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Australia Tightens Defence Trade Controls

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This article applies to organisations who supply goods, technology or services listed in the Defence and Strategic Goods List.

Defence Trade Controls Amendment Act 2024 (Cth)

On 1 September 2024, the Defence Trade Controls Amendment Act 2024 (Cth) (the Amending Act) commenced, amending the Defence Trade Controls Act 2012 (Cth) (the Act).

Background

The Amending Act strengthens Australia’s export control system by introducing new provisions to prevent certain transfers of military goods and technology to persons or organisations where that transfer may be prejudicial to Australia. The Amending Act inserts several new key offences into the Act to regulate the supply of Defence and Strategic Goods List (DSGL) technology within Australia to a foreign person, the supply of DSGL goods or DSGL technology from a place outside Australia to a foreign person or country, and the provision of DSGL services to a foreign person.

New and amended offences

Section 10

Section 10 of the Act provides that it is an offence for a supplier to supply DSGL technology to another person without a permit or in contravention of a condition of a permit, where:

  • the supply is either from a place in Australia to a place outside Australia or, if the supply is the provision of access to DSGL technology, at the time of the provision of access, the supplier is in Australia and the other person is outside Australia; and
  • there is no notice in force under section 14 of the Act in relation to the supplier and the supply.

The Amending Act amends this provision to introduce the requirement for the supply to be both a constitutional supply and a relevant supply (both of these terms are discussed in further detail below).

Section 10A

The Amending Act has introduced section 10A into the Act to establish an offence provision for the supply of DSGL technology in Australia to a foreign person. The new provision provides that a supplier commits an offence if they supply DSGL technology to a foreign person without a permit or in contravention of a condition of a permit, where:

  • the supply is both a constitutional supply and a relevant supply; and
  • there is no notice in force under section 14 of the Act in relation to the supplier and the supply; and
  • any of the following applies:
    • the place from which the supply is made and the place to which the supply is made are both in Australia;
    • the supply occurs wholly at a place in Australia;
    • if the supply is the provision of access to DSGL technology – at the time of the provision of access, both the supplier and the other person are in Australia.

The penalty for a breach of this provision is 10 years or 2,500 penalty units (currently $782,500), or both.

Section 10B

The Amending Act introduces section 10B into the Act, regulating the secondary supply of DSGL goods or technology outside Australia. A supplier commits an offence under section 10B if:

  • they supply DSGL goods (other than firearms) or DSGL technology (the current supply) to another person; and
  • the current supply is a constitutional and a relevant supply; and
  • any of the following applies:
    • the current supply occurs wholly at a place outside Australia;
    • the current supply is from a place outside Australia and is to a place outside Australia;
    • if the current supply is the provision of access to DSGL technology – at the time of the provision of access, the supplier is outside Australia and the other person is outside Australia; and
  • the supplier obtained the DSGL goods or technology as a direct or indirect result of the export or supply (the earlier export or supply) of the DSGL goods or technology:
    • from a place in Australia to a place outside Australia; or
    • if the earlier export or supply was the provision of access to DSGL technology – in circumstances where, at the time of the provision of access, the person providing access was in Australia and the person to whom access was provided was outside Australia; and
  • a permit was required under the Act, or permission was required under the Customs Act 1901 (Cth), for the earlier export or supply; and
  • the supplier does not hold a permit under the Act authorising the current supply, or the current supply contravenes a condition of a permit that the supplier holds; and
  • there is no notice in force under section 14 of the Act in relation to the supplier and the current supply.

Section 10B applies to DSGL goods or technology that is within the scope of Part 2 of the Defence and Strategic Goods List, the Sensitive List of Dual-use Goods and Technologies in Part 2 of the Defence and Strategic Goods List, or the Very Sensitive List of Dual-use Goods and Technologies in Part 2 of the Defence and Strategic Goods List.

Section 10B carries a penalty of imprisonment for 10 years or 2,500 penalty units (currently $782,500), or both.

Section 10C

The Amending Act has also introduced section 10C into the Act, which provides for an offence in relation to the provision of DSGL services within or outside Australia to a foreign person.

A provider of DSGL services who is an Australian person commits an offence where constitutional and relevant DSGL services are provided to a foreign person without a permit or in contravention of a condition of a permit under the Act, where:

  • the provider provides the DSGL services at or from a place outside Australia; and
  • the other person receives the DSGL services at a place outside Australia; and
  • there is no notice in force under section 14 of the Act in relation to the provider and the provision of the DSGL services.

Section 10C carries a penalty of imprisonment for 10 years or 2,500 penalty units (currently $782,500), or both.

Constitutional supply and constitutional DSGL services

For the purposes of the new and amended provisions of the Act, a supply of DSGL goods or DSGL technology is considered a constitutional supply, and the provision of DSGL services are considered constitutional DSGL services, if the supply or the provision:

  • is made by, or on behalf of, or to a constitutional corporation, a body corporate incorporated in a Territory, or a body corporate that is taken to be registered in a Territory under section 119A of the Corporations Act 2001 (Cth); or
  • is made by, or on behalf of, or to the government or an authority of the government of a foreign country; or
  • is made by, or to an alien as defined in the Constitution; or
  • occurs wholly or partly outside Australia; or
  • is made in the course of constitutional trade or commerce; or
  • occurs wholly or partly within a Territory of Australia; or
  • is made by way of a postal, telegraphic, telephonic or other like service (within the meaning of paragraph 51(v) of the Constitution).

Relevant supply and relevant DSGL services

Detailed definitions of relevant supply and relevant DSGL services are set out in new section 5C of the Act. The effect of these definitions is that supplies of DSGL goods or technologies will be a relevant supply, and the provision of DSGL services will be relevant DSGL services, by default and thus any relevant supply will fall within the scope of the offence provisions. Importantly, a supply of DSGL goods or technology is not a relevant supply, and the provision of DSGL services is not a relevant DSGL service (and therefore not subject to the requirement to hold a permit) where the supply is made to the following:

  • an Australian person;
  • a citizen or permanent resident of the United Kingdom or United States of America;
  • a body corporate incorporated by or under a law of the United Kingdom or United States of America, or of a part of either of those countries;
  • the Government of the United Kingdom or United States of America, or the government of a part of either of those countries; or
  • an authority of the Government of the United Kingdom or United States of America, or the government of a part of either of those countries.

The supply must be to, or occur wholly at, a place in Australia, or the United Kingdom or United States, or, if the supply is the provision of access to DSGL technology, at the time of the provision of access the person to whom the access is provided is in Australia, the United Kingdom or the United States of America. The effect of section 5C is to establish an exemption to the requirement to hold a permit for certain supplies of DSGL goods or DSGL technology, or for certain provisions of DSGL services, to the United Kingdom and the United States.

Conclusion

Organisations who supply DSGL goods or technology, or provide DSGL services, should familiarise themselves with the new offence provisions and update their policies and procedures accordingly to ensure compliance.

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