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[Senate Treaty Document 110-10]
[From the U.S. Government Printing Office]



110th Congress                                              Treaty Doc.
                                 SENATE                     
1st Session                                                    110-10
_______________________________________________________________________

                                     

 
       TREATY WITH AUSTRALIA CONCERNING DEFENSE TRADE COOPERATION

                               __________

                                MESSAGE

                                  from

                    THE PRESIDENT OF THE UNITED STATES

                              transmitting

 TREATY BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE 
 GOVERNMENT OF AUSTRALIA CONCERNING DEFENSE TRADE COOPERATION, DONE AT 
                       SYDNEY, SEPTEMBER 5, 2007




 December 03, 2007.--Treaty was read the first time, and together with 
the accompanying papers, referred to the Committee on Foreign Relations 
          and ordered to be printed for the use of the Senate.
                         LETTER OF TRANSMITTAL

                              ----------                              

                                 The White House, December 3, 2007.
To the Senate of the United States:
    I transmit herewith for Senate advice and consent to 
ratification the Treaty Between the Government of the United 
States of America and the Government of Australia Concerning 
Defense Trade Cooperation, done at Sydney, September 5, 2007. I 
transmit also, for the information of the Senate, the report of 
the Department of State that includes an overview of this 
Treaty.
    My Administration is prepared to provide to the Senate for 
its information other relevant documents, including proposed 
implementing arrangements to be concluded pursuant to the 
Treaty, relevant correspondence with the Government of 
Australia, and proposed amendments to the International Traffic 
in Arms Regulations.
    This Treaty will allow for greater cooperation between the 
United States and Australia, enhancing the operational 
capabilities and interoperability of the armed forces of both 
countries. I recommend that the Senate give early and favorable 
consideration to this Treaty.
                                                    George W. Bush.
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                      Washington, October 29, 2007.
The President,
The White House.
    The President: I have the honor to submit to you the Treaty 
between the Government of the United States of America and the 
Government of Australia Concerning Defense Trade Cooperation, 
done at Sydney on September 5, 2007, accompanied by an overview 
of the Treaty. I recommend that it be transmitted to the Senate 
for its advice and consent to ratification. The Treaty 
establishes a comprehensive framework for the export of defense 
articles and defense services from the United States to certain 
Australian facilities and entities.
            Respectfully submitted.
                                                  Condoleezza Rice.
    Enclosures: As stated.

 Treaty Between the Government of the United States of America and the 
      Government of Australia Concerning Defense Trade Cooperation


                                OVERVIEW

    Section I of the Arms Export Control Act (22 U.S.C. 2751 et 
seq.) (AECA) recognizes that ``[t]he need for international 
defense cooperation among the United States and those friendly 
countries to which it is allied by mutual defense treaties is 
especially important . . .'' and asserts that ``it remains the 
policy of the United States to facilitate the common defense by 
entering into international arrangements with friendly 
countries which further the objective of applying agreed 
resources of each country to programs and projects of 
cooperative exchange of data, research, development, 
production, procurement, and logistics support to achieve 
specific national defense requirements and objectives of mutual 
concern'' (22 U.S.C. 2751). Section 38(a)(1) of the AECA 
authorizes the President ``to control the import and the export 
of defense articles and defense services,'' to ``designate 
those items which shall be considered as defense articles and 
defense services.'' and to ``promulgate regulations for the 
import and export of such articles and services'' (22 U.S.C. 
2778(a)(1)). The AECA further provides that the President may 
regulate the import and export of defense articles and services 
pursuant to licenses (22 U.S.C. 2778(b)).
    In the proposed Treaty between the Government of the United 
States of America and the Government of Australia Concerning 
Defense Trade Cooperation. done at Sydney September 5, 2007 
(the Treaty), the Government of Australia would be bound to a 
regime that would provide appropriate protections for U.S. 
defense articles and defense services exported under the Treaty 
through the application of Australian criminal law and export 
control law rather than through revisions to its export control 
regime. For this reason, the Treaty will not be entered into 
pursuant to the authority contained in Section 38(j) of the 
AECA (22 U.S.C. 2778(j)).
    The Treaty establishes a comprehensive framework for the 
export of certain defense articles and defense services from 
the United States to certain Australian facilities and 
entities. Where the Treaty applies, such export may occur 
without a license or other written authorization from the 
Department of State's Directorate of Defense Trade Controls, 
which is the office responsible for developing and implementing 
the International Traffic in Arms Regulations (ITAR). Once 
exported, these Defense Articles may be transferred within what 
is referred to as an ``Approved Community'' without case-by-
case review and the issuance of export licenses by the U.S. 
government. Transfers out of such Approved Community would, 
however. be subject to Directorate of Defense Trade Controls 
authorization requirements, and any unauthorized transfers 
would constitute violations of the AECA.
    As noted in the Treaty's Preamble, this Treaty is self-
executing in the United States. The purposes for which exports 
may occur pursuant to this Treaty and the defense articles that 
may not be exported pursuant to the Treaty will be identified 
in separate Implementing Arrangements, as well as in 
regulations intended to clarify this matter. The list of 
facilities and entities in Australia that may receive defense 
articles and defense services through exports pursuant to this 
Treaty will be identified through processes established in 
separate Implementing Arrangements.
    This Treaty establishes an exemption from the operation of 
the licensing and notification requirements contained in the 
AECA and the ITAR. As stated below, compliance with the 
procedures established in accordance with this Treaty shall 
constitute an exception to these requirements. Conduct outside 
of the procedures established in accordance with this Treaty 
must comply with the normal requirements. Although the Treaty 
is self-executing, it will be necessary to promulgate a number 
of regulatory changes to the ITAR to effectuate the licensing 
exemption. Once the Implementing Arrangements have entered into 
force, they will be made available to the public, and changes 
to the ITAR will be published in the Federal Register.

