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International Research, Defence & National Interest: Getting the Balance right

Defence Trade Controls Bill 2011 - Further consultation recommended

Overview

The university and research sectors can breathe an interim sigh of relief as further stakeholder consultation on the Defence Trade Controls Bill 2011 (Cth) ("Bill") is the key recommendation of a preliminary report presented to the Senate on 15 August 2012 ("Report") by the Foreign Affairs, Defence and Trade Legislation Committee ("Committee").

This gives rise to an opportunity for further participation in the development of strengthened export controls by interested parties, with a view to the Committee submitting its final report on revised legislation on 31 October 2012.

What the Bill does

The Bill (and its companion legislation, Customs Amendment (Military End-Use) Bill 2011):

  • introduces controls over the export of intangible defence and strategic goods ‘technology’ and ‘services’;
  • gives effect to a treaty with the US Government under which Australian and US members of an ‘Approved Community’ may trade in certain defence goods without requiring a separate licence for each trade;
  • creates a registration and permit regime for brokering defence and strategic goods; and
  • introduces a catch-all control over export of otherwise-unregulated goods which are destined for ‘military end-use’.

Concerns Raised

The Report acknowledges that complying with controls over the transfer of intangible technology and services to foreign nationals or out of Australia has the potential to significantly impact on the conduct of both international business and research.

The Committee is critical of the timing and breadth of consultation undertaken by the Department of Defence (“Defence”), particularly in relation to engagement with the university and research sector, and concludes that ‘more groundwork is needed to refine the proposed legislation’. Recommendations include the establishment of a roundtable and advisory panel of stakeholders to facilitate the design and implementation of the legislation, involving the Chief Scientist of Australia, Universities Australia and others.

Submissions received by the Committee from the university and research sector identify the value to Australia from international engagement in the course of research in fields that touch upon defence and strategic goods. The CRC Association submitted that the Bill, in its current form, makes it ‘difficult for Australia to operate at the forefront of these fields of national interest’. Concerns raised focus on the need to exempt exports occurring in the course of scientific research, the redundant regulation of ‘services’ (covered by controlling the supply of intangible ‘technology’), and the application of definitions, including the need to define the scope of ‘scientific research’ to encompass ‘applied’ as well as ‘basic’ research.

Revision of the Bill

Defence has proposed four options for revision of the legislation, with research sector stakeholders favouring an option under which public domain technology and most scientific research are exempted from the operation of controls upfront, while Defence favours an option under which supply is permitted to foreign persons within Australia (relying on border controls), but tighter controls are exercised over technology leaving Australia. Universities Australia contends that ‘the sheer volume of international collaborative activity in the digital age’ would see this option constraining ‘low risk research of high public value, with few obvious benefits to national security’.

The Bill is intended to safeguard national security and meet Australia’s obligations under various international treaties, including by remedying the current inconsistency of regulating defence and strategic goods exports, but not the export of related intangible technologies. However, stakeholders from the university and research sector will be seeking to balance these goals with the need to ensure Australia does not become an unattractive destination for research collaboration, leading to a loss of globally competitive research outcomes.

If you have any queries please contact Jenni Lightowlers or Anne Donaldson.

21 August 2012