US legislation to allow the sale of nuclear-powered submarines and expedite defence and advanced technology transfers and investment with Australia has passed US Congress, leaving only President Joe Biden to sign off.
The passage on Friday morning of a $1.3 trillion US Defence spending bill containing the provisions means “AUKUS can go ahead”, Prime Minister Anthony Albanese said.
It will also see Australian companies treated as domestic suppliers to the US government in certain situations, unlocking a new investment stream in critical minerals and technologies.
The 2024 National Defense Authorization Act (NDAA) passed by US Congress on Friday includes a national exemption from US export control licencing requirements for Australia, allowing the transfer of controlled goods and technology between AUKUS nations without an export licence.
According to the text of the NDAA, an “anticipatory release policy” will be created for the transfer of AUKUS Pillar I and II technologies – the latter including advanced capabilities like quantum, cyber and hypersonics.
It will be created for Australia through the existing Foreign Military Sales that the US uses to sell some foreign countries US defence technology and services.
The new US policy will cover sensitive exports that aren’t covered by an exemption under the International Traffic in Arms Regulations (ITAR), effectively bypassing the tight export control that stood as a barrier to AUKUS tech and information exchanges.
US officials will also be required to provide a response to Foreign Military Sales requests within 45 days in an effort to speed up the overall process.
Defence minister Richard Marles is attempting to overhaul Australia’s Defence Trade Controls Act to bring it in line with the US system. But the changes have been criticised by Australian researchers and dual use technology companies because it will add barriers to working with non AUKUS partners.
The Australian export controls bill is currently before a Senate committee, expected to report by April.
“We are on the precipice of historic reform that will transform our ability to effectively deter, innovate, and operate together,” Mr Marles said on Friday.
The US bill also adds Australia and the United Kingdom to Title III of the US Defense Production Act, effectively treating companies from the foreign countries as a US domestic source.
The 70-year-old US law allows the US President to order private industry to produce crucial equipment and supplies in an emergency.
Appropriations to its associate fund have been as high as $US 1.5 billion, with the money having been used to fund non-defence production like critical minerals. But Australian organisations have needed to be based in the US or Canada to access the funding.
The passage of the defence bill on Friday paves the way for the US government to invest directly in Australia-based miners and defence technology contractors for the first time.
Prime Minister Albanese and President Biden committed to the plan on the sidelines of the G7 in Japan in May.
The NDAA also approves the transfer of three Virginia class submarines to Australia as a stop gap until newly designed nuclear powered submarines are built.
It also allows Australian contractors to train in US shipyards to support the development of Australia’s submarine industrial base and creates a mechanism for Australia to pay for the development of the US submarine industry, with the first payment reported to be $3 billion.
The Act also introduces a reporting requirement in the US on AUKUS progress, including Pillar II technologies. The first will be released within a year and then every two years afterwards.
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