Definitions

    Article 1 of the Treaty provides definitions for many of 
the terms used in the Treaty. When the capitalized form of any 
defined term, or its variants, is used in the Treaty, the 
intent is to employ the definition provided in Article 1. When 
a lower case form of any defined term, or its variants, is used 
in the Treaty, the intent is to refer to the ordinary meaning 
of the term. This procedure is also being followed for purposes 
of the discussion in this ``Overview.''
    The Treaty defines ``Defense Articles'' as those articles, 
services, and related technical data, including software, in 
tangible or intangible form, listed on the United States 
Munitions List (``USML'') of the ITAR. As origin (i.e., where 
the product is manufactured) is not an element of this 
definition, the term ``Defense Articles'' may extend to items 
of Australian origin, or to items with Australian content, that 
are listed or described on the USML, even if such items are not 
of U.S. origin or are without U.S. content.
    Several of the definitions (i.e., those for Government of 
Australia Facilities, Goverment of Australia Personnel, 
Implementing Arrangements, Australian Community, and U.S. 
Community) incorporate by reference the substantive provision 
of the Treaty that gives meaning to each term. Such definitions 
are intended to provide clarity in that the term appears in the 
substantive text prior to the relevant provision that provides 
its meaning.
    Four definitions apply to the movement of Defense Articles. 
An ``Export'' involves the initial movement of Defense Articles 
from the U.S. Community to the Australian Community. Once a 
Defense Article has been Exported pursuant to the Treaty, 
covered movements of such Defense Articles include 
``Transfers,'' ``Re-transfers.'' and ``Re-exports.'' A 
``Transfer'' involves the movement of previously Exported 
Defense Articles (1) within the Australian Commiunity, (2) from 
the Australian Community to the U.S. Community, or (3) from the 
U.S. Community back to the Australian Community. A ``Re-
transfer'' involves the movement of previously Exported Defense 
Articles by a member of the Australian Community from a 
location in the Approved Community to a location that is 
outside of the Approved Community but in the Territory of 
Australia. A ``Re-export'' involves the movement of Defense 
Articles by a member of the Australian Community from a 
location in the Approved Community to a location outside the 
Territory of Australia.

Purpose of the Treaty

    Article 2 contains a simple recital of the Treaty's 
purpose: to provide a comprehensive framework for Exports and 
Transfers of Defense Articles without a license or other 
written authorization, to the extent that such Exports and 
Transfers support certain types of activities. This Article 
stands for the proposition that it is in the mutual security 
and defense interests of the United States and Australia to 
improve the interoperability of their armed forces by 
facilitating the movement of Defense Articles in support of 
certain mutually agreed activities, while maintaining and 
ensuring proper safeguards against unauthorized release of the 
defense technology involved.

