export system for AUKUS are unlikely to facilitate the development of advanced weapons designated under Pillar II, which includes capabilities such as hypersonics, autonomy, and artificial intelligence, according to a new report from the US Studies Centre in Australia.
The report, titled “AUKUS Enablers? Assessing Defense Export Control Reforms in Australia and the United States,” cautiously concludes that while the “AUKUS-driven reforms may succeed where previous efforts failed, realizing a long-standing objective of creating a ‘defense free-trade zone’ between Australia and the United States,” significant hurdles remain unaddressed.
Authors Bill Greenwalt from the American Enterprise Institute and Tom Corben from the US Studies Centre caution that reform efforts could ultimately falter without further regulatory adjustments, as lingering barriers to implementation could hamper AUKUS’s effectiveness. “Indeed, stakeholders in all three countries worry that enduring structural challenges posed by the ITAR and the exclusion of many AUKUS-relevant technologies from the proposed US licensing exemption will stymie cooperation through AUKUS Pillar II and hinder alliance initiatives on precision-guided weapons,” they write.
Australian Defense Minister Richard Marles has praised the ITAR reforms as a “generational” change, and officials in Australia have expressed eagerness to align their arms export system with American standards. The ITAR system, however, is notorious for its often sluggish and convoluted processes, managed by the US State Department’s Political-Military Bureau.
The reforms, set to take effect on September 1, are aimed at helping Australia acquire and construct nuclear attack submarines as part of the AUKUS agreement involving Australia, the UK, and the US. While nuclear technology itself is not governed by ITAR, many components and systems associated with the Virginia-class submarines that Australia is expected to purchase are covered by the regulations. The acquisition of these submarines and the development of the SSN AUKUS fleet comprise Pillar I of the AUKUS agreement, while Pillar II focuses on a variety of new technology developments, potentially involving other countries beyond the core three AUKUS nations. During a briefing about the report, Greenwalt stated that “Pillar Two, except for those [systems] with unique military technologies and unique military contractors, will be impossible to execute” under the reformed system.
One of the primary obstacles identified in the report is the Excluded Technology List (ETL). Each participating country will have its own ETL, which necessitates arms export licenses among the three nations, except where specific legislation provides exemptions. If a technology or weapon—such as hypersonics or artificial intelligence—is included on this list, it will be subject to the standard treatment outlined by ITAR.
The authors emphasize that these technologies will experience “the ITAR’s well-documented ‘taint’ effect,” which has historically discouraged US allies and commercial enterprises from engaging in technology sharing and co-development projects with the Pentagon. The ETL “deliberately captures technologies central to Pillar I and Pillar II projects, omitting these articles and services from license-free trade due to national competitiveness, international treaty obligations, and concerns over industrial security threats posed by countries like China and Russia,” the report states.
While no weapons have yet traversed the new process, Greenwalt and Corben note that “early indications are that the three countries are missing an opportunity to craft a shared defense export control framework devoid of the well-understood structural problems associated with the ITAR.” They further warn of a significant risk that many AUKUS-related technologies could be excluded from the very framework that aims to facilitate their broader sharing and co-development.
Their recommendations include minimizing the number of excluded technologies and addressing deep cultural and political barriers to improve implementation. The authors urge the United States to clarify how its proposed licensing exemption will apply to the manufacturing and co-production of US-origin defense technologies in Australia, to Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) to Australia, and to commercial products modified for military applications overseas that are subsequently included in AUKUS co-development projects.
For its part, Australia should expand its defense export control office and defense industry security program “in anticipation of a surge in the number and complexity of requests for assistance,” the authors conclude.
