(r)AUKUS Discussion in the Aerospace Industry

This week, September 16, Paris will host the biggest event of the year (sorry, Olympics) – World Space Business Week. Attendees will come from all over the world to discuss advances in commercial spaceflight and global satellite infrastructure. But representatives from Australian, British and American companies are likely to do the most talking.

Recent changes to US export controls will enable Australian, UK and US (collectively “AUKUS”) companies to exchange space and satellite-related technology, software, parts, components and equipment with virtually any country. No export control restrictions (OK, there are still some export control restrictions, but they are much less restrictive… sorry for the underlining, we just thought it was really important!)

Pursuant to a trilateral agreement reached by the organization in September 2021, the United States has reduced export requirements for commercial items under the Export Administration Regulations (EAR) and export requirements for defense items under the International Traffic in Arms Regulations (ITAR).

AUKUS partnership: a new era of defence cooperation

In April 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) eliminated license requirements, expanded exceptions, and reduced export controls for certain end uses or end users. The BIS announcement stated that “many commercially controlled items, Including some satellite related stuff (!!!)will now be eligible for export or re-export without a licence to Australia and the UK.” (Our emphasis obviously added in excitement).

On September 1, 2024, the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) published new ITAR rules (§126.7, for those keeping accounts at home) and related changes that will allow most items on the United States Munitions List (USML)—the list of items restricted for export under the ITAR—to be exported to Australia and the United Kingdom without a license. The interim final rule is intended to streamline defense trade and strengthen technical cooperation between the United States, Australia, and the United Kingdom in areas such as defense articles and services, including satellite systems.

The DDTC regulations do exclude some items from the new free flow system. The Excluded Technology List (ETL) identifies a large number of controlled technologies that still require a license, even for export to Australia or the United Kingdom. Importantly for the space and satellite industries, the list does not exclude most launch technologies from license-free treatment, nor does it exclude unclassified satellite and spacecraft technologies. (1)

What does this mean for the satellite industry?

The space industry, and commercial satellites in particular, sits at the intersection of commercial and defense export controls. The resulting patchwork of compliance obligations can constrain companies and overburden legal and compliance resources. Now, BIS estimates that reduced controls will result in $7.5 billion in trade no longer subject to licenses. This relaxation, which encompasses both the Export Administration Regulations and the International Traffic in Arms Regulations, covers both commercial and defense export controls and will create unique and valuable opportunities for trilateral partners and the many countries with whom they work closely.

It is likely to be a hot topic of discussion in Paris this week.

footnote

(1) We note that the statements on the ETL are a summary of what is and is not listed therein. We strongly recommend that you review the list, verify your own export fact pattern, and consult an attorney if you have any questions.