Scope of the Treaty

    Article 3 identifies the activities in support of which 
Defense Articles may be Exported or Transferred without a 
license or other written authorization. The Treaty applies to 
the movement of Defense Articles that are required for agreed 
combined military or counterterrorism operations; cooperative 
security and defense research, development, production, and 
support programs; security and defense projects where the 
Government of Australia is the end-user; and for U.S. 
government end-use. Either government may exclude certain 
Defense Articles from the application of the Treaty.
    Existing processes for the acquisition of defense articles 
and defense services under the U.S. Foreign Military Sales 
(FMS) program shall continue in effect. However, defense 
articles and defense services that fall within the scope of the 
Treaty, once acquired by and delivered to the Government of 
Australia pursuant to an FMS Letter of Offer and Acceptance, 
may be transferred within the Approved Community as if they had 
been exported pursuant to the Treaty.
    An exporter may request a license or other authorization 
from the Directorate of Defense Trade Controls in which case 
the terms of such license or authorization will apply instead 
of the procedures that will be established to implement the 
Treaty.

Approved Community

    Articles 4 and 5 identify the persons and entities that may 
Export or Transfer Defense Articles without a license or other 
written authorization. Specifically, Article 4 identifies the 
Australian persons, entities, and facilities that may send or 
receive such Defense Articles, and Article 5 identifies the 
persons, entities, and facilities of the United States that may 
send or receive such Defense Articles.
    The Australian entities and facilities that may send or 
receive Defense Articles pursuant to this Treaty are: (1) those 
facilities of the Government of Australia that are accredited 
pursuant to the General Security Agreement between the 
Government of Australia and the Government of the United States 
of America of June 25, 2002, and its implementing arrangements 
that are relevant to the scope of the Treaty; and (2) 
nongovernmental Australian entities and facilities that meet 
agreed eligibility requirements, are accredited pursuant to a 
process agreed to by both Parties in an Implementing 
Arrangement, and that are agreed to by both Parties for 
inclusion on a List. Once on the List, a nongovernmental 
Australian entity or facility will be removed from the List if 
either the United States or Australia considers such removal to 
be in its national interests.
    Personnel of the Government of Australia who meet agreed 
criteria, which at a minimum will require appropriate 
Australian security accreditation and a need-to-know, may be 
provided access to Defense Articles Exported or Transferred 
pursuant to the Treaty. Employees of the agreed nongovernmental 
entities and facilities who meet agreed criteria, which at a 
minimum will require appropriate Australian security 
accreditation and a need-to-know, may be provided access to 
Defense Articles Exported or Transferred pursuant to the 
Treaty.
    The departments and agencies of the U.S. government may 
send and receive Defense Articles pursuant to this Treaty. In 
addition, nongovernmental U.S. entities that are registered 
with the State Department's Directorate of Defense Trade 
Controls and that are eligible to export defense articles and 
defense services in accordance with U.S. law and regulation, 
including the AECA and the ITAR, may send or receive Defense 
Articles pursuant to this Treaty.
    U.S. government personnel with appropriate security 
clearance and a need-to-know may be provided access to Defense 
Articles Exported or Transferred pursuant to this Treaty. 
Employees of the nongovernmental U.S. entities referred to 
above who have appropriate security clearance and a need-to-
know may be provided access to Defense Articles Exported or 
Transferred pursuant to this Treaty.
    The facilities, entities, and personnel described in 
Article 4 comprise the Australian Community. The facilities, 
entities, and personnel described in Article 5 comprise the 
U.S. Community. The Australian and U.S. Communities comprise 
the Approved Community.

Exports of Defense Articles from the United States

    Article 6(1) of the Treaty provides that departments and 
agencies of the U.S. government and eligible nongovernmental 
U.S. entities may Export Defense Articles within the scope of 
this Treaty to a member of the Australian Community without 
licenses or other authorization. Article 6(2) requires that the 
U.S. government establish procedures to ensure proper 
identification of Defense Articles Exported pursuant to the 
Treaty. Article 6(3) requires that the Government of Australia 
establish procedures to ensure these Defense Articles are 
appropriately identified once they enter the Australian 
Community.
    The Directorate of Defense Trade Controls and other 
departments and agencies of the U.S. government will promulgate 
regulations and policies to effectuate Article 6. In 
particular, it will be necessary to establish procedures to 
ensure potential exporters know whether a proposed recipient is 
a member of the Australian Community, and whether the proposed 
operation, program or project falls within the scope of Article 
3.

