Defence Export Controls: Compliance – What you need to know

Geopolitical tensions are rising. China's assertiveness in the South China Sea, Russia's war in Ukraine, and North Korea's cyber activities have heightened global security risks. In this environment, controlling the export of defence technologies prevents adversaries from gaining an edge. Australia's recent reforms to its export controls address these threats while boosting ties with allies.

The Defence Trade Controls Amendment Act 2024 reshaped the landscape. Effective from 1 September 2024, it created a licence-free environment for most military and dual-use items traded between Australia, the United Kingdom, and the United States under the AUKUS pact. This AUKUS partnership, announced in 2021, aims to enhance technology sharing, including nuclear-powered submarines and advanced capabilities like hypersonics.

Criminal penalties for new offences kicked in on 1 March 2025. These include supplying Defence and Strategic Goods List (DSGL) technology—covering items like electronics, lasers, and avionics—to non-exempt foreign persons within Australia without a permit. DSGL lists controlled military and dual-use goods. Another offence covers re-supplying sensitive DSGL items originally exported from Australia.

The United States aligned its rules late last year. On 30 December 2025, the U.S. Department of State finalized changes to the International Traffic in Arms Regulations (ITAR), expanding exemptions for defence trade among AUKUS partners. This includes re-exports supporting armed forces operations outside the three countries.

These shifts matter now because enforcement is in full swing, and the U.S. updates are fresh. Australia's defence spending hits $59 billion in 2025-26, projected to reach 2.3% of GDP by 2033-34. Exports are vital for industry sustainability, with the government prioritizing them in its Defence Industry Development Strategy.

Impacts ripple across sectors. Defence firms, universities, and research institutions must screen activities. In 2022, permits for exports to the U.S. and UK totaled AUD$5 billion. Now, many transactions bypass licensing, cutting costs and delays. But new internal controls affect supplies to foreign nationals in Australia, risking fines up to 2,500 penalty units or 10 years imprisonment.

Broader effects include supply chain vulnerabilities. Australia relies on imports for much of its military gear and sends rare earths abroad for processing, often to China. Tighter controls safeguard technologies but complicate collaborations. Sanctions, like Australia's February 2025 ban on exporting drone components to Russia, add layers.

Non-defence industries feel the pinch too. Dual-use tech in telecoms or sensors now demands compliance checks. The Australian Defence Strategic Sales Office, launched in March 2025, helps capitalize on exports, aiming for integration into allied supply chains.