Australia’s export control rules for tangibles have been amended to more closely align with the regime for intangible supplies.
As of 21 April 2018, changes to the Customs (Prohibited Exports) Regulations 1958 (Cth) came into force. The amendments are intended, so far as possible, to treat transfer of the same controlled subject-matter outside of Australia in a physical form consistently with intangible transfers (such as via email or allowing access by another intangible means).
The Regulations set the rules for export of controlled goods. The rules for controlled intangible supplies are contained in the Defence Trade Controls Act 2012 (Cth). Prior to amending the Regulations, the separate tangible and intangible regimes in some instances treated the same controlled subject-matter differently. For example, a person who brought goods containing controlled subject-matter into Australia on a temporary basis might have been required to obtain a permit to export the goods back out of Australia. In contrast, a person would not have been subject to controls for accessing the same content via their emails or from a server when the person was physically outside of Australia.
The changes to the Regulations impacting when permits to export goods are required include:
- A new prohibition on exporting controlled technology and software stored on an uncontrolled good without a permit. Such items should be treated as controlled goods for export.
- An exemption to the need for a permit to export controlled goods when exported temporarily from Australia, but not transferred to another person.
- An exemption to the need for a permit to export controlled goods to the origin of import after it was temporarily imported into Australia.
The Regulations also contain changes to the basis on which controlled goods export permits will be issued or revoked. The changes largely enhance the transparency of the permit process. The main changes are the following:
- A new Ministerial power to revoke a permit where it is determined that the export would prejudice Australia’s national security, defence or international relations.
- New criteria that the Defence Minister may have regard to in determining whether or not to grant a permit.
- New requirements around attaching or varying conditions for a permit.
- A new requirement for the Minister to notify and give reasons if a permit is refused.
- A new review mechanism for permit decisions.
The changes bring the control rules for tangible exports better in line with those for intangible supplies providing the opportunity for businesses to streamline their controlled supplies compliance process.
The changes to the Regulations come into effect just as an independent review into the operation of the Defence Trade Controls Act 2012 commences. The Review aims to identify if there are any gaps in the Act’s controls or any unintended consequences arising from the current operation of the Act. Stakeholders are invited to make submissions here until 31 May 2018.
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Thanks to Associate Candice Colman for her assistance in preparing this alert.