Transfers of Defense Articles

    Article 7 provides that the Transfer of previously Exported 
Defense Articles to members of the Australian Community, as 
identified in Article 4, or the U.S. Community, as identified 
in Article 5, will not require authorization by the U.S. 
government. Pursuant to Article 9, however, if a member of the 
Australian community were to retransfer previously Exported 
Defense Articles outside of the Approved Community, approval of 
the Government of Australia would be required. (Such 
retransfers would include ``Re-transfers'' and ``Re-exports'' 
as defined in the Treaty). Prior to granting approval for Re-
transfers and Re-exports, the Government of Australia will 
require the exporter to provide supporting documentation that 
includes U.S. government approval. Any Re-transfer or Re-export 
without the approval of the Governments of Australia and the 
United States will be a violation of, at a minimum, the AECA 
and Australian criminal laws, and will be punishable as such.
    Exports of Defense Articles from a member of the U.S. 
Community to an entity, facility, or person outside of the 
Australian Community would continue to require a license or 
other written authorization by the Directorate of Defense Trade 
Controls of the Department of State.

Exports and Transfers from Australia

    Article 8 obligates the Government of Australia to ensure 
that Defense Articles exported from the Australian Community to 
the U.S. Community do not require additional export licenses or 
other authorizations. Specifically, Article 8(l) recognizes 
that the Government of Australia may satisfy this obligation 
through its blanket authorizations.
    The remainder of Article 8 deals with Defense Articles, the 
initial movement of which is from the Territory of Australia to 
the United States (identified as ``Australian Defence 
Articles'' in Article 8(7)). The Treaty provides that Australia 
shall ensure that these Australian Defence Articles are clearly 
marked or identified as such, and the U.S. government shall 
ensure that they will be treated as USML items upon entry to 
the United States. Australian Defence Articles exported from 
the United States shall be handled pursuant to the U.S. 
government's existing export control procedures. The U.S. 
government is obligated to consult with the Government of 
Australia concerning exports to countries the Australian 
Government views to be of national security or foreign policy 
concern.
    Pursuant to Article 8(6), if the Government of Australia 
becomes concerned about the ability of a particular 
nongovernmental U.S. entity to protect Australian Defence 
Articles, the Government of Australia may provide direction to 
the Australian Community concerning the access of that entity 
to Australian Defense Articles, after consulting with the U.S. 
government.

Proprietary rights and intellectual property

    Article 10(1) provides that nothing in the Treaty shall 
affect any rights to, or interests in, intellectual property or 
other proprietary information of the Parties or of any person 
or entity within the Approved Community. Article 10(2) provides 
that nothing in this Treaty shall affect any provisions for the 
protection of intellectual property and other proprietary 
information that may be agreed between the persons or entities 
Exporting or Transferring Defense Articles pursuant to the 
Treaty. Accordingly, such persons or entities may agree between 
themselves on procedures to provide protections to intellectual 
property or other proprietary information, additional to the 
protections afforded to classified information.

Protection of Defense Articles Exported from the United States

    Article 11 provides that Defense Articles Exported or 
Transferred pursuant to the Treaty will be marked, identified, 
transmitted, stored, and handled in accordance with the General 
Security Agreement between the Government of Australia and the 
Government of the United States of America of June 25, 2002, 
and implementing arrangements thereto. At a minimum, the 
Defense Articles Exported will be treated as Australian 
``restricted'' information. Such treatment will result in the 
application of Australian criminal law with respect to Defense 
Articles Exported pursuant to the Treaty. If the Defense 
Articles are classified at a higher level, they will be so 
marked and identified, and treated according to the 
requirements for that classification level in the 
aforementioned General Security Agreement.

Recordkeeping and notification

    Article 12 requires both Parties to require that entities 
within their respective Community Exporting, Transferring, or 
receiving Defense Articles pursuant to the Treaty maintain 
detailed records of such movements. Either Party may request 
that the other Party obtain, and provide it with copies of, 
such records. Article 12 further allows for either Party to 
establish procedures, which may include advance notification of 
certain Exports, to accomplish appropriate legislative 
notifications.

