The Defence Trade Controls Act 2012 (DTC Act ) commenced on 13 November 2012. It will have a broader reach than its name suggests. In particular, it will mean a person in Australia will require a permit to provide controlled technology in an intangible form (eg, by email, facsimile or internet download) across Australia's borders.

There is also a new offence for unauthorised publishing or disseminating to the public controlled technology (within Australia or across borders).

The DTC Act has a two year transition period, during which no offences apply. Each offence carries a maximum penalty of 10 years imprisonment or a $275,000 fine, or both. An attempt to supply goods or technology in breach of the DTC Act could also result in forfeiture of the goods or technology (and anything containing them).

During the transition period a steering committee will monitor a pilot program for implementing the DTC Act.

What should be done now?

You should assess if your business deals with controlled subject-matter. If so, you may need a permit to provide that technology across Australia's borders. You may also need approval if you wish to publish or disseminate details about the controlled technology. At this time you should:

  • start testing how the DTC Act will apply to your business;
  • assess what new compliance measures you will need to implement; and
  • consider if you wish to engage with the government or the steering committee during the pilot.

What does the DTC Act cover?

The DTC Act:

  • gives effect to the Australia - United States Defense Trade Cooperation Treaty; and
  • closes gaps in Australia's export control regime. The main gap was the unregulated transfer of controlled technology by intangible means. This is now regulated as "DSGL technology".

Under current law, exporting controlled tangible goods is already regulated under a permit system.

What is DSGL technology?

DSGL technology is technology or software defined in the Defence and Strategic Goods List ( DSGL ). The DSGL is issued under customs regulations in 2 parts:

  • Part 1 covers subject-matter with a military or lethal use purpose; and
  • Part 2 covers subject-matter with a commercial or dual-use purpose.

The DSGL identifies goods and technology assessed as with the potential to be put to harmful use. This includes items with both a military and non-military application (ie, dual-use items). Dual-use items subject to controls include manufacturing equipment (eg, used for high precision manufacturing), electronics, computers, telecommunications and information security items (eg, software with a high level of encryption functionality).

The DSGL states what about an item is controlled. For example, the DSGL:

  • only identifies certain aspects of an item as controlled (ie, the aspects with the potentially harmful application);
  • may only control certain information about an item (eg, in some cases controlled technology is limited to information enabling production or development of the controlled aspects of the item. In other cases, controlled technology also includes information enabling use of the controlled aspects of the item); and
  • identifies subject-matter outside its scope (eg, the DSGL identifies certain software and technology in the public domain or relating to basic scientific research as outside its scope).

Additionally, the DTC Act gives the Minister discretion to issue instruments on circumstances where no permit is required.

Offences for exporting intangibly without a permit

When the offence provisions commence, it will be an offence to do the following without a permit or in breach of a permit condition:

  • supply (broadly defined) DSGL technology to another person from within Australia to a place outside Australia; or
  • provide access to DSGL technology to another person where the supplier is within Australia and the other person is outside Australia.

Publication offence

It will be an offence to publish or otherwise disseminate DSGL technology to the public, or a section of the public by electronic or other means, without approval or in circumstances where the DSGL technology is not lawfully available to the public. This offence applies regardless of whether the person is publishing within or across Australian borders. The defendant must prove the DSGL technology was already lawfully made available to the public.

The DTC Act does not define what is meant by to publish or disseminate DSGL technology to the public. It is a different test to the items identified in the DSGL as in the public domain (and so not DSGL technology).

The publication offence has the potential to constrain past practices on sharing information (eg, including in research papers or at conferences).

Examples on how the DTC Act will impact business

A range of activities are impacted by the DTC Act. Example activities requiring a permit are below (subject to a Ministerial instrument that none is required).

  • Education services - Australian educational institutions using DSGL technology in their courses will require permits to take those courses and teach them outside Australia. A permit will be required for the institution in Australia to give students outside Australia access to DSGL technology course materials online or via email. Exchange of research containing DSGL technology with foreign institutions by email or over the internet will also require a permit. The universities sector was active in engaging with the Government on amendments before the DTC Act was passed. Despite the amendments, concerns remain that Australia's educational sector may be disadvantaged as the DTC Act is likely to require permits for some activities that are not similarly regulated in other countries.
  • Defence supplies - Defence suppliers are the main industry impacted by the DTC Act. Many of them commonly deal with controlled material in tangible and intangible forms. Given this, the DTC Act may have less practical impact on defence suppliers than other industries (other than defence suppliers wishing to take advantage of the Treaty). Defence suppliers dealing with controlled tangible goods will look to adapt their existing processes and compliance systems to include dealing with DSGL technology.
  • Online business activities - Businesses making DSGL technology software available to download over the internet will need a permit if this is across Australian borders. Suppliers wishing to make manuals or other content containing DSGL technology available online will also need a permit if this can be accessed across Australian borders.
  • Inter-company, joint and outsourcing projects - Businesses wishing to transfer DSGL technology across Australian borders for a business collaboration, development project or outsourcing arrangement will need a permit, even if access is to be given to an employee of a company within the same group.
  • Software as a service and cloud computing arrangements - Software as a service and cloud computing service arrangements that involve DSGL technology passing across Australia's borders need to be examined to assess if, given the particular service set-up, a permit is required and which party needs to obtain the permit (ie, the service provider or the customer). The United States already regulates intangible transfers of controlled technology. The US Government has issued guidance for these types of services (eg, to clarify circumstances where the US service provider will not breach export controls if the foreign customer is uploading and down-loading controlled technology to the hosted service).

Permits and compliance

Details of the permit system are to be released. The DTC Act contemplates that a permit can cover a range of supplies (or a one-off supply). A business needing a permit will need to carefully describe the activities covered by the permit to limit the number of permits required.

Compliance measures a business will need to implement include:

  • identifying what DSGL technology the business handles;
  • implementing measures and training personnel to prevent the business allowing access to or communications of DSGL technology in breach of the DTC Act. A challenge for some businesses will be in identifying when they are allowing access across Australia's borders. The physical location of the recipient may not always be apparent; and
  • implementing processes to comply with permit conditions such as reporting and record retention requirements (eg, to maintain records for each separate export under the one permit).

The Government has said further information will be issued to assist implementing compliance programs.


Brokering (arranging) for the supply of controlled goods or DSGL technology from a place outside Australia to another place outside Australia is regulated under the DTC Act through a permit system. A person assessing if their activities include brokering should pay close attention the types of arrangements and countries that will trigger a requirement to obtain a permit.

Australia - United States Defense Trade Cooperation Treaty

The key object of the Treaty is to better facilitate two-way trade between Australia and the US in defence goods, services and technology without needing individual export permits. This is achieved by establishing an Approved Community of Government facilities and companies in both countries.

If a supplier is a member of an Approved Community, the DTC Act will apply differently to its dealings with controlled technology within that scheme to as described above.