BILLS DIGEST NO. 91, 2011–12, 22 February 2012

Defence Trade Controls Bill 2011

Nicole Brangwin
Foreign Affairs, Defence and Security Section
Paula Pyburne
Law and Bills Digest Section

Date introduced:  2 November 2011

House:  House of Representatives

Portfolio:  Defence

Commencement:  Sections 1 and 2 on the day of Royal Assent; sections 3–75 on the later of the day after the Royal Assent or the day on which the Treaty between the Government of Australia and the Government of the United State of America concerning Defense Trade Cooperation done at Sydney on 5 September 2007 enters into force.[1]

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The principal purpose of the Defence Trade Controls Bill 2011 (the Bill) is to give effect to the Treaty between the Government of Australia and the Government of the United States of America concerning Defense Trade Cooperation (the AS-US DTC Treaty).[2]  In addition, the Bill:

•       provides for controls on the supply of Defence and Strategic Goods List (DSGL) listed technology and services related to DSGL technology and goods

•       creates a registration and permit regime for the brokering of DSGL goods, technology and related services, and

•       creates offences and imposes penalties.

This Bills Digest should be read in conjunction with the Bills Digest for the companion Bill—the Customs Amendment (Military End-Use) Bill 2011.[3]

Background

The AS-US DTC Treaty was signed on 5 September 2007 by former Australian Prime Minister, John Howard, and former United States (US) President, George W Bush.[4]  The Implementing Arrangement for the AS-US DTC Treaty was signed on 14 March 2008, providing specific details about ‘how the obligations under the treaty will be implemented by the parties’.[5] The Treaty was tabled with the Joint Standing Committee on Treaties (JSCOT) on 14 May 2008.[6]  The Australian Parliament Joint Standing Committee on Treaties (JSCOT) considered the merits of the AS-US Treaty in 2008 and recommended that binding treaty action be taken.[7]

The United Kingdom (UK) also signed a DTC agreement with the US in June 2007.[8] Both the UK and Australian DTC Treaties remained in the US Senate Foreign Relations Committee for some time after they were introduced, as members sought greater detail on how the treaties would be implemented. Areas of concern included ‘how the treaty would be enforced and congressional involvement in monitoring arms trade and implementation of the treaty’.[9] The US Senate Foreign Relations Committee consented to the ratification of both the Australian and UK DTC Treaties on 29 September 2010.[10]

The US Senate passed the Resolution of Ratification for the Treaty on 29 September 2010.[11]  Once Australia has enacted legislation in line with the AS-US DTC Treaty requirements, the US President is expected to certify Australia’s compliance with the terms of the Treaty and an exchange of letters between the two countries will bring the Treaty into force.[12]  Implementation of the AS-US DTC Treaty has been delayed partly due to the specifics of the Treaty requiring further clarification and definition as well as the process involved with implementing changes via the parliaments of the respective State Parties.[13]

Purpose of the Treaty

The main purpose of the AS-US DTC Treaty is to remove certain agreed defence export restrictions between Australia and the US to establish a more cost efficient and productive system.

Under the current US defence export control system, the International Trade in Arms Regulations (ITAR),[14] licences are sought for every single trade transfer.[15]  The AS-US DTC Treaty will create a framework for two-way trade between Australia and the US, in specific defence articles, without the current need for an export licence for each item. This will be achieved by establishing an approved community of government agencies and private companies in each country to facilitate trade in defence articles without the administrative delays currently caused by US and Australian export control regulations.[16]

Australia’s export control system is administered under the Customs Act 1901 (Customs Act) and the Weapons of Mass Destruction (Prevention of Proliferation) Act 1995 (WMD Act). In particular, Customs (Prohibited Exports) Regulations 1958 authorises the Minister for Defence to maintain and publish the Defence Strategic Goods List (DSGL).[17] The Minister’s authority in this regard is provided under subsection 112(2AB) of the Customs Act.[18]

The most significant aspect of the AS-US DTC Treaty involves the Defence and Strategic Goods List (DSGL) which:

…identifies the goods which Regulation 13E of the Customs (Prohibited Exports) Regulations 1958 prohibits from being exported from Australia unless a licence or permission has been granted by the Minister or an authorised person and that licence or permission is produced to a Collector of Customs before exportation.[19]

The Department of Defence’s Defence Export Control Office (DECO) administers ‘controls on the export of defence and dual-use goods’ and authorises export permits and licenses for this purpose.[20]

The WMD Act, also administered by Defence, controls ‘the export or supply of goods, services and technologies that may contribute to a foreign military program, including WMD,’ and monitors exporters’ compliance with Australian export controls. Under the WMD Act, the Minister for Defence has the authority to ‘issue a notice prohibiting’ supply or to specify supply restrictions should the Minister deem the transfer likely to assist a WMD program.[21] The Minister for Defence has reportedly exercised this option under the WMD Act ‘every few months since late 2009’, most recently prohibiting supply of ‘scientific equipment’ to Pakistan.[22] On 13 October 2011, Defence announced a review of the WMD Act, appointing former Inspector General of Intelligence and Security, Mr Bill Blick AM, PSM as the Chair.[23] The review’s terms of reference (ToR) are extensive and are intended to consider the lessons learned from applying the WMD Act and the suitability of the ‘legislation and surrounding processes’ in reflecting ‘current regulatory best practice’. The review will also consider the impact of the Defence Trade Control legislation on the WMD Act.[24]

Mr Blick is expected to report his findings to Defence in the first half of 2012.[25]

Wassenaar Arrangement

In addition to implementing the AS-US DTC Treaty, this Bill introduces amendments which are said to be in line with commitments made by Australia within the multilateral arms and dual-use goods export control regime including the Wassenaar Arrangement (WA).[26]  As a long standing participant in the WA, Australia supported the adoption of two specific guidelines[27], the Elements for effective legislation on arms brokering[28], in 2003, and the Best practice guide for implementing intangible technology, in 2006.  The amendments would extend existing legislative controls on DSGL-related technology exported in a physical form, to the same technology transferred by intangible means including by word-of-mouth, facsimile, email and other electronic means.[29]

Basis of policy commitment

The introduction of this Bill into the Australian Parliament has come at a significant time in Australia‑US relations. The US President’s visit to Australia from 16–17 November 2011 marked the 60th anniversary of the ANZUS alliance.  During the visit there was a joint announcement that first, US forces will have a permanent presence in northern Australia over the coming years, and second, that there will be closer cooperation between the Royal Australian Air Force and the US Air Force resulting in increased rotations of US aircraft through northern Australia. It was stated that these initiatives will ‘increase interoperability between Australian and U.S. forces’.[30]

The Australian Government considers that implementation of the AS-US DTC Treaty would enhance interoperability between the respective armed forces by permitting:

… the licence-free export of defence goods and services, meeting security and regulatory requirements between the Australian and US Governments, and between Australian and US companies. It will significantly cut red tape and simplify processes for sharing equipment, information and technology between Australian and US defence companies. The treaty will deliver significant new opportunities for Australia’s defence industry to work cooperatively on sensitive defence technology projects and to compete jointly for major defence-related global supply chain contracts. It will boost Australian defence exports, supporting jobs and providing greater long-term stability for the Australian defence industry.[31]

Status of United Kingdom Defence Trade Cooperation agreement

The UK signed a defence trade cooperation agreement with the US in June 2007.[32] Like the AS-US DTC Treaty, it sets out a ‘framework for arms trade and technology transfer between the US and the UK’.[33] The UK-US Defence Trade Cooperation Treaty (UK-US DTC Treaty) was submitted to the US Senate in September 2007 and the Implementing Arrangements issued by the US State Department in February 2008. That same month, the UK Parliament ratified the UK-US DTC Treaty.[34]

The US Senate passed the Resolution for Ratification of the UK-US DTC Treaty on 29 September 2010, on the same date as the Resolution for Ratification of the AS-US DTC Treaty. As part of the Treaty process, the UK and the US conducted ‘pathfinder’ tests on seven simulated high profile projects to test combined military operations, and sustainment in terms of UK end use and export controls. The pathfinder tests aim to ‘explore the practical implications of the treaty in simulated project environments’. Due to the success of these tests, the UK and the US expect full implementation of the UK-US DTC Treaty by March 2012, following ‘final preparations for live cases’.[35] Pathfinder testing will not commence in Australia until the legislation implementing the
AS-US DTC Treaty has been enacted and has commenced.[36]

Committee consideration

The Bill has been referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee for inquiry and report by 12 April 2012.[37]

At the date of writing this Bills Digest, eight submissions had been received, although only seven had been published.  The issues raised in the submissions are discussed under the heading Main issues.

