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Go8 response to the 2023 Review of the Defence Trade Controls Act 2012

Mr Peter Tesch and Professor Graeme Samuel AC
Review of the Defence Trade Controls Act 2012

27 October 2023

The Group of Eight (Go8), which represents Australia’s research-intensive universities, welcomes the opportunity to respond to the Review of the Defence Trade Controls Act 2012. Go8 universities are all ranked in the world’s top 100, six in the top 50, and collectively spend some $7.7 billion on R&D annually.

Please note that this submission represents the views of the Go8 network and member universities may wish to make their own individual submissions. The Go8 consents for this submission to be published in full.

Go8 response to the Terms of Reference

Whether the Act is fit for purpose, including whether it contains appropriate controls to effectively manage the supply, brokering and publication of intangible technology.

  • The Go8 considers the Act largely fit for purpose, however notes gaps in the Act’s control as outlined below.

Whether there are any gaps in the Act’s controls.

  • The Defence and Strategic Goods List (DSGL) (particularly as it relates to the dual-use list at Part 2) is out‑of‑date and inaccessible and as a result, serves a limited purpose.
    • The Go8 recognises the challenges of keeping the list current in the face of fast developing technologies and a complex (and changing) geopolitical environment. This impacts the relevance of, and therefore the need to, control certain technologies.
    • However, more could and should be done to update the DSGL, in addition to regular consultation with participating states of other export control regimes[1]. Regular dialogue with the university research community, as proposed by the Go8 in discussions with the Department of Defence regarding the ramifications of new, emerging and cutting-edge technologies will inform what goods and technologies should be added to the DSGL. This would be in addition to the standard domestic consultations to initiate wholescale DSGL updates[2].
    • In addition, more granular discussion in our Export Controls framework of the relevance of the List of Critical Technologies in the National Interest (CT List) to assessing risks for export controls is needed. While some Go8 members are using the CT list to increase awareness of potential risks in their research communities, it would be useful to have formalised advice regarding how the DSGL, CT list and the Sensitive Technologies List (if it still exists) can be harmonised in universities’ consideration of export controls risks[3].
    • The Go8 notes that, in the absence of a technology or item being listed, there is limited recourse for a university to pause or cancel a proposed research project involving international partnerships, which it perceives may be contrary to the export controls regime or to Australia’s national interest.
    • Consideration needs to be given to increasing the accessibility and useability of the DSGL. Despite improvements to the online tool since the 2018 Review, Part 2 of the DSGL is difficult to navigate and interpret and it can be challenging to identify where a risk may exist. Go8 universities’ compliance therefore continues to depend heavily on the capacity of the DEC Office to provide timely and effective advice.
  • The Go8 acknowledges that there is a perceived (and potentially actual) gap relating to control of transfer of relevant goods and technology within country.
    • This perception prompts additional caution when universities consider the inclusion of foreign colleagues or students in research projects of potential interest under the DEC. At a minimum, this creates tensions among research project proponents, and more significantly can create gaps in the project team which can be difficult to fill should alternative expertise or emerging talent be limited. As this self-censorship escalates, universities choose to simply not proceed with certain projects. Yet these may be the very projects necessary to build Australia’s capability and workforce in areas of urgent need, including critical technologies.
    • If the DEC regime is to be extended to transfer of goods and technology within country, the Go8 emphasises the importance of Australia’s immigration/visa system to helping regulate who within Australia receives goods or technology listed on the DSGL.
      • The Go8 recognises that the immigration system alone may be insufficient to provide adequate assurance regarding who may be trusted partners in research in controlled areas.
      • Go8 universities conduct their own checks of staff and students, including potential international research students to work in research areas of interest to the DEC regime. The development of a detailed set of criteria by the Department of Defence would assist with the vetting process.
      • Recognising that a general exemption for all international research students is not feasible, consideration should be given to a tailored exemption system based on specific factors and carefully designed in consultation with the university sector.
      • One alternative is a system of permits where approvals are sought for a specified small subset of individual international research students working in research areas of interest to the DEC regime. However, the Go8 would need assurance that the process for granting permits would be streamlined and rapid, given international competition for research talent.
  • The Go8 supports a more holistic definition of research, including basic scientific, for the purposes of the Act (and its exemption)
    • The DTC Act 2012 definition of Basic Scientific Research (copied below) duplicates the Organisation for Economic Co-operation and Development (OECD) Frascati Manual[4][5] definition of basic research. Nevertheless, this definition has led to difficulties in interpretation and how it has been applied for the purposes of the DEC regime.

