The reason: It was too arduous to comply with U.S. export rules.
“We’re such a strong ally, you’d think you’d be able to say, ‘Well, OK, it’s Australia,’” said Tetlow, founder of Inovor Technologies, which ultimately sourced the equipment from a European supplier.
As the U.S. stitches together alliances to counter adversaries such as China, its arms-control regime relies on many regulations from the Cold War. Now, lawmakers, defense firms and U.S. allies contend that some rules that apply to the private sector are no longer fit for purpose, and want them changed.
Those rules, called the International Traffic in Arms Regulations, or ITAR, call for the State Department to approve the export of the most sensitive defense-related equipment, services and technical data from U.S. companies to foreign entities, including corporations, governments and individuals. Some exemptions apply to universities, but they also have to comply. Supporters of revising the rules argue that cooperation among allies is stifled by an approval process that in some cases can be lengthy, and by a record-keeping and training burden that small firms and institutions often can’t handle.
Some worry the current rules could limit the effectiveness of Washington’s new Aukus alliance with Australia and the U.K. Australia plans to acquire American nuclear-powered submarines under the arrangement, but Aukus also envisions speedy cooperation in areas such as quantum computing and artificial intelligence—technology that is expected to be developed in large part by researchers and the private sector, and which could play a crucial role in future warfare.
“Reform of export controls, particularly ITAR, must happen to meet that mandate of urgency,” said Rep. Joe Courtney (D., Conn.), co-chairman of a lawmaker group that supports U.S.-Australia relations. “Aukus is not a run-of-the-mill sale of military kit by a U.S. contractor.”
The ITAR discussion is part of a broader debate over American export controls, a previously obscure set of regulations that is now taking on new prominence as the U.S. seeks to work closer with allies and maintain a technological edge over rivals such as China. To prevent foreign adversaries from obtaining U.S. technology, U.S. officials have recently said they would more effectively police exports of “dual use” items—which have both commercial and military applications—that are overseen by the Commerce Department separately from ITAR. Washington also wants to speed up approvals for foreign military sales, another process separate from ITAR that involves sales of military equipment between governments directly—which accounts for most of the defense trade between the U.S. and Australia.
The ITAR rules, which apply to components in items such as guns, missiles, lasers, aircraft and spacecraft, have been perceived to hobble Washington’s cooperation with allies in the past. In the U.K. defense industry, the rules have been blamed for generating significant delays and increasing costs, according to a 2011 study from British academics that was supported by the Naval Postgraduate School, a university in California run by the U.S. Navy.
One U.K. industry representative told the researchers that after a supplier had a fire at its facility, it was better to wait for the facility to be rebuilt rather than try to get U.S. approval for an alternate supplier. Some interviewees, however, understood that export controls are needed to protect sensitive technologies, and not all viewed ITAR as a problem, the study said.
People in the defense industry say ITAR licenses can sometimes take months; State Department officials say that on average, licenses are typically granted in about six weeks.
Still, State Department officials acknowledge the rules can be improved. They say they are working on an interim mechanism that would generally allow for exports between Aukus countries to be preapproved—if the project falls under the scope of the alliance—and on legislative changes that would create new exemptions to licensing requirements for member nations. The U.S. already exempts Canada from some of the rules, reflecting the historic closeness between the two countries.
“We want export controls to be able to safeguard our technology,” said Mira Resnick, a deputy assistant secretary at the State Department. “We also want Aukus to succeed. And for Aukus to succeed, we know that we need to be able to have much more robust, agile, flexible information sharing.”
Some U.S. lawmakers have already suggested legislative fixes. One bill, nicknamed the Torpedo Act, would authorize the State Department to hire more people to review defense export license requests, as well as expedite the process for exporting certain defense items to Australia and the U.K.
Despite congressional support for revisions, one challenge in rewriting the rules is finding a balance between protecting sensitive technologies while also making it easier for the Aukus countries to collaborate.
“When you start doing major statutory or regulatory changes, you just don’t know the unintended consequences,” said Chris Stagg, who worked at the State Department branch that approves the export licenses and is now a Washington-based lawyer at Miller & Chevalier.
For companies, the current regime of export controls is making for hard choices. While big defense contractors have the resources and expertise to navigate the export rules, this can be daunting for smaller companies. Adding to the irritation is what many in the defense industry call “ITAR taint.” If an ITAR-controlled component or activity is used by a foreign company, the U.S. may need to sign off on any further sales by that company of the product that contains the ITAR-regulated items.
Some decide to work independent of the U.S., though that can be tough.
Engineers at Black Sky Aerospace, an Australian maker of rocket motors that it says are “ITAR-free,” are wary of phoning people in the U.S., said James Baker, the general manager of defense and national security. That is because they worry any conversation with a U.S. citizen could inadvertently result in the export of U.S. technical data, breaching the rules, he said.
“Would it have been helpful to talk to some U.S. suppliers about integrating some of their technologies into our product?” Baker said. “Yeah, I guess it would.”
Others say the entire process to get a license, including all the legal paperwork, can take a long time even for mundane requests. A few years ago, it took months for Thomas Global Systems, a company with locations in both Australia and the U.S., to be able to receive the dimensions of a seat, which it needed for a simulator that trained troops how to drive armored vehicles, said Angus Hutchinson, the company’s chief executive. Collaboration between the company’s U.S. and Australian teams is often not practical because of the effort and time required to apply for the licenses needed to share information, he said.
“One of the things we should be trying to do is really generate as much innovation as possible for the benefit of the U.S. and Australia,” Hutchinson said. “That innovation is being held back by what I would describe as red tape.”
Officials in Australia and the U.K. have said they are encouraged by efforts to revise the rules. Richard Marles, Australia’s defense minister, said last month that he has had productive conversations with U.S. officials about ITAR. Ben Wallace, the U.K.’s defense secretary, told a parliamentary committee in November that his department spends hundreds of millions of dollars a year on complying with ITAR requirements.
“Aukus is an opportunity for that to happen,” Wallace said of easing the rules.