Enforcement

    Article 13 provides that if persons or entities Exporting 
or Transferring Defense Articles pursuant to the Treaty comply 
with the procedures established pursuant to this Treaty, 
including its Implementing Arrangements, and any regulations 
promulgated to implement the Treaty's effect on existing law, 
they shall be exempt from the generally applicable licensing 
requirements established pursuant to the AECA with respect to 
exports and transfers of Defense Articles. If, however, persons 
or entities Exporting or Transferring Defense Articles engage 
in conduct that is outside the scope of the Treaty, including 
certain of its Implementing Arrangements, and any regulations 
promulgated to implement the Treaty's effect on existing law, 
that conduct remains subject to the applicable licensing 
requirements and implementing regulations of the AECA.
    Because the Treaty is self-executing, this exemption will 
be created through ratification of the Treaty; no additional 
legislation will be required to implement the exemption in U.S. 
law. Those Implementing Arrangements constituting terms of the 
exemption are authorized by this self-executing Treaty. They 
will not be submitted for Senate advice and consent to 
ratification and also require no further legislative action to 
become a fully effective part of the exemption.
    Both governments will investigate potential violations of 
the procedures established pursuant to the Treaty. Where 
appropriate, both governments will cooperate in the conduct of 
such investigations as well as in prosecutions and 
administrative actions resulting from such investigations.
    As with exports that are regulated pursuant to Section 38 
of the AECA, as amended, it is important to ensure that Defense 
Articles exported or transferred pursuant to the Treaty are 
properly handled and controlled. In this regard, the 
governments will review the procedures utilized with respect to 
post-shipment verification and end-use or end-user monitoring 
for current exports to ensure that they are appropriate for 
exports or transfers pursuant to this Treaty. Such procedures 
will be modified as required.

Implementing arrangement

    Article 14(1) of the Treaty provides that the Parties shall 
conclude, on an expedited basis, Implementing Arrangements for 
this Treaty, which may be amended or supplemented by the 
Parties from time to time. For example, the Implementing 
Arrangements will establish eligibility requirements for 
persons to be considered part of the Australian Community.
    Article 14(2) further provides that the Parties will 
include in such Implementing Arrangements a process by which 
entities in the Approved Community may transition from the 
requirements of U.S. government defense export licenses or 
other authorizations issued under the ITAR to the regime 
established under the Treaty.
    The Administration does not intend to submit any of the 
Implementing Arrangements to the Senate for advice and consent, 
but it is prepared to provide these implementing Arrangements 
to the Senate for its information.

Implementing agencies

    Article 15 of the Treaty requires that each Party designate 
an authorized agency to implement its obligations under the 
Treaty. The authorized agency for the Government of the United 
States is the Department of State. The authorized agency for 
the Government of Australia is the Department of Defence. 
Either Party may change the designation of its authorized 
agency by providing written notice to the other Party.

Relationship to other international agreements

    Article 16 provides that the Treaty does not affect the 
rights and obligations of either Party under other 
international agreements to which it is a Party.

Consultations

    Article 17 of the Treaty requires that the Parties consult 
at least annually on cooperative aspects of their export 
control relationship and to review the operation of the Treaty. 
It further clarifies that the consultations are intended to 
provide a mechanism to review and address all relevant export 
control issues. Such issues therefore are not limited to issues 
specifically arising under the Treaty.

Dispute resolution

    Article 18 provides that any disputes between the Parties 
arising out of, or in connection with, the Treaty shall he 
resolved through consultations between the Parties and shall 
not be referred to any court, tribunal, or third party.

Amendments

    Article 19 provides that the Treaty may be amended upon 
written agreement of the Parties.

Entry into force

    In accordance with Article 20, the Treaty shall enter into 
force upon an exchange of notes confirming that each Party has 
completed the necessary domestic requirements to bring the 
Treaty into force. The United States will not provide such 
notice until the Senate provides its advice and consent to 
ratification of the Treaty and the President ratifies the 
Treaty.

Duration and withdrawal

    Article 21(1) provides that the Treaty shall be of 
unlimited duration. Article 21(2) further provides that either 
Party may withdraw from the Treaty if it decides that 
extraordinary events related to the subject matter of the 
Treaty have jeopardized its national interests. Should a Party 
decide to withdraw from the Treaty, it shall notify the other 
Party of its intent to withdraw and shall include a statement 
of the extraordinary events that it regards as having 
jeopardized its national interests. The Parties shall commence 
consultations within 30 days of the provision of such 
notification, with a view to allowing the continuation of the 
Treaty. If the notifying Party does not agree to the 
continuation of the Treaty, the withdrawal of the notifying 
Party will take effect six months after the provision of such 
notification.
    Article 21(3) provides that should either Party withdraw 
from the Treaty, the procedures for the protection of Defense 
Articles that were exported pursuant to the Treaty and for 
handling Australian Defence Articles as referred to in Article 
8 shall continue in effect until appropriate export licenses or 
other authorizations are in place.