‘“Basic scientific research” means experimental or theoretical work undertaken principally to acquire new knowledge of the fundamental principles of phenomena or observable facts, not primarily directed towards a specific practical aim or objective.’

  • While there has been broad support for the approach taken by the Export Administration Regulations (EAR), a wholescale replacement of the definition of ‘basic scientific research’ with the EAR’s ‘fundamental research’ definition (copied) would not be sufficient. The EAR definition does not cover the nature of the research, rather focuses on the intent to publish or not, and could therefore apply to either basic or applied research. Furthermore, the EAR definition limits the scope to science, engineering or mathematics.

“Fundamental research means research in science, engineering, or mathematics, the results of which ordinarily are published and shared broadly within the research community, and for which the researchers have not accepted restrictions for proprietary or national security reasons.”

  • The Go8 recommends incorporating definitions of ‘basic research’ and ‘applied research’ with an additional clearly set out basis for exemption, including but not limited to the intent to publish as discussed in the EAR’s ‘fundamental research’ definition. ‘Basic research’ should be characterised in a discipline agnostic way.
    • That is, it would be helpful for research to be discussed in terms of its nature in a way that is familiar to researchers such as in the existing DTC definition, but also the intent for the research such as in the EAR definition.

Whether the Act strikes an appropriate balance between fulfilling national security requirements and supporting trade, research and international collaboration.

  • The Go8 considers that the Act itself largely strikes that balance.
  • However, in view of the shifting geopolitical environment, rapid technological development and the continued growth of Australia’s international education industry, further support is needed to ensure that balance is not compromised.
  • In relation to other reform being considered by the Government to the DTC regime, careful consideration is needed regarding added controls and exemptions, so an imbalance is not introduced between national security and research, including that supported by international collaboration. Additional awareness‑raising and education is needed to underpin the Act’s effectiveness and that balance. While Go8 universities have dedicated staff (in varying degrees) to consider compliance requirements and to advise and guide researchers regarding the risks, their ability to do so would be enhanced by additional and more granular DEC office programs to increase understanding of the requirements, and of changes or additions to those requirements.
    • One larger Go8 university advised that it needed at times to refer to US resources to gain a sense of what the risks may or not be, given the absence of that granularity in DEC tools and resources.
    • Several Go8 universities indicated they were challenged in determining the risks that emerging technologies present from the DSGL and other tools in the DEC portfolio, having to refer to the CT list for additional indications of potential risks.
    • There is a need for carefully honed communications targeted at the new generation of researchers working in different and emerging areas of research. Go8 universities have identified a list of potential resources including case studies, consistent messaging, accessible advice such as factsheets, clear ways of determining exemptions especially on basic scientific research grounds, additional digital tools, transparency around rulings and a framework for considering emerging technologies.

Whether any unintended consequences are resulting from the Act’s controls.

  • As noted previously, Go8 universities are self-censoring research activity which can lead to non-approvals for potential projects involving research or technologies of interest and international partnerships with colleagues or students.
    • This is not restricted to potential collaborations with partners from countries identified in sanctions regimes that Australia implements, nor to additional countries identified as prohibited or sanctioned countries in the USA export controls regime.
    • These practices will continue in the absence of additional guidance from the Government and compromise Australia’s potential for enhanced or even sovereign capability in areas such as critical technologies.
  • More generally, the administrative burden involved in navigating the Act and the DSGL can also be self‑limiting when it comes to choosing research projects and partnerships.
  • In rare circumstances, there may be ramifications to partnerships from delays in processing times, or even the perception by an outside partner (including industry) of potential delays.

