Updated January 4, 2024
U.S. Arms Transfer Restrictions and AUKUS Cooperation
On September 15, 2021, Australia, the United Kingdom
of the AECA (22 U.S.C. §2776) requires the President to
(UK), and the United States announced an “enhanced
submit a formal notification of such transactions to
trilateral security partnership,” named AUKUS after the
Congress before issuing a Letter of Offer and Acceptance
participating countries. The partnership consists of two
for an FMS transfer or an export license for a DCS transfer.
lines of effort, known as pillars: Pillar One is to provide
The executive branch may not proceed with such transfers
Australia with a nuclear-powered submarine capability.
if Congress adopts a joint resolution of disapproval within
Pillar Two is jointly to develop “advanced military
an AECA-prescribed time period. In addition, 10 U.S.C.
capabilities.”
§8677 requires the transfer of any naval vessel that exceeds
Arms Exports Background
3,000 tons or is less than 20 years of age to be “specifically
authorized by law.” Section 1352 of the National Defense
U.S. participation in Pillar Two may require the transfer of
Authorization Act for Fiscal Year 2024 (NDAA; P.L. 118-
items or information via Foreign Military Sales (FMS), a
31) exempts exports of from the AECA Section 36 and 10
term that refers to the sale of U.S.-origin defense articles,
U.S.C. §8677 requirements.
equipment, services, and training (hereinafter referred to as
“defense articles”) on a government-to-government basis.
License Exemptions
Such participation may also require U.S. government-issued
The AECA and the ITAR exempt certain exports from
export licenses for Direct Commercial Sales (DCS), a U.S.
some licensing requirements. The AECA and the ITAR also
program for registered U.S. firms to sell defense articles
authorize export license exemptions for certain projects
directly to eligible foreign governments and international
undertaken pursuant to governmental agreements.
organizations. U.S. participation in AUKUS Pillar One is
Defense Trade Cooperation Treaties
governed by different laws and regulations. (See CRS In
Defense Trade Cooperation Treaties, which entered into
Focus IF11999, AUKUS Nuclear Cooperation, by Paul K.
force in April 2012 and 2013 with Australia and the United
Kerr and Mary Beth D. Nikitin, and CRS Report RL32418,
Kingdom, respectively, exempt certain DCS transfers to
Navy Virginia (SSN-774) Class Attack Submarine
(and retransfers among) approved communities of
Procurement: Background and Issues for Congress, by
Australian and British end users from export licensing
Ronald O'Rourke.)
requirements. 22 C.F.R. Part 126.15 specifies that license
The FMS and DCS processes are statutorily governed by
applications for exporting defense articles to Australia or
the Arms Export Control Act (AECA; P.L. 90-629, as
the United Kingdom “will be expeditiously processed” by
amended; 22 U.S.C. §§2751 et seq.) and the Foreign
the State Department “in consultation with” DOD. The
Assistance Act of 1961 (FAA; P.L. 87-195, as amended; 22
ITAR also contains provisions governing exports pursuant
U.S.C. §§2151 et seq.). The Department of State
to the treaties; these provisions include specific
administers the AECA through the International Traffic in
requirements regarding such matters as consignees,
Arms Regulations (ITAR; 22 C.F.R. Parts 120-130), which
marking of exported items, and record-keeping. The
also establishes licensing policy for the export of defense
regulations also detail congressional notification
articles and contains the U.S. Munitions List (USML), a list
requirements covering exports pursuant to these treaties.
of controlled defense articles. The ITAR do not apply to
These treaties may not cover all envisioned AUKUS
FMS transactions.
technology cooperation because the treaties exempt certain
The Department of State’s Office of Regional Security and
defense articles from their scope. Moreover, the treaties
Arms Transfers, in the Bureau of Political-Military Affairs
currently cover fewer defense articles than when the treaties
(PM), oversees FMS transactions; DOD’s Defense Security
entered into force because, as a result of Obama
Cooperation Agency (DSCA) implements specific FMS
Administration-initiated changes to U.S. export controls,
cases. The State Department’s Directorate of Defense Trade
the Department of Commerce now controls exports of those
Controls (DDTC), also in the PM Bureau, issues and
articles. U.S. regulations may permit only FMS transfers of
administers licenses for commercial sales. AECA Section
some sensitive AUKUS-covered technology items. (See
38(j)(1)(C) limits the scope of items that the United States
CRS In Focus IF12425, Defense Primer: International
can include in Defense Trade Cooperation Treaties, such as
Armaments Cooperation, coordinated by Luke A. Nicastro.)
those described below. State Department officials have
Canadian Exemption
identified the role of the Defense Technology Security
22 C.F.R. Part 126.5(a) permits “the permanent and
Administration (DTSA), which manages risks from the
temporary export” of certain unclassified defense articles to
international transfer of defense technology and critical
Canada without an export license. Canadian recipients must
information, as particularly important for Pillar 2 activities.
be “Canadian Federal or Provincial governmental
FMS and DCS transfers meeting certain monetary value
authorities acting in an official capacity” or a “Canadian-
thresholds are subject to congressional review. Section 36
registered person.” Some ITAR requirements, such as
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U.S. Arms Transfer Restrictions and AUKUS Cooperation
license eligibility provisions contained in 22 C.F.R. Part
Sweden. Part 126.14 describes, as well as specifies
120.1(c) and Part 120.1(d), still apply to such exports.
requirements for obtaining, four comprehensive export
authorizations: Major Project Authorization; Major
The Canadian exemptions include provisions governing
Program Authorization; Global Project Authorization; and
