The End of ITAR

Recently Mike Kalms and Ed Morgan, defence and industry experts at KPMG, were reflecting on their experience of ITAR or the International Traffic in Arms Regulation regime founded in 1976 in the United States and controlling the US’ export of its Defence technologies since.?

Interviewer: So, Mike, can you help us understand ITAR? Why does it matter to Australia??

Mike: Well, let me start by saying I'd like to see a calculation of the cost of ITAR to Australian industry and the ADF.?The time lost waiting for a Technical Assistance Agreement (TAA) or a License to Export.?The stagnant capability as local US technology is not able to be accessed.?The hordes of managers and administrators that pass paperwork.?The facilitation costs.?The frustration of governments, or business and warfighters as the bureaucracy steps in to foil even those leaders most determined to collaborate and solve.?Tens, possibly hundreds of millions?across?the decades since ITAR commenced?I’d estimate.??

It's about time that all ended.

At least, it's time for it to end between the USA and its most important ally, Australia.? AUKUS should be the final rationale, the reason we bury this arcane system between two of modern history's greatest friends.

In the early 70s the US had a problem?with technology leakage, 50 years ago (my goodness 50 years of ITAR, that in itself causes me to pause!) US defense technology?data was being siphoned to enemy states. ?Remember those times, this was when technology and data being (largely) physically stolen or otherwise provided to America's adversaries.?So the US had to be careful, and an arrangement where such physical and digital assets were carefully controlled between parties (including?Australia) made some sense.?But two things have changed – and as a result the administration of the exchange between our two countries?needs to change too.???

First, the weakness in?the system isn't?the tech exchange anymore - it's the cyber security system around those businesses that exchange.?Aside from a business being on DISP, ITAR seem little concerned?with the real value of the asset being exchanged, or the capacity of the holder to match its importance with necessary security features.?ITAR is an unsophisticated administrative process that is ineffective in both dimensions.?Today it’s a cost with no commensurate benefit.

Second, the breadth of ITAR’s use is too wide. Bolts that could be purchased?at Bunnings are ITAR-entangled and require formal dispensation to move from one facility to another across an Australian airstrip to repair a US aircraft. A paperwork exchange that can (and often does) take months as the US Department of Commerce applies scarce workforce to its handraulic task.?

Time for ITAR to go.?But the worry is that once it’s gone (and it will go) the cultural neurosis of Defence and Defence Industry will be a far larger obstacle to overcome. If I don’t?have the 27 forms from the US Department of Commerce, how do I know I can give you this data-file, maintenance-handbook or widget??You watch us re-create ITAR in some bespoke, even more Byzantine manner.?Unless we take steps now to de-clutter our processes and free our people and systems from a 'don’t?do until you're told to’ mindset that ITAR has left as its legacy.

But what about the real risk of IP leaks to non-allies and non-partners? I've read estimates of $200B of US IP lost, but the cost of delay and slow response is now too high not to act.??

Interviewer: Ed, you have some experience in the blocks ITAR creates from the US side also. Can you walk us through these?

Ed: ?I think the issue we’re dealing with here is not just the blocks Mike talks about. That is all about the US tripping itself up over its best intentions – to preserve US capability for the US and its allies, not realizing that the speed of growth of US competitors has outstripped the legal frameworks it set in place to protect itself and allies from mass proliferation.

To put it simply, ITAR legislation formed in 1976 has not kept up in practice or purpose with the speed of strategic growth, and strategic technology growth, globally. China has emerged as the US’ peer global competitor, seeking to match and overtake the US and US allies in key areas of US geographic interest, such as the Asia-Pacific and now broader Indo-Pacific.

Technology has meanwhile changed to make common technologies inherently “strategic”, in a way not envisaged in 1976. For example, the US learned in its Iraq war against ISIS that access to commercial technologies, well-manned and well-positioned, could trump the US’ might in tactical situations which quickly became strategic ones. This in part meant the US got bogged down in a conflict it believed would be over in weeks, months at most. So the complex mix of strategy, technology and agile use became the US’ greatest enemy, a technological and strategic giant.

In essence, the US needs to change how it thinks about its technology and its strategic relationships, because in many ways ‘technology at speed’ is the modern battlefield, much more than ‘geography and position’ used to be.

Interviewer: Can you tell us more about this?

Ed: Well, you can do things with modern digital capabilities not even envisaged even in 1976 (ITAR), 1991 (Iraq 1), and 2003 (Iraq 2), not just because of the capabilities but because of how connected they are. Cyberspace best exemplifies this evolution, since it’s the constant connection of all things digital and, often, all things battlefield as well.

Interviewer: So, you think cyber is the heart of the modern battlefield, what does that mean for ITAR?

Ed: Well, everything and nothing. Everything, because cyber is a developing domain for which ITAR isn’t accounting very well at all. And nothing, because it may be the battlespace has already moved beyond ITARs entirely, and the US just needs to accept that, remove it for trusted partners like Australia and move on.

It may be time for the US to position its technological and strategic relationships more purposely – with countries like Japan, for example, whose robotics capabilities, including autonomous robotics, are well advanced of some US industries. But US industries can’t access this Japanese capability because they get bitten by ITARs in reverse.?A task for the QUAD perhaps.

So I’m with Mike. ?Let’s work together to refine, advance and go well beyond ITAR, which things like AUKUS probably help us do.?Not ‘everything at once’ because the bureaucracy won’t be able to change quickly enough, but let’s focus on a few key areas, e.g., submarines and build out from there. Practical, step-by-step change that’s feasible and achievable for our governments and industries.