Policy position of non-government parties/independents

Liberal Party of Australia

During the June 2008 hearings of the Australian Parliament Joint Standing Committee on Treaties, Senator David Bushby raised concerns about compliance costs for businesses seeking to become part of the approved community, particularly small to medium size enterprises. Defence officials advised Senator Bushby that the estimated cost to industry would be around $50 million. This estimate was based on:

…the fact that many of the companies who would be involved in the approved community already have approval under DSB [Defence Security Branch] for the security level that is needed to do this. That does not mean that they do not have to set up separate record-keeping arrangements. They will have to do that. There is a compliance cost in that. For newer companies to become members of the approved communities who are not already DSB approved, of course there would be a cost for compliance. But of course that is where they made the treaty voluntary.[38]

Senator Simon Birmingham discussed the implications of ongoing costs to businesses under the terms of the AS-US DTC Treaty. Defence officials confirmed that there will be ongoing compliance costs for businesses in the approved community and that the issue had been raised by industry groups during the Treaty consultation process.[39]

This issue has been partly addressed in the Regulation Impact Statement for the Bill, which states that:

Defence recognises that it is difficult to quantify the direct impact on industry of enforcing compliance, as the costs will vary depending on many factors such as the size of the business, the extent of their existing exports of controlled goods, services or technology and/or the maturity of their business practices, including records management.[40]

Australian Greens

Prior to the 2010 Federal election, Leader of the Australian Greens, Senator Bob Brown promised to ‘review Australia's defence treaty with the US’.[41]

Position of major interest groups

Defence industry representatives have broadly welcomed the implementation of the AS-US DTC Treaty. For instance, the Australian Industry Group Defence Council has noted its ongoing support for the relaxation of the US ITAR system for over five years prior to the signing of the AS-US DTC Treaty.[42]

For companies like Raytheon, the delay in the AS-US DTC Treaty’s implementation has impacted one of its large Defence projects; the Air Warfare Destroyer (AWD). Raytheon has had to develop ‘ITAR compliant infrastructure’, such as ‘appropriate procedures, fire walls and air gaps to protect US data’ to progress the AWD project which will need to be amended once the Treaty comes into force. However, overall the company considers that the AS-US DTC Treaty will improve arrangements in the longer term.[43]

During the October 2010 sitting of the Foreign Affairs, Defence and Trade Legislation Estimates Committee, the then Secretary for Defence, Dr Ian Watt, welcomed the passing of the AS-US DTC Treaty resolution by the US Senate and noted that the Implementing Arrangements must now be progressed by Australia for the Treaty to enter into force. Dr Watt highlighted the benefits for Defence in:

…improved interoperability between the Australian Defence Force and the US Armed Forces in combined operation and training, improved cooperation on joint research projects and development activities, and expedited delivery of new defence projects and improved whole‑of‑life sustainment. For the defence industry, the treaty offers more efficient means of doing defence business with the United States by, for example, permitting Australian and US companies to share technical data without needing to apply for export licences. It will also offer industry greater opportunities to participate in defence contacts.[44]

Financial implications

According to the Explanatory Memorandum:

Funding for the scheme to implement the provision related to the Treaty has been provided as an administered appropriation to the Department of Defence.  There are no additional costs associated with the Bill beyond the costs already included in the current Budget and forward estimates to implement the Treaty.[45]

In addition, it would appear that for those businesses which choose to become members of an Approved Community, the ‘costs will vary depending on the size of the business, the extent of their existing exports of controlled goods, services or technology and/or the maturity of their business practices, including records management’.[46]

The Treaty implementation is subject to a Post Implementation Review within 24 months of the Treaty entering into force.  That review ‘will assess the actual costs and other impacts of the Treaty elements of the Bill’.[47]

Main issues

The main provisions in the AS-US DTC Treaty are as follows:

•       it provides for an ‘Approved Community’ of companies and individuals in Australia and US. In Australia, the community will include Government facilities, Government personnel, companies and individuals[48]

•       it removes the requirement for goods and technologies that are exported from the US to companies within the Approved Community in Australia to be granted an individual export licence[49]

•       it also allows for the subsequent transfer of those articles within the Approved Community without further US authorisation[50]

•       it prevents goods and technologies exported to the Approved Community in Australia from being re-exported or transferred outside of that community without subsequent approval by both Governments[51]

•       in Australia, all relevant legislation, including the criminal law and export control law will apply to the goods and technologies exported under the AS-US DTC Treaty[52]

•       both Governments will be obliged to investigate any suspected violations and inform the other party of the result of such investigations[53]

•       both Governments will consult at least once a year on the cooperative aspects of export controls, and to review the operation of the AS-US DTC Treaty[54], and

•       any disputes arising out of, or in connection with, the AS-US DTC Treaty are to be resolved on a bilateral basis and will not be referred to any court, tribunal or third party.[55]

Brokering registration

Boeing has expressed concern at the regulation of brokering.[56]  Of particular concern to Boeing, is that the provisions relating to broker registration and oversight are very broad and potentially capture persons and activities that are not significant from the perspective of Australia’s national security interests.[57]  According to Boeing, the Bill should ‘require that a broker controlled under this legislation be located in Australia.  As written, [subparagraph 15(1)(a)(i)] of the Bill could exert control over situations in which the parties’ nexus with Australia is tenuous[58]

Saab also took issue with the terms of the brokering offence created by clause 15 on the grounds that the term ‘arrange’ is undefined.[59], Saab is concerned that ‘even a tenuous link to a foreign transfer may be unintentionally caught’ citing as an example where:

... an Australian employee is asked by its foreign prime contractor to identify the delivery location for goods at the foreign end user’s premises (simply due to circumstances, eg time zones or a greater awareness on the part of the Australian person due to site experience). This is ‘arranging’ a transfer in one sense so, on its terms, would be subject to the need for a brokering approval, however it is assumed that this is not the intention.[60]

Although the term is not defined, the Explanatory Memorandum states that:

The term ‘arranges’ is intended to include, but is not limited to, circumstances where for a fee, commission or other benefit, a person acts as an agent or intermediary between two or more parties in negotiating transactions, contracts or commercial arrangements for the supply of DSGL goods or technology or provision of services related to DSGL goods or technology.[61]

The draft regulations provide a limited exemption from the offence provisions—that is, where the broker arranges for another person to provide defence services and that person holds a valid permit under clause 11.  It would seem therefore, that the provisions, as written, do intend to capture an activity carried out for a fee or commission which is not the subject of a permit under either clause 11 or clause 16.