non-Canadian entities. For example, retransfers to non-U.S.
Technical Data Supporting an Acquisition, Teaming
destinations of items exported pursuant to these exemptions
“must in all instances have the prior [DDTC] approval.”
Arrangement, Merger, Joint Venture Authorization.
This requirement also applies to retransfers within Canada.
International Armaments Cooperation
In addition, a U.S. person must obtain an export license for
The AECA exempts activities contained in International
an exempted defense article if the exporter “has knowledge
Armaments Cooperation (IAC) agreements from certain
that the defense article … is being exported for use other
AECA reporting and export license requirements. Such
than by a qualified Canadian-registered person or for export
agreements comprise a range of research, development,
to another foreign destination.”
testing, and evaluation (RDT&E); procurement; and
sustainment partnerships between DOD and foreign
Reacting to State Department-described past
“unauthorized” exports and re
governments, militaries, or commercial entities. According
-exports of U.S.-origin
to DSCA, IAC activities entail “interfacing with
defense articles to Canada, the State Department announced
international partners during the research, development,
revisions to the Canadian exemption in April 1999. These
revisions included “removal of the exemption for severa
test, and evaluation … and production phases of the U.S.
l
systems acquisition process.”
USML items.” The two governments subsequently
IAC programs use bilateral or
multilateral agreements with participating governments to
announced in October 1999 that Canada had agreed to
improve Ottawa’s export controls in exchange for U.S.
authorize, scope, and manage particular programs and
revision of Washington’s controls. Following Canada’s
projects. Pursuant to AECA Section 27(g), FMS and DCS
transactions governed by IAC agreements with NATO
implementation of such improvements, the State
countries are exempt from some congressional review
Department announced in 2001 an ITAR amendment
expanding “significantly the scope of the Canadian
requirements. 22 C.F.R. Part 126.4 exempts from AECA
licensing requirements the “export, reexport, retransfer, or
exemption.”
temporary import of a defense article or the performance of
AECA Section 38(j)
a defense service,” pursuant to an IAC agreement with any
AECA Section 38(j)(1)(A) authorizes the President to
government.
“exempt a foreign country” from AECA export licensing
Pillar Two Implementation
requirements if the United States “has concluded a binding
bilateral agreement with the foreign country.” This
Assistant Secretary of State Jessica Lewis testified on May
24, 2023, that the State Department will implement an
provision does not apply to existing licensing exemptions
initial interim measure, named the AUKUS Trade
for exports to Canada or pursuant to the Defense Trade
Authorization Mechanism (ATAM), to establish license
Cooperation Treaties. AECA Section 38(j)(2) mandates that
exemptions for certain exports to approved entities within
such an agreement require the foreign government to
implement changes necessary for establishing “an export
AUKUS countries. Noting that the “vast majority of U.S.-
Australia defense trade occurs via FMS,” Lewis explained
control regime that is at least comparable” to U.S. “law,
that ATAM will permit “most items that would typically be
regulation, and policy” governing transfers and retransfers
transferred under FMS authorities” to be “transferred under
of both tangible and intangible exports, including defense
DCS authorities.” As noted above, only DCS transactions
articles.
are eligible for export license exemptions. Lewis noted that
AECA Section 38(j)(3) requires the President to, at least 30
the United States also intends to request commitments from
days before exempting a country from AECA export
Australia and the United Kingdom “on shared standards for
licensing requirements, transmit to the House Foreign
the protection of defense information and materials
Affairs Committee and the Senate Foreign Relations
consistent with” applicable U.S. standards.
Committee a certification that the United States and the
Section 1343 of the NDAA adds a subsection to AECA
foreign government have entered into a bilateral agreement
Section 38 requiring the President, after certifying to
meeting the above-described requirements. Similarly,
Congress that Australia or the UK “has implemented
AECA Section 38(f)(2) stipulates that the President may not
standards for a system of export controls” satisfying all
exempt a country from AECA export licensing
elements of AECA Section 38(j)(2)(A) and certain elements
requirements unless the President has transmitted a report to
of AECA Section 38(j)(2)(B), to exempt DCS transfers
the same committees that describes the exemption’s scope
“between the United States and that country or among the
and contains an Attorney General determination that a
United States, the United Kingdom, and Australia” from
bilateral agreement concluded pursuant to Section
export licensing requirements. NDAA Section 1343 also
38(j)(1)(A) “requires the compilation and maintenance of
exempts retransfers pursuant to this exemption from the
sufficient documentation” concerning exports of U.S.-
certification and congressional review requirements
origin defense articles “to facilitate law enforcement efforts
to detect, prevent, and prosecute criminal violations.”
contained in AECA Section 3(d)(1-3).

Special Comprehensive Export Authorizations

Under ITAR 22 C.F.R. Part 126.14, the DDTC issues
Paul K. Kerr, Specialist in Nonproliferation
special comprehensive export authorizations for certain
Ilana Krill, Research Assistant
“commercial export endeavor[s]” involving registered U.S.
exporters and NATO members, Australia, Japan, or
IF12483
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U.S. Arms Transfer Restrictions and AUKUS Cooperation


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https://crsreports.congress.gov | IF12483 · VERSION 4 · UPDATED

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