AUKUS Agrees on Frictionless Trade

The United States, United Kingdom, and Australia penned a “frictionless trade” agreement to develop next-generation technologies between the three countries, starting Sept. 1, 2024. The collaboration will surround defense technology and trade. This announcement comes on the heels of proposed legal changes in the United States and the United Kingdom to provide specific exemptions on arms exports and controls.

According to a State Department press release, “The proposed changes to the International Traffic in Arms Regulations – or ITAR – would create a license exemption supporting billions of dollars in license-free defense trade between Australia, the United Kingdom, and the United States.”

The changes in export control laws were reached during the Washington NATO Summit and meetings between the three countries. The agreement enables the U.S. and U.K. to provide Australia with the technology, material, and equipment required for Australia’s future nuclear-powered submarine capability. It slashes the number of licenses required for exports, retransfers, and reexports between the three nations, eliminating approximately 70% of the 3,800 required licenses to exchange this information between Washington and Canberra. London estimates the agreement will result in an annual economic benefit of $643 million to the U.K.

Under the first of the two pillars, the United States will give Australia conventionally armed, nuclear-powered Virginia-class submarines and maintain three to five boats. Between the 2030s and early 2040s, Canberra would build its own nuclear-powered sub. The second pillar provides a wide range of technologies, from undersea capabilities to electronic warfare.

The changes will allow for faster, more efficient collaborations between scientists, engineers, and the defense industry.