Criminal offences

The Bill creates criminal offences with penalties of imprisonment for up to ten years.  Boeing has expressed its concern about those penalties, and suggests that the Bill be amended so that manufacturers of defence products who have unintentionally violated the offence provisions have a mechanism for reporting the violation.  This, they argue, ‘would give the Australian government the chance to determine for itself whether the violation has national security implications’ and would result in continuous improvement of compliance programs.[62]

Unfortunately such a provision would not be consistent with Article 13 of the AS-US DTC Treaty. In addition, the penalty is consistent with the penalty in the Customs Act 1901 for exporting goods listed in the DSGL without authorisation.

Record-keeping requirements

A number of submitters expressed concern that the record keeping requirements outlined in the Bill, appear onerous.  These include, but are not limited to, the requirement that approved members of the Australian Community must ‘make a separate record of each activity that the person does that is prescribed by the regulations’.[63]

The University of Sydney has stated that ‘eliciting the required information and assessing our levels of exposure relating to intangible transfers would be a time consuming and resource intensive task’.[64]  In this context, intangible transfers might include the intangible transfer of research results, papers, seminars, conferences, and instructions written or recorded, working knowledge, design drawings, models, operational manuals, skills training, potentially including the content of some post-graduate courses and catalogues.

According to Boeing, clarification is needed of the mechanics of the record-keeping requirements as a requirement for the creation of a separate record of each activity that a person does under a permit could amount to ‘thousands of entries’.[65]

Approved community

Boeing argues that the contents of subsections 27(1) and (2) contrast unfavourably with similar terms in the Treaty between the US and the UK on the grounds that in the UK an approved community is ‘facility specific’.  This means that a company may designate a single facility as its approved community—with the rest of the company’s sites and office being distinct from the approved community. This approach, they argue ‘provides cost savings and logistical flexibility’.  That being the case, Boeing recommends that the Government adopt a similar definition.[66]

It would appear that Article 4 of the AS-US DTC Treaty does allow for such an arrangement as it describes the Australian community as consisting of:

•       facilities of the Government of Australia that are located within the Territory of Australia

•       personnel of the Government of Australia meeting mutually determined criteria, and

•       specifically identified nongovernmental Australian entities and facilities located within the territory of Australia that meet mutually determined eligibility requirements, and certain employees of those entities and facilities.

However, the Bill as drafted does not appear to be facility specific.

Review process

The Australian Manufacturing Workers’ Union (AMWU) acknowledges that ‘the regulatory impact statement makes many [positive] predictions’ in relation to the implementation of the AS-US DTC Treaty.  However it cautions that ‘these anticipated benefits have an inherent and compelling, albeit perhaps naïve, logic’.[67]

The AMWU notes that the AS-US DTC Treaty has a built in review process undertaken 12–24 months after it comes into force and urges that ‘should the review find that the anticipated benefits have not been realised then appropriate and immediate remedial action should be undertaken’.[68]

However, US Trade and Export Control Services considers the intended review in a less positive light calling it ‘glib and disingenuous’ on the grounds that by the time the review is undertaken it will be ‘too difficult to rectify the existing deficiencies in the Treaty which via the Bill will have flowed through to Australian legislation.’[69]

Regulations

The Bill makes considerable reference to regulations.  Exposure drafts of the Defence Trade Controls Regulations 2012 have been made available for public and industry consultation.[70]  Where draft regulations have been made, they will be referred to in this Bills Digest the context of the provisions of the Bill.

Key provisions

The Defence Trade Controls Act (when enacted) will regulate dealings in items listed in the Defence and Strategic Goods List and dealings in items covered by the Treaty.  In addition, it will create offences for persons who engage in dealings relating to goods or technology listed in the DSGL or arrange for other persons to do so.

Part 1—preliminary matters

Part 1 of the Bill contains definitions of terms used in the Bill.  The definitions reflect the wording of the Treaty where relevant.  For example, clause 5 picks up the content of Article 3 of the Treaty to define the terms ‘Article 3(1) US Defence Article’ and ‘Article 3(3) US Defence Article’.

The Bill defines an ‘Australian Community member’ as a person covered by Article 4(1)(b) of the Defense Trade Cooperation Treaty, a body corporate that holds an approval under section 27 or a person who is employed, or is engaged under a contract for services, by that body corporate and who has satisfied the requirements set out in the regulations.  ‘Industry participation in the Australian Community will be voluntary. Companies that choose not to participate can continue to use the existing US and Australian licensing systems.’[71]  Draft regulations 4–10 set out the citizenship and security clearance requirements for such a person.  In addition draft subregulation 4(6) requires the Minister to assess whether the person is suitable to access US Defence Articles[72] based on whether the person has significant ties to a proscribed country.  In making that decision the Minister must consider the person’s history of travel to the proscribed country, the person’s recent or continuing contact with citizens of that country and whether the person has an allegiance to a person, or entity, in the proscribed country.[73]  The draft regulations also contain provisions in relation to the Minister’s assessment, the suspension or termination of the assessment and the Minister’s right to review whether a person has significant ties with a proscribed country at any time.  In addition, draft regulation 10 gives a person whose interests are affected by such a decision the right to internal review by the Minister and external review by the Administrative Appeals Tribunal (AAT).

Part 2—Defence and Strategic Goods List

Part 2 of the Bill creates offences for persons who engage in, or arrange for other persons to engage in, dealings relating to goods or technology listed in the DSGL.

Permits

Clause 11 allows a person to apply to the Minister for a permit to:

•       the supply to another person of technology relating to goods where the technology is listed in the DSGL

•       for the provision of defence services to another person in relation to goods listed in the DSG List, or

•       for the provision of defence services in relation to another person to technology relating to goods whether the technology is listed in the DSG List.[74] 

The Minister may give the person a permit if he or she is satisfied that the activity would not prejudice the security, defence or international relations of Australia: subclause 11(4).  The permit may cover more than one activity and may cover a specified activity for a period worked out in accordance with the terms of the permit: subclause 11(5).[75]

Clause 13 creates an offence of strict liability where a permit holder under clause 11 does an act, or omits to do an act, and the act or omission breaches a condition of the permit.  In that case the penalty is 60 penalty units.[76]

Notices

Clause 14 allows the Minister to issue a notice prohibiting a person from doing an activity—with or without conditions—if the Minister believes, or suspects, that the activity would prejudice the security, defence or international relations of Australia.  The relevant activities which are set out in paragraphs 14(1)(a)–(c) are expressed in the same terms as paragraphs 11(1)(a)–(c) (about permits).

The notice comes into force on the day the person receives it and remains in force for the period set out in, or worked by reference to, the notice.  The period should not exceed 12 months: subclauses 14(3) and (4).  However, during the currency of a notice, a further notice may be given to a person, coming into force on the day that the earlier notice ceases to be in force.  The Bill does not limit the number of further notices. 

Primary offences

Subclause 10(1) creates an offence where a supplier:

•       supplies to another person technology listed in the DSGL

•       the supply is either from a foreign person in Australia to a foreign person outside of Australia, or an Australian person to a foreign person

•       the supplier either does not hold a permit under section 11 or contravenes a condition of their permit, and

•       there is no notice in force under subclause 14(1).

Similarly, subsection 10(2) creates an offence where a provider:

•       provides defence services to another person in relation to DSGL goods or technology

•       the defence services are either provided outside Australia by an Australian person to a foreign person, or received in Australia by a foreign person, and

•       the provider either does not hold a permit under section 11, or contravenes a condition of a permit.

