Reform of Australia’s export control regime

Last year, the Australian Parliament passed the Defence Trade Controls Amendment Act 2024 (Cth) (the Act) to reform Australia’s export control regime and promote cooperation, collaboration and innovation between Australia, the United Kingdom (UK) and the United States (US) as part of the commitment by all three countries to build a seamless industrial base between ‘AUKUS’ partners. 

On 1 March 2025, the compliance transition period formally ended and the criminal penalty provisions for each of the three new export control permit types came into effect. With non-compliance potentially constituting a criminal offence punishable by up to 10 years in jail or a fine of up to $825,000, it is important that impacted businesses are familiar with the new laws and that governance arrangements, policies and procedures have been updated to reflect their new compliance obligations. 

Please refer below for a detailed overview of Australia’s export control reforms and what businesses should be doing to manage the changes.

What are the changes?

The Act introduces a national exemption to the UK and the US from Australia’s export control permit requirements under the Defence Trade Controls Act 2012 (Cth) and also contemplates providing additional exceptions to be included through the Defence Trade Control Regulation 2013 (Cth) and the Defence and Strategic Goods List (DSGL). The DSGL specifies the goods, software and technology (both military (Part 1) and commercial or ‘dual-use’ (Part 2)) that are regulated and require a permit when exported, supplied, brokered or published, unless there is an exemption.  

New criminal offences

The Act will also significantly strengthen Australia’s existing export control framework to establish a robust protective security regime that is comparable to the export control regime administered by the United States. 

The Act introduced three new criminal offences that will be punishable by up to 10 years in jail or a fine of up to 2,500 penalty units (currently $825,000): 

1. ‘Deemed’ exports – the supply of DSGL technology to a non-exempt foreign person within Australia without a permit. 
2. The ‘secondary supply’ of previously exported DSGL goods and technology – the supply of military and DSGL goods and technology (sensitive and very-sensitive list items only) that were previously exported or supplied from Australia, from one foreign country to another foreign country, or to a foreign person within the same foreign country.  
3. Provision of DSGL ‘services’ – the provision of DSGL (Part 1 only) services in the form of assistance (including training), whether in Australia or abroad, in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarisation, destruction, process of use of specified military goods or technology without a permit.  

In order to strike an appropriate balance between protecting Australia’s national security interests and supporting economic growth and research collaboration, the Act provides for certain exceptions to certain persons and activities, including:  

• Exempted defence and intelligence alliances and members thereof – AUKUS partners, Defence Trade Cooperation Treaty, Five Eyes   
• Exempted parties – Foreign Country List, Australian Government employees, Original manufacturers  
• Exempted activities – Fundamental research, build-to-print, items returned to Australia, and  
• Timeframe limitations – Lapsed timeframes (on secondary supply obligations) and grandfathering of existing permits.  

What should businesses be doing?

Given that the new criminal penalty provisions have now come into effect  businesses dealing with controlled technology and information should fully consider the potential impact of the new laws. This may include:  

• Considering the impact of the reforms on your business operations – We recommend that businesses consider whether the Act (in particular, the introduction of ‘deemed exports’, secondary supply prohibitions and the capturing of DSGL Part 1 services) will change the scope of goods, services and arrangements that are now captured by Australia’s export controls, and what the changes mean for your business operations (e.g. ability and timing to apply for a permit as required; systems and process changes necessary to monitor and capture deemed export and secondary supply risks).  
• Reviewing existing Trade Governance Policies, Procedures and Controls – The Act represents a significant strengthening of Australia’s export control regime and businesses dealing in military or dual-use goods, software and technology should consider whether their existing Trade Governance Framework and associated systems, processes and controls adequately mitigate potential risks of non-compliance.  
• Ensuring proactive compliance – Businesses will need to ensure that they meet the compliance requirements before undertaking any newly regulated activities, including:  
  • applying for and obtaining permit/s from Defence Export Controls (DEC) where required  
  • registering for and obtaining approval under the licence free environment for exports between Australia, United Kingdom and United States  
  • maintaining appropriate records in respect of any regulated activities to demonstrate compliance  
  • documenting decision making and due diligence processes in respect of any potentially regulated activities  
  • conducting periodic prudential audits to ensure ongoing compliance, and  
  • voluntarily disclosing any instances of non-compliance.  
• Awareness and training is key – Businesses should ensure that all relevant staff are trained in the new export control framework, and clearly understand the new obligations, what has changed, and how to stay abreast of updates (for example, attending DEC’s outreach training sessions). 
• Being prepared for increased regulatory interaction – Businesses should also consider their level of compliance with Australia’s existing export control laws, as we anticipate the commencement of the provisions under the Act will be accompanied by increased compliance activity and enforcement by the Department of Defence as the Australian Government seeks to project a more protective security regime to its strategic partners and adversaries.  

At PwC, we leverage our extensive expertise and experience in the customs and trade field to assist businesses in navigating the complexities of the evolving trade environment. Our dedicated team of trade professionals is adept at providing strategic insights and customised solutions to help companies assess and solve their important problems.