Defence Trade Controls Act 2012 – What should research institutions and high-technology companies be doing?
If the best defence is a good offence, then research institutions and high-technology companies should be auditing their activities and implementing compliance measures now to ensure they don’t run into difficulties with the new export control regime under the Defence Trade Controls Act 2012 (Cth) (Act).
Publishing your work, making a phone call to an international collaborator, or sending an email to a colleague overseas may be regulated under the Act if your subject matter is military or ‘dual-use’ (having both civilian and military applications).
The Act allows for staggered implementation of provisions (generally over two years from a date yet-to-be-fixed) and a pilot program, specifically to enable affected organisations time to comply and for the impact of the regime to be assessed (and possibly tweaked) before penalties are applied.
However, once the penalties kick in, they are severe. Non-compliers face prison terms up to 10 years and fines in the $100s-of-thousands.
Therefore, the grace period should be used as an opportunity to prepare, not to procrastinate.
Australia has regulated exports of military and dual-use goods since the 1990s. Controlled goods are listed on the Defence and Strategic Goods List (DSGL, see: www.defence.gov.au/deco/dsgl.htm), with Part 1 of the list controlling ‘military’ items and Part 2 controlling ‘dual-use’ items.
However, one glaring hole in Australia’s export regime – particularly when compared with those of like-minded countries – was its failure to regulate intangible transfers of related information. For example, under the previous controls one could upload onto the internet and make available to people in other countries software for the construction and use of DSGL goods, but it would be an offence to post a CD containing that software to the same people without an export licence. The new regime closes this loophole by regulating the transfer of what is called ‘intangible technology’ from Australia to other countries. The new Act also makes it an offence to publish or disseminate such information.
A permit system and offences are also introduced regulating the brokering of DSGL items, where a person in Australia arranges for the supply of DSGL items between two places outside Australia.
The changes aren’t all about stricter controls. For those dealing in the import and export of military goods and intangibles (those listed under the US ‘ITAR’ regime and on Part 1 of the DSGL), an ‘Approved Community’ system is introduced under which accredited Australian organisations and individuals can more freely trade such items with accredited US members of the Approved Community. This will not be relevant to organisations which deal with dual-use items, nor will it assist with exports to countries other than the US.
The introduction of the Act has been dogged by controversy and concerns, particularly from the research sector, regarding the administrative burden represented by complying with the new controls and fear that international collaborators may now avoid Australia (as some do the US) as ‘too hard’, leading to loss of globally competitive research and development in fields of national security significance.
The research sector favoured an up-front exception for supply of intangible information occurring in the course of ‘fundamental research’ (basic and applied). However, the Department of Defence (Defence) successfully lobbied for its favoured model, under which exchange of information is allowed freely within Australia (even to foreign nationals, relying on immigration controls regarding who enters the country), but all supplies of information out of Australia are subject to control.
Details of the pilot program under the Act are yet to be released. There is the potential for affected organisations to nominate to be involved in this.
Research institutions and high-technology companies can take the following steps to go on the front foot in implementing compliance with the new export controls.
Audit activities
Undertake an internal review of fields of research, development, manufacture or export (including intangible export) against the list of controlled subject matter on the DSGL, to identify projects or business activities which may be subject to regulation.
Compliance protocols
Implement protocols (in a similar manner to ethics approval procedures, or pre-publication reviews) for assessing and reviewing potentially regulated projects and activities to identify when permits are required before ‘exports’ (including intangible exports) or publication are inadvertently undertaken.
Permits
Where necessary, apply to the Defence Export Control Office (DECO, see www.defence.gov.au/deco/default.htm) for the appropriate export permits.
Training
Train staff to raise awareness of export controls and ensure compliance with your protocols.
Take advice
If in doubt, contact DECO or obtain advice on how to proceed.