Australian Guide to Export Controls and Best Practices

1 The Australian Industry Group Australian Guide to Export Controls and best Practices December 2016 Page 2 of 154 Australian Guide to Export Controls and best Practices DISCLAIMER: This Guide has been developed by the Australian Export control Forum in the Australian Industry Group (AIG). The information contained herein is not intended to be relied upon as legal opinion and does not constitute, in any manner, legal advice. All information is provided as is and is subject to change. The authors of this Guide do not assume any legal liability or responsibility for the accuracy and completeness of the information herein.

2 The Australian Industry Group Australian Guide to Export Controls and best Practices A Guide for Australian companies, researchers and academic institutions handling defence and dual-use controlled goods and technology subject to Australian and Export Controls . Last updated: 19 December 2016 Page 3 of 154 Australian Guide to Export Controls and best Practices Acknowledgements: The Guide has been completely revised by the best Practices Working Group of the Australian Export control Forum. Working Group participants are experienced practitioners in the Export /import control arena and have provided their time and input to complete the Guide .

3 Current participants included; Jurgen Zacny Thales Australia (Editor and Chair) Eva Galfi International Trade Advisors (Editor and Contributor) Zoran Franicevich - Thales Australia Julia Reed Northrop Grumman Corporation Chris Read BAE Australia Andrew Giulinn Saab Australia Terry Miles RUAG Australia Special thanks goes to Ms Janice Nand (Sparke Helmore Lawyers) for input in relation to Dual/Third Country Nationals and also to Mr Jason Brown (Thales Australia) for his input in relation to Supply Chain Security. The Group would like to acknowledge the assistance from relevant government agencies (including the Defence Export control Branch) in the development and review of the Guide .

4 Page 4 of 154 Australian Guide to Export Controls and best Practices TABLE OF CONTENTS INTRODUCTION 8 PART 1 10 GENERAL INFORMATION ABOUT CONTROLLED EXPORTS / TECHNOLOGY 10 INFORMATION 10 WHAT ARE Export Controls ? 10 WHY IS Export control IMPORTANT? 12 WHO SHOULD BE CONCERNED ABOUT Export Controls ? 12 Export Controls : UNIVERSITIES AND RESEARCH INSTITUTIONS 13 WHAT IS OR COULD BE A CONTROLLED Export ? 14 WHY Australian BUSINESSES NEED TO CONSIDER Export Controls 16 NON-COMPLIANCE CONSEQUENCES 17 PART 2 18 EMBARGOES, SANCTIONS AND TREATIES 18 18 Australian SANCTIONS 18 SANCTIONS AND EMBARGOES 18 Australian CONSOLIDATED LIST 19 / DEFENCE TRADE CO-OPERATION TREATY 20 APPROVED COMMUNITY 21 OPERATING UNDER THE TREATY 22 THE SCOPE OF THE TREATY IS DETERMINED BY SEVERAL ELEMENTS.

5 23 REFERENCE 24 PART 3 25 Australian Controls 25 Page 5 of 154 Australian Guide to Export Controls and best Practices OF Australian Export Controls 25 LEGISLATIVE BASIS FOR Australian Export Controls 25 WHO ADMINISTERS Australian Export Controls ? 26 HOW TO Export Australian CONTROLLED (DSGL) TECHNOLOGY? 27 Export PERMITS 28 Australian PENALTIES 30 OF Australian IMPORT Controls 31 TRUSTED TRADER 32 PART 4 34 Export Controls 34 OF Export Controls 34 FMS 35 KEY GOVERNMENT ORGANISATIONS INVOLVED IN Export Controls 35 Export control REFORM 36 US ITAR REQUIREMENTS 38 WHAT IS A DEEMED Export ?