Whether the Act aligns with international best practice.

  • The Go8 has no comment against this term of reference.

Any other matters considered relevant, including human rights considerations.

  • Go8 universities strongly endorse the service, direct advice, support and online tools that the DEC Office provides, noting that they are critical and must be expanded.
  • The Go8 welcomes the consideration of options notified in the final Canberra roundtable on 24 October 2023, to bolster the ease of compliance under the DEC regime. We further urge consideration of the gaps in support as highlighted in this submission, in any further development of those options. While they will not replace a highly desirable expansion of the DEC Office to further support the regime, they have the potential to significantly assist if designed in close consultation with academia, industry and other relevant stakeholders.
    • Comprehensive compendium of guidelines: at minimum, these must serve to enhance understanding of the DSGL and to assist universities’ internal assessments of risks in situations not clearly covered by the DSGL.
    • Compendium of rulings: this would be highly beneficial. There is strong Go8 interest in accessing case studies, and for detail and transparency around assessments and decisions, as an educative resource.
    • System of trusted advisors accredited by Defence. In theory, such a system would be useful, if regularly updated or re-trained as needed, if sufficiently populated and with rolling spare capacity to adjust to increased needs or sudden exits. Effective adoption and uptake would depend on the details of the system, including whether the advisors are intended to be inserted into institutions (or networks of institutions), and whether accreditation is intended to extend to existing DEC personnel in our universities.
  • In relation to other options you proposed:
    • Increased penalties as a deterrent. The Go8 has a strong positive approach to compliance under the DEC regime. It is unlikely that increased penalties will influence the approach by our universities, however may be an added signal to potential partners.
    • Self-generated communities of practice and shared tools to increase awareness and understanding. While in theory this would seem a logical approach to increasing capability, in practice these may be challenging to implement without additional and dedicated resources. For example, such communities of practice may be more feasible if trusted advisors were resourced to form the core of such communities. The development of tools may rely on access to data (such as compliance data) that relevant parties may not be prepared to share.
      • In the Go8, limited sharing of experience on DEC has historically occurred either informally among known DEC contacts or via other formal Go8 committees that serve a broader purpose (such as research ethics).
      • Following the 2018 Review of the DTC Act, the Go8 constituted a short-lived Go8 DTC Reference Group to support the Go8’s input to the Government’s response to the Review. This group considered and contributed initially to the development of an AI tool by one Go8 university to assist with compliance, however limited data meant that the tool (still in existence) never progressed to a shared Go8 resource.

[1] As discussed at https://www.legislation.gov.au/Details/F2021L01198/Explanatory%20Statement/Text and https://oia.pmc.gov.au/published-impact-analyses-and-reports/remaking-defence-and-strategic-goods-list-dsgl
[2] In 2019, to foster such dialogue, the Go8 invited relevant Department of Defence colleagues (FAS and below) to three Go8 Innovation and Commercialisation Summits dealing respectively with Defence, Space and AI, covering cutting edge developments and potential commercialisation in these areas.
[3] For further context, the Review may wish to consider the Go8 Submission to the consultation on the 2022 List of Critical Technologies in the National Interest, including recommendations for greater clarity in the definition of a CT and the stated purpose and use of the CT List (available at https://go8.edu.au/go8-submission-to-the-consultation-on-the-2022-list-of-critical-technologies-in-the-national-interest)
[4] OECD 2015, Frascati Manual 2015 Guidelines for Collecting and Reporting Data on Research and Experimental Development (see https://www.oecd.org/innovation/frascati-manual-2015-9789264239012-en.htm)
[5] The Frascati Manual defines three types of R&D: basic research, applied research, and experimental development.