Subclauses 10(3) and (4) provide an exception to members of the Australian and United States Approved Communities from the offence created by subclauses 10(1) and (2) respectively where the relevant activity is carried out in accordance with the Treaty.  In addition, subclause 10(7) provides an exception to the offence provision in circumstances set out in the regulations.  Draft regulations 11–13 contain the following exceptions:

•       where the supplier of technology which is subject to the Defence Trade Controls Act (when enacted) holds a valid licence or permission under regulation 13E of the Customs (Prohibited Exports) Regulations 1958 and the supplier complies with the licence or permission

•       where the goods supplied under subsection 10(1) of the Defence Trade Controls Act (when enacted) are an Australian Defence Article, and

•       where the person who supplies technology under subsection 10(1) of the Defence Trade Controls Act (when enacted) is an employee of, or is engaged under contract by, an Australian High Commission or embassy, supplies the technology in the course of his or her duties and holds a current security clearance, issued by the Commonwealth Government.

A further offence is created by subclause 14(10) which provides that a person commits an offence where the person knowingly engages in an activity in contravention of a notice, or a condition of a notice given in accordance with subclause 14(1).

The penalty for the offences created by subclauses 10(1), 10(2) and 14(10) is imprisonment for ten years or 2500 penalty units.[77]

Brokers

Clause 19 provides that a person may apply to the Minister to be registered as a broker.  The Minister must make a decision to register the person as a broker if he or she is satisfied that the applicant is a fit and proper person: subclause 20(2).  The decision must be made taking into account the criteria set out in subclause 20(3) which includes, but is not limited to:

•       any conviction of the person of an offence against a law of the Commonwealth, a state, a territory or a foreign country punishable by imprisonment for 12 months or longer, if that offence was committed within the ten years immediately before the application for registration: paragraph 20(3)(a)

•       whether the person has previously breached a condition of registration as a broker, or had a registration as a broker cancelled: paragraph 20(3)(b)

•       the financial position of the person: paragraph 20(3)(d), and

•       any other matters that the Minister considers appropriate: subclause 20(3). 

The Minister must give the applicant for registration a notice setting out his or her decision on the application.  Where the Minister decides to register the person as a broker, the notice must set out the day on which the registration begins.  Registration is for a period of five years, unless the registration is cancelled earlier: subclauses 20(5) and (6).[78]

Clause 21 sets out the conditions under which a person may apply to renew his or her registration as a broker; and the circumstances in which the Minister must renew the registration.  Once again, the Minister is required to apply the test of whether the applicant for renew of registration is a fit and proper person, applying all of the criteria listed in subclause 21(5).

Notably, subclause 21(9) provides for current registration to continue in circumstances where the Minister has not made a decision on an application for renewal of registration—until the day that the person receives the Minister’s decision.  Clauses 22 and 23 empower the Minister to change registration conditions or to cancel the registration of a broker respectively.[79]

Permits

Clause 16 provides that a registered broker may apply to the Minister for a permit.  Under paragraphs 16(1)(a)-(d), the permits relate to:

•       arranging for another person to supply goods where the goods are listed on the DSG List

•       arranging for another person to supply technology relating to goods where the technology is listed in the DSG List

•       arranging for another person to provide defence services in relation to goods listed in the DSG List, and

•       arranging for another person to provide defence services in relation to technology relating to goods whether the technology is listed in the DSG List.[80]

The Minister may give the broker a permit as long as the Minister is satisfied that the arrangement would not prejudice the security, defence or international relations of Australia: subclause 16(4).  As with permits under clause 11, the Minister may impose permit conditions[81], change permit conditions[82] or revoke a permit altogether.[83]

Clause 18 creates an offence of strict liability where a registered broker does an act, or omits to do an act, and the act or omission breaches a condition of a permit approved under clause 16.[84]  In that case the penalty is 60 penalty units.

Brokering offences

Subclause 15(1) creates an offence where a registered broker does not hold a permit under clause 16 or contravenes a condition of a permit granted under clause 16 and the registered broker:

•       arranges for another person to supply goods where the goods are listed on the DSG List and the supply is from a place outside Australia to another place outside Australia

•       arranges for another person to supply technology relating to goods where the technology is listed in the DSG List and the supply is from a place outside Australia to another place outside Australia

•       arranges for another person to provide defence services in relation to goods listed in the DSG List and the defence services are to be received at a place outside Australia, and

•       arranging for another person to provide defence services in relation to technology relating to goods where the technology is listed in the DSG List and the defences services are to be received at a place outside Australia.

Subclause 15(4) provides an exception from the offence if the arrangements is for the supply of technology or goods from a Participating State of the Wassenaar Arrangement on Export Control for Conventional Arms and Dual use Goods and Technologies to another Participating State.

In addition, subclause 15(3) provides an exception in circumstances that are set out in regulations.  Draft regulation 14 provides that a broker does not commit an offence under subclause 15(1) of the Bill where the broker arranges for another person to provide defence services under that subclause, and the other holds a valid permit under section 11 of the Defence Trade Controls Act (when enacted).

The penalty for the offence created by subclause 15(1) is imprisonment for ten years or 2500 penalty units.[85]

Part 3—Defense Trade Cooperation Treaty

Part 3 of the Bill contains provisions implementing the Treaty—in particular the process for approving bodies corporate as members of the Australian Community referred to in Article 4(1)(c) of the Treaty. 

Approval process

The approval process, set out in clause 27, operates as follows:

•       the person must lodge a formal application in writing[86]

•       the Minister must make a decision, in writing, to either approve or refuse the application, and

•       in making the decision, the Minister must have regard to all the matters listed in subclause 27(3), including, but not limited to, whether:

–      the person has access to a facility which is, or is capable of being, accredited for storing and handling classified information and material

–      the person has been convicted of an offence, committed within the ten years immediately before the application for approval, of certain offences under Australian or US laws, and

–      the holding of the approval would prejudice the security, defence or international relations of Australia.[87]

•       the Minister must not approve the person as a member of the Australian Community unless the Government of the USA has agreed in writing to the giving of the approval: subclause 27(4).

Approval conditions

Where the Minister does approve the application, it is subject to any conditions specified in the approval, and to conditions that the person must:

•       allow an authorised officer to enter premises[88] for the purpose of finding out whether the person has complied with Part 3 or Part 6 of the Defence Trade Controls Act (when enacted) and any other condition of the approval: paragraph 28(1)(b)

•       comply with any conditions prescribed by regulations in relation to ‘Article 3(1) US Defence Articles’ or ‘Article 3(3) US Defence Articles’ or technology relating to ‘original goods’[89] under paragraphs 28(1)(c)–(f)

•       comply with regulations in relation to compliance reporting: paragraph 28(1)(g), and

•       comply with regulations in relation to Australian Defence Articles: paragraph 28(1)(h).

The draft regulations 15–23 set out the approval conditions in some detail including what process to be followed in the event of loss, theft or destruction of US or Australian Defence Articles, and the manner of marking those Articles.  In addition, draft regulation 24 requires an annual compliance report to be provided within 30 days after the end of each financial year in the form approved by the Secretary.

Once an approval has been given, the Minister may, by notice in writing, impose new conditions, remove, or vary a condition.  The notice must include reasons for the decision: subclauses 28(2) and 28(3).[90] 

Two offences arise from the granting of approval as a member of the Australian Community under clause 27.  First, a person who is the holder of such an approval commits an offence if the person does an act or omits to do an act; and the act or omission breaches one of the approval conditions set out in paragraphs 28(1)(c), (d), (e) or (f).  In that case, the penalty is 600 penalty units: subclause 28(4).[91]  Second, a person who is the holder of such an approval commits a strict liability offence if the person does an act or omits to do an act; and the act or omission breaches any of the approval conditions: subclauses 28(5) and (6).  In that case, the penalty is 300 penalty units—being equivalent to $33 000.

