The leniency period under the Defence Trade Controls Act 2012 is over. Are you up to speed with your obligations?
If you or your organisation supplies goods or services outside of Australia, you may need to check whether you are required to apply for an export permit under the Defence Trade Controls Act 2012 (DTCA).
The DTCA regulates the export of goods and services that are either for military purposes or that may have both civilian and military operability (“dual use”). Goods and services that are categorised as only being for military purposes are listed in Part 1 of the Defence and Strategic Goods List (DSGL) while those which are controlled for export purposes and have dual use functionality are listed in Part 2 of the DSGL.
If you already export goods or services under the DTCA, you may be aware of the changes that are about to come into effect.
If your exports are in the form of intangible goods and you have not previously needed to consider whether you required a permit to export, now is the time to seek advice on what your obligations are.
Enforcement of new provisions
From 2 April 2016, the new offence provisions under the DTCA will become operative (after a trial period of some 12 months). The new rules apply to publications (making available in the public domain), brokering (through a third party) the supply of goods and services, and to the export of goods or services in an intangible form.
If the goods or services you have been exporting previously required a permit, you will now also require a permit to export if you supply those goods or services in an intangible form.
If you did not previously require a permit on the basis that your exports were in an intangible form, you will now require a permit.
In either case, the leniency period is over.
What constitutes an intangible form?
A supply of goods or services in an intangible form means that the information relating to those goods or services is supplied via electronic communications such as by email, or file transfer. Verbal communications are exempt, so you can still breathe easy on that phone or VOIP call - so long as it is not recorded as part of the process!
From a business perspective it is important to note that even if the intangible form of the goods or services supplied are not actually exported but are made available to persons outside Australia via the use of e-rooms or other data rooms where a password is provided, the provision of that password will trigger the requirement that a permit be obtained and, if the permit is not obtained, will be an offence under the Act.
What are the penalties and to what do they apply?
The penalties apply to any person who exports without a permit, goods or services that are listed on the DSGL. The penalties are tough – 10 years gaol and/or $450,000. The definition of “person” includes body corporates as well as individuals. The same penalty applies if the export of the goods or services is in an intangible form. The prohibition includes any publication of DSGL goods or services to the public or a section of the public, by electronic means.
Are there exceptions?
There are limited exceptions to the requirement that a permit be obtained.
Part 2 of the DSGL provides that “Controls on “technology” transfer do not apply to information “in the public domain”, to “basic scientific research” or to the minimum necessary information for patent application”. The Defence Export Control Office (DECO) notes on its website that “pre-publication such as a draft publication sent by email to a co-author for review will not require a permit”. As noted above, phone calls are exempt if not recorded. Sharing of information across an organisation which operates internationally is also not an offence.
If the exemptions do not apply, emails and file transfers of items listed on the DSGL will not be exempt.
The regularly updated DSGL is available on the DECO site at http://www.defence.gov.au/deco/. This site also provides links to the Department of Foreign Affairs and Trade (DFAT) site which lists countries, organisations and individuals that Australian exporters must not supply, or may only supply, with permission of DFAT.
Jenni Lightowlers, Partner
29 January 2016