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SME trade control

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As articulated by the Commonwealth government’s Defence Industry Innovation and Defence Export agendas, a large part of the future economic success for Australia rests in our ability to grow and support small businesses specialising in niche markets, particularly those developing dual-use technologies with applicability across the defence sector that can be commercialised, increasing market opportunities domestically and abroad.

These agendas are largely built off the back of Australia’s small and medium enterprises (SMEs), home-grown businesses offering innovative capabilities into global supply chains with a diversity of utility across various sectors. Supporting these SMEs achieve optimal economic success requires simple yet dynamic solutions in keeping with their business models, and which can be easily understood and implemented. In large part this equates to identifying opportunities where guidance, processes and risk management strategies are cross-matrixed to provide streamlined business solutions, which is crucial when it comes to the complexities associated with export controls and foreign military sales (FMS), whether those are imposed from partner nations or sovereignly determined.

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These challenges are particularly difficult for SMEs, who regularly face significant limitations in resourcing, experience and awareness surrounding US International Traffic in Arms Regulations (ITAR) or Export Administration Regulations (EAR), the “benchmarks” of regulatory controls when it comes to defence exports. While some have a cursory awareness of their responsibilities in managing US-derived controlled goods/technology, most operate without understanding the technological, economic, commercial and reputational repercussions of mis-handling controlled goods/technology. Add the complexities of US export control legislation, constantly evolving guidance on managing military and dual-use goods through export control reform, and even simple best practice guidance becomes difficult for SMEs to follow. 

Ensuring adequate protections are in place for US-controlled military and dual-use goods/technology managed on behalf of commercial partners and government customers must be incorporated into corporate export control policies, processes and training. First and foremost this begins with educating the SME community on the existence of export controls; the pervasiveness of US-derived goods/technology across Australian defence programs; the mechanisms of participating in programs associated with FMS sales; and their roles and responsibilities in managing US-controlled goods/technology. 

While government and industry primes have a level of appreciation for the challenges SMEs face in getting the right type of export control support, there is often limited knowledge and even less outreach put in place to address these needs. This is particularly true given the influx of major defence acquisition programs led by foreign defence primes, which often have the challenge of managing complex controlled technologies across two or more sovereign regimes. Part of fulfilling their Australian industry content (AIC) requirements means that primes carry responsibility in assisting SMEs comply with regulation, which in turn makes them eligible and competitive for participation in global supply chains.  Attaining global strategic trade control compliance requires SMEs receive straightforward guidance and industry best practice advice, presented in simple language and relatable to the way in which they run their day-to-day businesses, versus rigid and formulaic approaches leaving them further intimidated and confused about their responsibilities.

The challenge is for government (at both federal and state levels), industry primes and peak bodies to dedicate the necessary resources to assist SME’s in ensuring they achieve compliance, thus ensuring they are competitive when programs require access to controlled technology. The simple truth is that by the time it’s a problem, it’s far too late to ‘just start thinking about it’. And once an organisation is compromised in its ability to handle controlled technology, particularly that derived from the US, it is incredibly difficult to reverse the negative impacts.

If Australia is serious about its desire to grow a defence and dual-use sector that is economically sustainable and exportable, far more strategic consideration must be given to these issues from the outset. And while there are those in the industry who may regard regulatory matters as somewhat ‘optional’, opting to roll the dice and beg for forgiveness rather than ask for permission, understanding and complying with these requirements need not be overly burdensome or costly. Ensuring compliance and competiveness across industry can be done affordably, provided it is accounted for early. Like it or not, it is the reality if success is to be found in creating new export markets for the myriad technological advances being developed in Australia.

SME trade control
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