Where the Minister does not approve the application, the Minister must notify the person in writing of the decision and the reasons for the decision: subclause 27(6).[92]

Clauses 29 and 30 of the Bill give a broad power to the Minister to suspend, and/or to cancel an approval.[93] 

Clause 29 provides that the Minister may, by notice in writing, suspend an approval for the reasons listed in subclause 29(1).[94]  In that case, the Minister must also specify the period of suspension (which must not exceed 60 days) and the conditions for lifting the suspension.  Once those conditions are met the Minister may, by notice in writing to the approval holder, lift the suspension. The suspension is effective from the time the person receives the notice: subclauses 29(4) and (5).  In addition, the Minister may, by notice in writing, cancel an approval for the reasons listed in subclause 30(1).  Paragraph 30(1)(g) provides that the Minister may cancel an approval in circumstances prescribed by regulations.  However, the draft Defence Trade Controls Regulations 2012 do not contain any provisions relevant to this paragraph.

The cancellation takes effect at the time the person receives the notice.

According to the Explanatory Memorandum, clause 31 ‘implements Article 9 of the Treaty and section 9 of the Implementing Arrangement, which relate to the handling of US Defence Articles outside the Community or by Community members outside the Treaty’.[95]  Under the Treaty, the transfer and export of Defence Articles within the Australian and US Communities is allowed without the requirement for US or Australian export licences. Clause 31 creates offences for certain activities.  It operates to prevent and deter Defence Articles being moved outside of an Approved Community, or used for purposes other than those specified under the Treaty without prior authorisation. 

The relevant authorisation is contained in subclause 31(8) which empowers the Minister to give a notice to an Australian Community member, approving one or more supplies or the provisions of one or more defence services.

The following activities give rise to offences:

•       an Australian Community member either as a supplier of goods, or provider of defences services, dealing outside of Australian and US territory: subclauses 31(1) and (2)

•       an Australian Community member dealing in Australia, or the USA, outside the Treaty framework: subclauses 31(3) and (4), and

•       an Australian Community member dealing in Australia, or the USA, within the Treaty framework—but without an authorisation under subclause 31(8): subclauses 31(5) and (6).

Under subclause 31(7) regulations may prescribe circumstances in which the offence provisions do not apply.  The relevant regulations are draft regulations 25 and 26.  Specifically, draft subregulation 25(3) covers those circumstances where the receiver of a supply is an ‘intermediate consignee’.[96]  Draft regulation 26 sets out the process by which a person may apply to the Minister for approval as an intermediate consignee—in particular, under draft subregulation 26(4), the requirement that the person has a tracking system which is able to provide details of the movement of an article, its current location and the person who has control of that article. According to draft subregulation 26(7) approval as an intermediate consignee will but subject to the condition that the tracking system continues to meet the requirements which are specified in draft subregulation 26(4).

In each case, the penalty is imprisonment for ten years or 2500 penalty units (being equivalent to $275 000), or both.

Part 4—monitoring powers

Part 4 deals with monitoring compliance with Part 3 (the process for approving bodies corporate as members of the Australian Community) and Part 6 (record-keeping requirements).

Clause 39 empowers the Secretary to appoint certain persons, who have suitable qualifications and experience, as ‘authorised officers’ for the purposes of this Part.  An appointment must be in writing.  Either a member of the ADF who holds the rank of warrant officer or a higher rank, or an APS employee who hold the position of an APS6, or an equivalent or higher position in the Department, may be appointed.

Authorised officers must be issued with an identity card in the form, and containing the information, which is prescribed by regulations.[97] The identity card also must contain a recent photograph of the authorised officer: clause 40. 

Authorised officers have extensive ‘monitoring powers’ in respect of any person who holds an approval as a member of the Australian Community referred to in Article 4(1)(c) of the Treaty.  Under clause 41 an authorised person may enter certain premises to exercise the monitoring powers.  They are

•       any premises specified in the application for approval (or that the Minister has subsequently been informed of) as being premises at which ‘Article 3(1) US Defence Articles’ or ‘Article 3(3) US Defence Articles’ may be kept, or

•       any premises in Australia used, wholly or partly, by the person for the purposes of business operations of the person, except premises used as a place of residence.

The ‘monitoring powers’ of authorised officers are extensive.  They include the power to:

•       search the premises and anything on the premises

•       inspect, examine, take measurements of or conduct tests on anything on the premises

•       make any still or moving image or any recording of the premises or anything on the premises

•       inspect any document on the premises

•       make copies of any such document, and

•       take onto the premises such equipment and materials as the authorised officer requires for the purpose of exercising powers set out in this section in relation to the premises: clause 42.

There is no requirement for a warrant.  Approval as a member of the Australian Community referred to in Article 4(1)(c) of the Treaty (which is outlined in clause 27) provides the necessary consent for the exercise of these monitoring powers.

An authorised officer who has entered premises as outlined above, and who believes on reasonable grounds that a person present at those premises is capable of answering a question or producing a document about whether the holder of the approval has complied with Part 3, or Part 6, or a condition of the approval, may require the person to answer the question or produce the
document: clause 43.  The person commits an offence if the person fails to comply with that requirement.[98]  In addition, clause 44 provides that a person is not excused from answering the question or producing the document if doing so would tend to incriminate the person, or expose the person to a penalty.

Where an authorised officer enters premises under clause 41, the occupier of the premises, or a person who represents the occupier is entitled to observe the search which is conducts but that right ceases if the occupier or the other person impedes the search: clause 47.

Part 5—information-gathering powers

Part 5 of the Bill contains information-gathering powers.  Where the Secretary believes on reasonable grounds that a person has information, or a document, that is relevant to the operation of the Defence Trade Controls Act (when enacted), the Secretary may given that person a written notice requiring the person to provide the information or to produce the document: clause 52.  The person commits an offence if the person fails to comply with that requirement.[99]  Any such notice must set out the period within, and the manner in which, the information is to be given or the documents produced: subclause 52(2).  The notice period must be at least 14 days after the date that the notice was given: subclause 52(3).

Where the Secretary exercises this power, the Secretary may:

•       inspect and copy original documents: clause 54

•       retain copies of documents: clause 55, or

•       retain original documents for as long as is reasonably necessary: clause 56.

As under Part 4, a person is not excused from giving information or producing a document if doing so would tend to incriminate the person, or expose the person to a penalty: clause 57.

Part 6—record-keeping

Part 6 of the Bill contains separate rules about record-keeping by permit holders and by any person who holds an approval as a member of the Australian Community referred to in Article 4(1)(c) of the Treaty.  The form of these records may be prescribed by regulations: clause 58.  The person or the approval holder commits a strict liability offence if the person or the approval holder fails to comply with that requirement.[100]

Subclause 58(3) requires a person who holds an approval under clause 27 (that is approval as a member of the Australian Community) to make records of those activities that are prescribed by draft regulations 28 and 29.

Subclause 58(4) provides that the records which are made and retained under clause 58 must contain the information prescribed by regulation.  Draft regulation 30 sets out the information which must be contained in the records that are made and retained by permit holders who are registered brokers under subclause 16(1).

As in Parts 4 and 5, the Secretary may:

•       by written notice given to the person who is required to make records require the person to produce the records within the period and in the manner set out in the notice: clause 59

•       inspect the records and retain copies of all or part of the records: clause 60, and

•       retain the retains for as long as reasonably necessary: clause 61.

Clause 62 provides that a person is not excused from giving information or producing a document if doing so would tend to incriminate the person, or expose the person to a penalty.

Clause 69 operates so that information or a document provided to the Secretary under Part 5 and/or Part 6 as set out above may be disclosed to the following:

•       a Minister of the Commonwealth, a state or a territory

•       the head of a Commonwealth entity[101]

•       a state or territory entity

•       a foreign government entity[102], or

•       a person or entity specified by the Minister by legislative instrument.