6 39 DESTINATION control STATEMENT 40 GOVERNMENT PROGRAMS (BLUE LANTERN, END USE VERIFICATION VISITS) 40 WATCH LIST 41 DUAL AND THIRD COUNTRY NATIONALS 42 RECORD KEEPING 45 PENALTIES FOR VIOLATION OF Export Controls 46 MITIGATING PENALTIES 47 PART 5 48 Australian best PRACTICE 48 COMPLIANCE AND MANAGEMENT PROGRAM 48 Page 6 of 154 Australian Guide to Export Controls and best Practices COMPLIANCE APPROACH 50 AGREEMENTS, APPROVALS AND PERMITS 53 TECHNOLOGY control PLAN 57 PHYSICAL SECURITY 62 HUMAN RESOURCES 64 SUPPLY CHAIN 65 TRAINING 70 AUDITING AND RISK ASSESSMENT 75 RECORDS 78 COMPLIANCE ISSUES AND VIOLATIONS 78 INTERNAL COMMUNICATIONS 79 PART 6 81 USEFUL RESOURCES 81 AND INTERNATIONAL LINKS 81 Australian LEGISLATION 81 INTERNATIONAL ORGANISATIONS.

7 REGIMES AND TREATIES 82 KEY Australian GOVERNMENT AGENCIES 82 UNITED STATES GOVERNMENT 84 KEY LEGISLATION/REGULATIONS 84 OTHER USEFUL LINKS 85 TRAINING / ASSISTANCE 86 ANNEX A: ABBREVIATIONS AND ACRONYMS 88 ANNEX B COMPLIANCE PROGRAM best PRACTICE A PERSPECTIVE 91 ANNEX C: INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR) 95 ANNEX D: Export ADMINISTRATION REGULATIONS (EAR) 100 ANNEX E: PRO FORMA TECHNOLOGY control PLAN 118 Page 7 of 154 Australian Guide to Export Controls and best Practices ANNEX E-1: PROJECT/SITE TECHNOLOGY control PLAN 141 Page 8 of 154 Australian Guide to Export Controls and best Practices INTRODUCTION The Export control Forum s best Practices Working Group, which consist of several Australian Defence Contractors and Government stakeholders, created this Guide with the intent that it will serve as a resource to Primes, Small and Medium Enterprises (SMEs), and universities and researchers, in the understanding of their obligations and the development of Export compliance programs.

8 This Guide addresses transactions that are outside the scope of the Australia Defence Trade Cooperation Treaty s Approved Community Arrangements. Part 1 of this Guide provides Australian exporters and universities general information about managing Export controlled goods and technology. Part 2 of this Guide provides an overview of the Office of Foreign Assets control (OFAC), the Defence Trade Cooperation Treaty (the Treaty) and corresponding screening Practices Part 3 an overview of Defence Export Controls (DEC) and Australian Border Force (ABF), and the consequences of violating Export control legislation, Part 4 an overview of International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR)

9 Including the Export control Reform and the consequences of violating Export control legislation, Part 5 provides examples of for managing controlled exports and technology. It was developed through interviews and the solicitation of written submissions from compliance managers at Australian Defence Contractors. General InformationPart 1 Embargoes, Sanctions and TreatiesPart 2 Australian Export / ImportControlsPart 3 US Export ControlsPart 4 Australian best PracticePart 5 Useful ResourcesPart 6 Page 9 of 154 Australian Guide to Export Controls and best Practices While the Working Group recognises that resource constraints may make it difficult for SMEs and universities to implement complex compliance programs, we trust that Part 5 of this Guide will help to provide guidance on the essential elements of effective compliance programs.

10 Which can be scaled to suit a variety of budgets and resource constraints. Many Australian exporters in the defence industry manage controlled technology that may also be subject to Export Controls , which have extraterritorial reach. As such, we have included in this Guide , basic information about the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR) and Office of Foreign Assets control (OFAC) as well as best practice materials to assist Australian exporters, particularly SME s, with compliance. Page 10 of 154 Australian Guide to Export Controls and best Practices PART 1 General Information about Controlled Exports / Technology 1.