/>iIn early June 2023, legislation was proposed in the U.S. Congress to amend the U.S. Arms Export Control Act to provide an exemption for licensing of defense items for export to the United Kingdom (U.K.).
On June 8, 2023, the White House announced the “Atlantic Declaration” as a “Twenty-First Century U.S.-U.K. Economic Partnership to ensure that our unique alliance is adapted, reinforced, and reimagined for the challenges of this moment.”
And on June 28, 2023, the U.S. announced their agreement with the U.K., Australia, Canada, and New Zealand –to formally coordinate on the enforcement of each country’s export control regimes.
Expansion of Coordination
The Atlantic Declaration is part of ongoing efforts between the U.S. and Five Eyes partners, such as the enhanced Australia, U.K., and U.S. (“AUKUS”) trilateral security partnership signed in 2021.
While export regimes have previously been harmonized to enable more efficient transfers of sensitive technologies, proposed legislation will further modernize U.S. export control rules to make the flow of sensitive technology and services between the U.S., and U.K. more efficient. Measures may include designation of Five Eyes partners as “domestic sources” to allow them to operate on a more equal footing with U.S. exporters and more targeted controls on certain sensitive technologies.
Proposed legislation will further modernize U.S. export control rules to make the flow of sensitive technology and services between the U.S., and U.K. more efficient.
Coordination on Export Control Enforcement
The June 28, 2023, announcement signaled a collaborative endeavor by Australia, Canada, New Zealand, U.K., and U.S. to enhance global security through coordinated enforcement of their respective export control regimes – including those relating to Russia and Belarus.
Commonly referred to collectively as the “Five Eyes” – Australia, Canada, New Zealand, U.K., and U.S. – have historically worked closely on common defense and intelligence matters. They even have their own classified document designation "AUS/CAN/NZ/UK/US eyes only."
While the specific details of the pact were not released, the announcement signaled that the countries were jointly committed to facilitating the exchange of information related to export control violations, including trends in illicit procurement methods.
The announcement signaled that the countries were jointly committed to facilitating the exchange of information related to export control violations, including trends in illicit procurement methods.
The U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued a specific announcement concerning the new export control pact. Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod clearly communicated the intended effect of the Five Eyes export enforcement pact – “By formalizing our coordination, we hope to drive additional enforcement outcomes in each of the Five Eyes countries, including detentions, penalties, and public identification of diversionary actors.”
Axelrod also telegraphed the more immediate intended impact of the timing of the pact – “As is evidenced by today’s gathering, the United States and our Five Eyes partners stand united in our commitment to vigorous enforcement of the Russia and Belarus export restrictions,” – i.e., the support of Ukraine.
The pact will permit will enable each of the countries to leverage their enforcement resources and capacities to prevent evasion and violation of export controls, including Russia’s access to technologies used in its hostilities against Ukraine.
The pact will also minimize gaps in enforcement and permits joint investigations and coordinated enforcement actions. This new level of cooperation will help to prevent unauthorized exports, and to identify and address export evasion and diversion risks.
Expanded multijurisdictional export and sanctions enforcement will also enhance cooperation in defense sector.
Impact to International Trade
The BIS announcement also noted an intent to strengthen partnerships with industry to better address diversion activities, with the goal of strengthening the resilience of global supply chains.
The proposed U.S. legislation would provide the U.K. with an improved status under International Traffic in Arms Regulations (ITAR). Doing so would necessarily expedite trade by U.S. companies in defense articles to the U.K., and if the U.K. were to reciprocate, could result in an overall increase in both defense related trade and advanced research and development in controlled technologies. Conversely, from a business perspective and if passed, the Atlantic Declaration and possible new U.S. – U.K. export legislation will likely lessen licensing requirements and time delays for defense related sales, services, and R&D between the U.S. and the U.K.
From an operational perspective, companies engaged in international trade should remain diligent in their export compliance efforts. From a compliance perspective they should be aware that an export control violation may result in investigative referrals or liability across multiple jurisdictions.
From a compliance perspective, companies engaged in international trade should be aware that an export control violation may result in investigative referrals or liability across multiple jurisdictions.