The Secretary may only disclose the information to the persons listed above on the condition that the Secretary is satisfied that the recipient of the information will not disclose it to anyone else without the Secretary’s consent.

Part 7—review of decisions

Part 7 deals with the review of decisions under the Defence Trade Controls Act (when enacted).  Clause 63 lists those decisions which, when made by the Minister, are reviewable decisions.  These include, but are not limited to:

•       decisions under clause 11 to refuse to give a person a permit for an activity, to revoke a permit, or to impose a permit condition: paragraphs 63(a)–(c)

•       decisions under clause 16 to refuse to give a person a permit for an arrangement, to revoke a permit, or to impose a permit condition: paragraphs 63(d)–(f)

•       decisions under clauses 20, 21 and 23 in relation to the registration of a person as a broker: paragraphs 63(g)–(j), and

•       decisions under clauses 27–30 in relation to approval of a person as a member in the Australian Community: paragraphs 63(k)–(n).

Rights of review operate so that a decision made by a delegate of the Minister may be reviewed by the Minister.  A request for Ministerial review must be made in writing within 30 days (or a longer period if the Minister allows) of the date on which the person is informed of the decision: clause 64.

The Minister must give the person notice in writing of the review decision.  That decision may be to affirm the reviewable decision, vary it or set aside it aside and substitute another decision which the Minister thinks appropriate.  However, the notice must not disclose any reasons whose disclosure the Minister believes would prejudice the security, defence or international relations of Australia: clause 68.

Importantly, if the person who has requested the review does not receive notice of the Minister’s decision within 90 days after the date the request was made, the Minister is deemed to have affirmed the reviewable decision: subclause 64(8).

A person may apply for review of a decision made personally by the Minister, or a decision made by the Minister under clause 64 as outlined above, to the Administrative Appeals Tribunal: clause 65.

Part 8

Part 8 deals with various matters such as injunctions, forfeiture of things and delegations.

Clause 67 provides that a notice, permit or approval under the Defence Trade Controls Act (when enacted) must be given in the manner and in the time prescribed by regulations.  Draft regulation 31 allows for the giving of a notice, permit or approval, in person, by registered mail, by fax, email or other electronic means.

Importantly, clause 70 empowers the Minister to apply to the Federal Court of Australia for an order granting an injunction either restraining a person from engaging in certain conduct, or requiring the person to do a thing, in the event that the person has engaged, is engaging or is proposing to engage in conduct that would be an offence against the Defence Trade Controls Act (when enacted).

Clause 71 provides for the forfeiture to the Commonwealth of goods or any thing in which they are contained, if a person supplies, or attempts to supply, goods in contravention of the Defence Trade Controls Act (when enacted).  Forfeiture to the Commonwealth also occurs if a person supplies, or attempts to supply, technology relating to goods in contravention of the Defence Trade Controls Act (when enacted).  In addition, clause 71 provides for the storage and/or destruction of forfeited goods, technology or things.

A member of the ADF; a member or special member of the Australia Federal Police, or a member of the police force of a state or territory; or an office of Customs may seize the goods, technology or thing that is forfeited without warrant: subclause 71(3).

Clause 73 empowers the Minister to delegate his or her functions and powers with some specific limitations.  Under subclause 73(2) the Minister may not delegate his or her functions or powers at all in a certain circumstances, including but not limited to:

•       making a decision to revoke a permit (subclause 11(8))

•       issuing a notice prohibiting certain activities (clause 14), and

•       revoking a permit given to a registered broker (subclause 16(8)).

For other decisions authorised by the Defence Trade Controls Act (when enacted) the Minister may be able to delegate his or her powers and functions but the extent to which that delegation may occur is limited: subclauses 73(3)–(7).

Clause 74 enables the Secretary to delegate his or her function, whilst clause 75 authorises the making of regulations.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library about the background to the Bill by telephoning Nicole Brangwin on (02) 6277 2445; and about the provisions of the Bill by telephoning Paula Pyburne on (02) 6277 2434.

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ISSN 1328-8091

[1].               Sections 3–75 are the operative provisions of the Bill.  They will not commence at all if the Treaty between the Government of Australia and the Government of the United States of America does not come into force.

[2].               The text of the Treaty can be viewed at: http://www.defence.gov.au/publications/DefenceTradeCooperation_Treaty.pdf

[3].               P Pyburne, Customs Amendment (Military End-Use) Bill 2011, Bills Digest, no. 90, 2011–12, Parliamentary Library, Canberra, 2012, viewed 10 February 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2F1357669%22

[4].               J Howard (former Prime Minister), Australia-United States Treaty on Defence Trade Cooperation, media release, 5 September 2007, viewed 8 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F7I6O6%22

[5].               Government of Australia, Defence Annual report 2007–08, Department of Defence, Canberra, vol. 1, 2008, p. 87, viewed 8 November 2011, http://www.defence.gov.au/budget/07-08/dar/2007-2008_Defence_DAR_13_v1_full.pdf and R Skinner (Head Strategic Policy, Department of Defence), Treaty between Australia and the United States concerning Defence Trade Cooperation, Joint Standing Committee on Treaties, Hansard, 16 June 2008, pp. 9–10, viewed 8 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Fcommjnt%2F10940%2F0002%22

[6].               Joint Standing Committee on Treaties website, viewed 7 February 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=jsct/14may2008/report1.htm

[7].               Joint Standing Committee on Treaties, Treaty between the Government of Australia and the Government of the United States concerning Defense Trade Cooperation, viewed 7 February 2012, http://www.austlii.edu.au/cgi-bin/sinosrch.cgi?query=defense+trade+cooperation&results=50&submit=Search&mask_world=&mask_path=&callback=on&method=auto&meta=%2Fau  

[8].               Treaty between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America concerning Defense Trade Cooperation, London and Washington, 21 June and 26 June 2007, Command paper 7213, September 2007, viewed 8 November 2011, http://www.fco.gov.uk/resources/en/pdf/pdf19/fco_cm7213_usadefencetrade

[9].               J Abramson, ‘Defense Trade Treaties remain in committee’, Arms Control Today, vol. 40, Issue. 1, Jan/Feb 2010, p. 6 and Government Accountability Office (GAO), Export controls: observations on selected countries’ systems and proposed Treaties, GAO report, May 2010, p. i, viewed 17 November 2011, http://www.gao.gov/new.items/d10557.pdf

[10].               S Smith (Minister for Defence), Australia welcomes US Senate’s agreement to ratify Australia-US Defence Trade Cooperation Treaty, Department of Defence, media release, 1 October 2010, viewed 17 November 2011, http://www.defence.gov.au/minister/105tpl.cfm?CurrentId=10903 and Editorial, ‘Chairman Kerry: US Senate approves Defense Trade Cooperation Treaties with the United Kingdom and Australia’, Targeted News Service, 30 September 2010.

[11].               Department of Foreign Affairs and Trade, Australia-US Defence Trade Cooperation Treaty, fact sheet, AUSMIN 2010, November 2010, viewed 8 November 2011, http://www.dfat.gov.au/geo/us/ausmin/Defence-Trade-Cooperation-Treaty-fact-sheet.pdf.

