On August 20, 2024, the State Department published an Interim Final Rule in the Federal Register amending the International Traffic in Arms Regulations (ITAR) to add a license exemption regime for exports, reexports, transfers, and temporary imports of defense articles and defense services to and between Australia and the United Kingdom. The Interim Final Rule largely adheres to the Department’s May 1, 2024 Proposed Rule to ease ITAR license restrictions imposed on such transactions to and between the two countries, thus entrenching the objective of closer defense trading per the trilateral security partnership known as AUKUS, which was established in 2021 (see Update of May 2, 2024). The Interim Final Rule went into effect September 1, 2024.

Scope of the Interim Final Rule

Like the earlier Proposed Rule, the Interim Final Rule adds a new section to ITAR, § 126.7, which states: “No license or other approval is required for the export, reexport, retransfer, or temporary import of defense articles, the performance of defense services, or engaging in brokering activities” to and between Australia and the United Kingdom subject to certain restrictions and conditions. For example, as initially envisioned by the Proposed Rule, § 126.7 still requires that such activities “be [directed] to or within the physical territory of Australia, the United Kingdom, or the United States.” Additionally, the exporter/transferor and recipient must be “authorized users,” meaning a U.S. person registered with the Department’s Directorate of Defense Trade Controls (DDTC) and not debarred, or an Australian or United Kingdom person approved by DDTC and so “identified through the DDTC website.” As noted in a Department press release, therefore, the Interim Final Rule, like the Proposed Rule, will ensure “[t]he vast majority of defense articles and defense serviced described [i]n the [ITAR] are eligible…via the § 126.7 exemption.”

Still, the Interim Final Rule introduces a few minor changes from the Proposed Rule. The Interim Final Rule most notably removes certain items previously listed in the new Excluded Technology List (Supplement No. 2 to Part 126 of the ITAR) that renders certain defense articles and defense services ineligible for the special treatment conferred by § 126.7.

Public Comment

Although the Interim Final Rule went into effect September 1, 2024, the State Department seeks public comments to further clarify and refine the ITAR exemption for AUKUS. Comments must be received by DDTC no later than November 18, 2024, and should be filed using the federal rulemaking portal (www.regulations.gov) under Docket DOS-2024-0024. Alternatively, comments can be sent to the State Department via email to DDTCPublicComments@state.gov with the subject line: “Australia, the United Kingdom, and the United States ITAR Exemption.”