AUKUS: Billions of dollars of defence exports to flow freely under new export deal

Billions of dollars’ worth of military hardware will be able to flow freely between Australia, the US and UK under a “generational” export deal.

The AUKUS allies have agreed to establish a new free trade regime from September 1, allowing defence technologies to be exported between the countries without the need for rigorous licence requirements.

The three countries have been working for two years on a deal to streamline the sharing of advanced defence capabilities — the centrepiece of AUKUS’ so-called “Pillar 2”.

Australia already has expansive free-trade agreements with the US and UK but they don’t extend to military exports.

Under a deal to be announced on Friday, roughly 900 defence export permits from Australia to the US and UK, valued at $5 billion per year, will be scrapped.

More than 70 per cent of defence exports from the US to Australia, and 80 per cent of defence trade from the UK to Australia, will be subject to the new free trade regime.

Eliminating licence requirements is expected to dramatically speed up exports, given the US currently takes up to 18 months to approve them.

“I commend AUKUS partners for their tireless efforts to deliver this generational change so quickly,” Defence Minister Richard Marles said.

“These critical reforms will revolutionise defence trade, innovation and cooperation, enabling collaboration at the speed and scale required to meet our challenging strategic circumstances.”

Some sensitive technologies, including those used in nuclear-powered submarines, will be excluded from the free-trade regime and still require licensing arrangements.

Defence has export controls in place to ensure the technologies don’t spread beyond the US and UK.

The announcement of the new trade deal comes amid fresh concerns about the long-term future of AUKUS, after an updated agreement included an escape clause allowing the US and UK to abandon the pact at just one year’s notice.