              The Treaty was not mentioned during the most recent AUSMIN meeting. Press conferences and independent press releases from Australia and the US made no reference to the Treaty. Only the Joint Communiqué provided a minor remark about the Treaty increasing interoperability between the two countries. Government of Australia and the Government of the United States, ‘Australia-United States Ministerial Consultations (AUSMIN) 2011’, Joint communiqué, San Francisco, 15 September 2011, viewed 8 November 2011, http://foreignminister.gov.au/releases/2011/kr_mr_110916b.html

[12].               Government of Australia, ‘Changes to Australia’s export control system: industry information session’, Department of Defence, presentation, December 2010, p. 20, viewed 15 November 2011, http://www.defence.gov.au/strategy/deco/usec/presentation/US_Treaty_Industry_Presentation.pdf; I Watt (Secretary of Defence), Foreign Affairs, Defence and Trade Legislation Committee, Defence Portfolio, Supplementary Budget Estimates, Hansard, 19 October 2010, p. 10, viewed 15 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22committees%2Festimate%2F13305%2F0001%22; and ‘Changes to Australia’s export control system: industry information session’, Department of Defence, op. cit., p. 22 and Explanatory Memorandum, p. 11.

[13].               B Vaughn, The US-Australia Treaty on Defense Trade Cooperation, Congressional Reporting Service, Washington, 12 December 2007, p. 2, viewed 8 November 2011, http://dpl/Books/2008/CRC_USAustTradeDefence.pdf, Australia‑United States Treaty on Defence Trade Cooperation, op. cit and Government of the United States, US‑Australia Defense Trade Cooperation Treaty, Bureau of Political-Military Affairs, fact sheet, Washington, 6 September 2007, viewed 8 November 2011, http://www.archive.usun.state.gov/fact_sheet/ecosoc_w5.pdf

[14].               The Government of the US controls access, including export, to defence technology via the Arms Export Control Act (AECA). The US Department of State’s Directorate of Defense Trade Controls administers this access through the ITAR, which includes controlled items listed in the US Munitions List under Part 121 of ITAR. Under the existing ITAR system, Australia must comply with ITAR to gain access to US defence technology. US Department of State, ‘International Traffic in Arms Regulations 2011’, Directorate of Defense Trade Controls, 1 April 2011, viewed 8 November 2011, http://www.pmddtc.state.gov/regulations_laws/itar_official.html

[15].               A full explanation about the operation of the International Traffic in Arms Regulations is contained in R Trope and M Witt, ‘Allies at Sixes and Sevens: sticky issues in Australian-US Defence Trade Controls’, Security Challenges, vol. 3, no. 2, June 2007, viewed 20 February 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2FT6UO6%22

[16].               R Skinner, Joint Standing Committee on Treaties, op. cit., p. 9.

[17].               Customs (Prohibited Exports) Regulations 1958, Comlaw website, section 13E, viewed 8 February 2012, http://www.comlaw.gov.au/Details/F2011C00974/Html/Text#_Toc311799169 and Defence Export Control Office, ‘Defence Strategic Goods List’, Department of Defence website, viewed 8 February 2012, http://www.defence.gov.au/strategy/deco/dsgl.htm

[18].               Comlaw, Customs Act 1901, section 112, viewed 8 February 2012, http://www.comlaw.gov.au/Details/C2011C00915/Html/Volume_1#_Toc310241442

[19].               Explanatory Statement issued by the authority of the Minister for Defence, Customs Act 1901, Defence and Strategic Goods List Amendment 2011 (No. 1), viewed 8 November 2011, http://www.comlaw.gov.au/Details/F2011L02061/Explanatory%20Statement/Text and Explanatory Memorandum, Defence Trade Controls Bill 2011, 2010–11, p. 10, viewed 8 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4700_ems_9e976e24-2fbc-48ae-ad31-dcf1d61d8eb7%22

[20].               Defence Export Control Office, Department of Defence website, viewed 8 November 2011, http://www.defence.gov.au/strategy/deco/default.htm

[21].               Government of Australia, ‘Weapons of mass destruction: the role of export controls in preventing proliferation’, Defence Export Control Office (DECO), Department of Defence website, August 2008, p. 3, viewed 8 November 2011,  http://www.defence.gov.au/strategy/deco/publications/booklets/wmd.pdf

[22].               S Parnell, ‘Another Pakistan shipment blocked’, The Australian, 14 November 2011, p. 2, viewed 15 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2F1224072%22

[23].               Department of Defence, Review of Weapons of Mass Destruction (Prevention of Proliferation) Act 1995, media release, 13 October 2011, viewed 15 November 2011, http://news.defence.gov.au/2011/10/13/review-of-weapons-of-mass-destruction-prevention-of-proliferation-act-1995/ 

[24].               Department of Defence, Review of Weapons of Mass Destruction (Prevention of Proliferation) Act 1995, terms of reference, paragraph 16, viewed 15 February 2012, http://www.defence.gov.au/oscdf/BlickReview/tor.pdf

[25].               Department of Defence, Review of Weapons of Mass Destruction (Prevention of Proliferation) Act 1995, media release, op. cit.  

[26].               The Wassenaar Arrangement (WA) was established in December 1995 following the end of the Cold War and the disbandment of the former export control regime CoCom (Coordinating Committee for Multilateral Export Controls). The WA became operational in 1996 after the Plenary, the decision-making body that meets annually, adopted the Initial Elements. 41 contributing countries currently comprise the WA, including Australia. Its main purpose is to promote ‘transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies’ through the transfer of information and agreement on export controls lists. While ‘the scope of export controls in participating states is determined by WA lists, practical implementation varies from country to country in accordance with national procedures’, cited in ‘Wassenaar Arrangement on export controls for conventional arms and dual-use goods and technologies’, WA website, viewed 15 November 2011, http://www.wassenaar.org/introduction/index.html. Australia’s DSGL is based on the export control lists produced under the WA, Explanatory Memorandum, Defence Trade Controls Bill 2011, op. cit., p. 37.

[27].               Explanatory Memorandum, p. 25.

[28].               Ibid., and ‘Elements for effective legislation on arms brokering’, WA website, 2003, viewed 15 November 2011, http://www.wassenaar.org/guidelines/docs/Elts_for_effective_legislation_on_arms_brokering.pdf

[29].               Ibid., p. 18 and ‘Best practices for implementing intangible transfer of technology controls’, WA website, 2006, viewed 15 November 2011, http://www.wassenaar.org/guidelines/docs/ITT_Best_Practices_for_public_statement.pdf and ‘Statement of understanding on intangible transfers of software and technology’, WA website, 2001, viewed 15 November 2011, http://www.wassenaar.org/2003Plenary/docs/SOU_on_ITT.pdf

[30].               J Gillard (Prime Minister of Australia) and B Obama (President of the United States), Australia-United States force posture initiatives, joint media release, 16 November 2011, viewed 17 November 2011, http://www.pm.gov.au/press-office/australia-united-states-force-posture-initiatives

[31].               Howard, Australia-United States Treaty on Defence Trade Cooperation, op. cit.

[32].               C Taylor, UK-US Defence Trade Co-operation Treaty, Standard Note, House of Commons Library, 17 February 2009, viewed 17 November 2011, http://www.parliament.uk/business/publications/research/briefing-papers/SN04381

[33].               Parliament of the United Kingdom, UK/US Defence Trade Cooperation Treaty: third report of session 2007–08, House of Commons Defence Committee, 4 December 2007, p. 5, viewed 16 November 2011, http://www.publications.parliament.uk/pa/cm200708/cmselect/cmdfence/107/107.pdf

[34].               Export controls: observations on selected countries’ systems and proposed Treaties, op. cit., p. 8.

[35].               B McCormick (Deputy Assistant Secretary for Defense Trade and Regional Security), ‘Overview of the US-United Kingdom Defense Trade Cooperation Treaty’, UK-Canada-US-Australia Quadrilateral Conference, 12 September 2011, p. 11, viewed 17 November 2011, http://www.ndia.org/Divisions/Divisions/International/Documents/147DPresentations/8.%20Beth%20McCormick.pdf

[36].               M Bell, ‘US, UK Co-operation Treaty clears tests’, Jane’s Defence Weekly, vol. 48, Issue 46, 16 November 2011, viewed 15 February 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2F1309559%22

[37].               Details of the inquiry are at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=fadt_ctte/trade_controls/index.htm 

[38].               K Clarke (Head of Industry, Defence Materiel Organisation), Joint Standing Committee on Treaties, op. cit., p. 13.

