Export Control Exemptions Facilitate US Defense and Sensitive Technology Trade With Australia and the UK

Overview

In support of the defense partnership between Australia, the United Kingdom, and the United States, over the last two years, the U.S. Department of State and the U.S. Department of Commerce have taken significant steps to remove regulatory obstacles to trade in defense articles, defense services, and other export-controlled items among these countries.

Specifically, the State Department, through its Directorate of Defense Trade Controls (DDTC), amended the International Traffic in Arms Regulations (ITAR), including most recently in a final rule published on December 30, 2025, to:

• Add a new exemption to licensing requirements for most trade in defense articles and defense services among Australia, the UK, and the United States (modified in the final rule)
• Add a list of particularly sensitive defense articles and defense services excluded from eligibility for transfer under the new exemption
• Add a separate exemption for reexports, retransfers, or temporary imports of defense articles to support the armed forces of Australia, the UK, and the United States (added in the final rule)
• Add an expedited licensing process for nonexempt exports of certain defense articles and defense services to Australia, the UK, and Canada
• Add to the scope of the existing exemption for intracompany, intraorganization, and intragovernmental transfers to allow for the transfer of classified defense articles to certain dual nationals who are citizens of Australia or the UK and another country (modified in the final rule)

In parallel, the Commerce Department, through its Bureau of Industry and Security (BIS), amended the Export Administration Regulations (EAR) to:

• Remove licensing requirements for exports, reexports, and transfers (in-country) to or within Australia or the UK for a range of technologies
• Expand the availability of license exceptions for Australia and the UK
• Reduce the scope of end-use and end-user-based license requirements for Australia and the UK
• Remove controls for certain spacecraft and related items for exports and reexports to Australia, Canada, and the UK

With these changes, the EAR’s treatment of Australia and the UK now largely aligns with that of Canada.

Background

In September 2021, the United States, Australia, and the UK established the AUKUS partnership to build on long-standing ties and support mutual security and defense interests. A central goal of the partnership is enhanced collaboration and development of each country’s industrial base in the areas of autonomy and AI, advanced cyber, hypersonics and counter-hypersonics, electronic warfare, quantum technology, and undersea warfare.

In the National Defense Authorization Act for Fiscal Year 2024 (FY24 NDAA), Congress amended the Arms Export Control Act to implement the objective of streamlining commercial trade of U.S. defense articles and defense services among the AUKUS partners. Specifically, Section 1343 of the FY24 NDAA, codified at 22 U.S.C. § 2778(l), required the president, following a determination that Australia and the UK have implemented export control systems comparable to the United States, to immediately exempt most defense exports and transfers among the AUKUS partners from certain licensing or other approval requirements. Additionally, Section 1344 of the FY24 NDAA, codified at 22 U.S.C. § 10423, called for the State Department to establish an expedited licensing process for export to Australia, the UK, and Canada of defense articles and defense services not covered by the new exemption or another under ITAR.

State Department Actions

On May 1, 2024, DDTC issued a proposed rule to amend the ITAR to implement the directives in the FY24 NDAA, effective upon the president’s certification regarding Australia’s and the UK’s comparable export control systems. The proposed rule discussed the State Department’s intent to make three amendments to the ITAR (as well as other conforming revisions):

• Add a new exemption at § 126.7 providing that no license or other approval is required for the export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among designated “authorized users” within the AUKUS partnership provided certain requirements and limitations are met (including those broadly applicable under § 120.15 to all ITAR exemptions). The exemption covers most commercial defense trade between and among the AUKUS partners, but it also enables the United States to exclude from exemption certain particularly sensitive defense articles and defense services, as detailed in a new Supplement No. 2 to Part 126 (the Excluded Technologies List or ETL).
• Amend an existing exemption in § 126.18 regarding intracompany, intraorganization, and intragovernmental transfers to allow certain dual nationals of Australia and the UK to receive classified defense articles without a separate license from DDTC, subject to restrictions.
• Revise § 126.15 to reflect the expedited licensing review process required by Section 1344 of the FY24 NDAA.    

On August 15, 2024, the State Department provided the certification to Congress that Australia and the UK have export control systems comparable to that of the United States and have implemented a reciprocal export exemption for U.S. entities, thereby triggering the new licensing exemption. 

Shortly thereafter, DDTC issued an interim final rule, in force as of September 1, 2024, containing revisions to the text of the new exemption, the ETL, the expedited licensing scheme, and other affected ITAR provisions. 

On December 30, 2025, DDTC issued a final rule making additional modifications to the interim final rule. The most significant changes in the final rule are:

• Adding Australian and UK government departments and agencies as authorized transferors, recipients, or brokers under § 126.7(b)(2).
• Adding a new exemption (§ 126.7(c)-(d)), subject to limitations, for certain reexports, retransfers, or temporary imports of defense articles to support the armed forces of Australia, the UK, or the United States, wherever located. This new exemption is intended to provide additional flexibility given that the primary exemption under § 126.7 (now § 126.7(a)-(b)), in conformance with 22 U.S.C. § 2778(l), is scoped to cover only activity within the physical territory of Australia, the UK, or the Unites States.

Of note, the final rule also provides details on the implementation of the new regulations. Since the exemption went into effect in September 2024, more than 700 entities from Australia and the UK have registered as “authorized users.” Additionally, State Department data reflects that approximately 18% of proposed transfers to Australia and the UK are not eligible for the exemption because of the ETL and, thus, must follow normal licensing procedures. These licensing applications have an average processing time of 16.6 days under the expedited review procedures.

Commerce Department Actions

Though not explicitly required by the FY24 NDAA, BIS implemented complementary changes to the EAR.

On April 19, 2024, BIS published an interim final rule whereby BIS brought Australia and the UK into near parity with Canada in terms of preferential treatment under the EAR. BIS removed from the EAR licensing requirements for exports, reexports, and transfers (in-country) to Australia and the UK related to:

• National security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) controls
• Military commodities controlled under ECCN 0A919
• Military end-use and end-user-based restrictions for certain cameras, systems, or related components detailed under § 744.9(a)(1)(i) and (a)(1)(iii)
• Hot section technology for the development, production, or overhaul of commercial aircraft engines, components, and systems controlled under ECCN 9E003.a.1 through a.6, a.8, .h, .i, and .l

At the time of issuance, BIS estimated these changes would affect more than 1,800 existing licenses. 

In October 2024, BIS issued an additional final rule removing licensing requirements for exports to Australia, Canada, and the UK of certain items involving remote sensing or space-based logistics, assembly, or servicing spacecraft. BIS estimated this would result in a further reduction of 90 license applications annually. 

Australia and UK Regulatory Changes

Paralleling the changes in U.S. law and regulation, both Australia and the UK have schemes to exempt from licensing requirements most defense exports to the other partners. Specifically, Australia implemented a “license-free environment” for the United States and UK through the Defence Trade Controls Amendment Act 2024, and the UK implemented the AUKUS Nations Open General License.

Conclusion

Overall, these regulatory amendments enable more robust commercial trade in defense articles, defense services, and other export-controlled items between and among Australia, the United Kingdom, and the United States, while still reserving for each government the ability to protect particularly sensitive technologies. Although various qualifications and restrictions remain in place, many U.S. companies in the defense industry and other sensitive technology industries will face fewer regulatory and compliance burdens associated with doing business with counterparties in Australia and the UK.