[39].               Ibid., pp. 15–16.

[40].               Explanatory Memorandum, p. 14.

[41].               S Lewis, ‘Greens offer extra weeks holiday death duties for rich’, Courier Mail, 18 August 2010, viewed 15 February 2012, http://www.couriermail.com.au/news/national/greens-offer-extra-weeks-holiday-death-duties-for-rich/story-fn5z3z83-1225907036910

[42].               J Kerr, ‘Australia-US Defence Trade pact to cut red tape’, Australian Defence Magazine, 1 October 2007, p. 20, viewed 15 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2FNYPO6%22

[43].               G Ferguson, ‘Raytheon eyes long term naval opportunities’, Australian Defence Magazine, 1 December 2007, p. 10, viewed 15 November 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2FQEGP6%22

[44].               Supplementary Budget Estimates, Defence Portfolio, op. cit., p. 10.

[45].               Explanatory Memorandum, p. 5.

[46].               Ibid., p. 14.

[47].               Ibid., p. 9.

[48].               Article 4, AS-US DTC Treaty.

[49].               Article 6, AS-US DTC Treaty.

[50].               Article 7, AS-US DTC Treaty.

[51].               Article 9, AS-US DTC Treaty.

[52].               Article 11, AS-US DTC Treaty.

[53].               Article 13(3), AS-US DTC Treaty.

[54].               Article 17, AS-US DTC Treaty.

[55].               Article 18, AS-US DTC Treaty.

[56].               Clauses 19–25 of the Bill.

[57].               Boeing Australia and South Pacific, Submission to Senate Standing Committee on Foreign Affairs, Defence and Trade, Inquiry into the Defence Trade Controls Bill 2011, 31 January 2012, viewed 20 February 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=8c9e4b8b-6c23-4b9d-a87d-6eed4a9f762b

[58].               Ibid.

[59].               Saab, Submission to Senate Standing Committee on Foreign Affairs, Defence and Trade, Inquiry into the Defence Trade Controls Bill 2011, 31 January 2012, viewed 20 February 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=d2d06955-cb50-44dd-af92-1e8aff0e834d

[60].               Ibid., p. 4.

[61].               Explanatory Memorandum, p. 54.

[62].               Boeing Australia and South Pacific, op. cit.

[63].               Subclause 58(3) of the Bill.

[64].               University of Sydney, Submission to Senate Standing Committee on Foreign Affairs, Defence and Trade, Inquiry into the Defence Trade Controls Bill 2011, 31 January 2012, viewed 20 February 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=cc081cb6-2954-4dbd-8010-4acc62e280a1

[65].               Boeing Australia and South Pacific, op. cit.

[66].               Ibid.

[67].               Australian Manufacturing Workers’ Union, Submission to Senate Standing Committee on Foreign Affairs, Defence and Trade, Inquiry into the Defence Trade Controls Bill 2011, 31 January 2012, p. 4, viewed 20 February 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=28767e16-2d3b-45a4-9d8c-02cbb7c025ac

[68].               Ibid., p. 5.

[69].               US Trade and Export Control Services, Submission to Senate Standing Committee on Foreign Affairs, Defence and Trade, Inquiry into the Defence Trade Controls Bill 2011, 27 January 2012, p. 2, viewed 20 February 2012, https://senate.aph.gov.au/submissions/comittees/viewdocument.aspx?id=d86c87e2-f239-4c10-a0aa-fec4ac4bc8b5

[70].               The details of the draft regulations and supporting Explanatory Statement are at: http://www.defence.gov.au/strategy/deco/usec/treaty.htm

[71].               Explanatory Memorandum, p. 31.

[72].               The term ‘US Defence Articles’ is defined in clause 5 of the Bill.

[73].               Subregulation 4(8) of the draft Defence Trade Controls Regulations 2012.

[74].               Clause 66 of the Bill sets out the formal application requirements.

[75].               Part 7 of the Bill sets out the rights of review in respect of a decision to refuse to give a person a permit, to revoke a permit or to impose a permit condition under section 11.

[76].               Under section 4AA of the Crimes Act 1914 a penalty unit is equivalent to $110. This means that the penalty in this case is $6600.

[77].               The monetary value of the penalty is $275 000.

[78].               Part 7 of the Bill sets out the rights of review in respect of a decision to refuse to register a person as a broker, to refuse to renew a person’s registration as a broker or to impose a registration condition under sections 20–21.

[79].               Part 7 of the Bill sets out the rights of review in respect of a decision to refuse to register a person as a broker, to refuse to renew a person’s registration as a broker or to impose a registration condition under sections 22–23.

[80].               Part 7 of the Bill sets out the rights of review in respect of a decision to refuse to give a person a permit, to revoke a permit or to impose a permit condition under section 16.

[81].               Subclause 16(7) of the Bill.

[82].               Clause 17 of the Bill.

[83].               Subclauses 16(8)–(10) of the Bill.

[84].               However, the defence of honest and reasonable mistake of fact may be raised.

[85].               The monetary value of the penalty is $275 000.

[86].               Clause 66 of the Bill sets out the formal application requirements.

[87].               Part 7 of the Bill sets out the rights of review in respect of a decision to refuse to approve a person as a member of the Australian Community.

[88].               Clauses 41–44 of the Bill set out the powers of authorised officers.

[89].               The term, ‘original goods’, is defined in clause 5 of the Bill.

[90].               Part 7 of the Bill sets out the rights of review in respect of a decision to impose an approval condition under subsection 28(2) or to vary an approval condition under subsection 28(3).

[91].               Section 4AA of the Crimes Act 1914 provides that a ‘penalty unit’ is equal to $110.  This means that the penalty for this offence is $66 000.

[92].               Paragraph 63(k) provides that this is a ‘reviewable decision’.

[93].               Part 7 of the Bill sets out the rights of review in respect of a decision to suspect an approval under section 29 or cancel an approval under section 30.

[94].               Note that paragraph 29(1)(f) provides that the Minister may suspend an approval under clause 27 in circumstances that have been prescribed by regulation. However, the draft Defence Trade Controls Regulations 2012 do not contain any provisions relevant to this paragraph.

[95].               Explanatory Memorandum, p. 67.

[96].               Draft regulation 3 defines an ‘intermediate consignee’ as a freight forwarder, a customs broker or a commercial air, land or sea freight carrier or transport provider and includes an entity that acts in that capacity as the agent of another entity.

[97].               The relevant regulation is draft regulation 27.  Note that this appears to contain a minor error in that it refers to clause 39, rather than clause 40.

[98].               Subclause 43(3) of the Bill provides that the penalty for contravention is imprisonment for six months. However, section 4B of the Crimes Act 1914 allows for the penalty to be converted to a dollar amount subject to a formula.

[99].               Subclause 57(6) of the Bill provides that the penalty for contravention is imprisonment for six months. 

[100].               Subclause 58(4) of the Bill provides that the penalty for contravention is 30 penalty units ($3300). 

[101].               In subclause 69(6), the term ‘Commonwealth entity’ is defined as an Agency within the meaning of the Financial Management and Accountability Act 1997 or a Commonwealth authority within the meaning of the Commonwealth Authorities and Companies Act 1997.

[102].               In subclause 69(6), the term ‘foreign government entity’ is defined as the government of a foreign country or of part of a foreign country; or an authority of the government of a foreign country; or an authority of the government of part of a foreign country.