17 November 2023
Department of Defence
The Group of Eight (Go8), which represents Australia’s research-intensive universities, welcomes the opportunity to respond to the draft Defence Trade Controls Amendment Bill 2023.
Go8 universities are all ranked in the world’s top 100, with six in the top 50. We collectively invest $7.7 billion on R&D annually including 44 per cent of the total university sector’s defence R&D investment. Significantly we receive almost 80 per cent of total US Department of Defence funding to Australian universities. As such we are in a strong position to provide expert feedback on this Amendment Bill.
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. This submission follows the Go8 submission (dated 29 October 2023) to the related 2023 Review of the Defence Trade Controls Act 2012.
The Go8 strongly supports the intent of the Bill to create an export controls framework that will streamline the flow of defence trade between AUKUS partners, by creating an export licence-free environment to support higher education, research and industry in all three countries.
Indeed, we acknowledge that changes to our current defence export environment will be critical if Australia is to maximise the opportunities offered by the AUKUS agreement, especially in relation to Pillar II. However, our broader research and knowledge networks, especially those with critical partners across the Indo-Pacific, also help contribute to regional stability and furthering Australia’s strategic goals. This makes it critical that we strike a carefully calibrated balance between ensuring the necessary legislative protections while not damaging our ability to engage more broadly where it is in the national interest.
While we look forward to further and detailed engagement and consultation as we go through the legislative process, there are certain elements in this Bill that must be clarified as a matter of priority.
We recommend these clarifications are provided either explicitly in the Bill or that a commitment to provide clarity through some other mechanism is included in the Explanatory Memorandum.
These include the following threshold issues:
- The definition of research.
- The meaning of employees where they are the recipients of DSGL technology or services.
- The treatment of Australian citizens or permanent residents who also have other citizenship; and
- The treatment of foreign research students and training.
The Bill introduces a level of specificity to the export controls framework that will assist in universities’ assessment of risk based on the recipient’s country of residence or citizenship. While this specificity is limited, this is welcome as it more clearly delineates for universities the distinction to be applied in compliance depending on the country involved.
However, additional significant burden on universities is likely to remain given the extended regulation to location-agnostic transfer where recipients are foreign persons or entities, unless the exemptions prove to be broad and wide-ranging.
For this reason, any exemption related to “fundamental research” – and the exact definition to be used – will be critical in determining the extent to which the amendments will impact the sector.
If the majority of research conducted by universities is covered by this exemption, then the impact of other factors (as discussed below) will be lessened. Ensuring the definition is as straightforward to interpret as possible will address the concerns of the research community and simplify business processes to establish which activities will require permits.
Summary of Recommendations
- The Go8 recommends that “Fundamental Research” be defined as a matter of priority through consultation through UFIT.
- That the new export controls framework – in seeking to ensure an export-licence free environment for the three AUKUS countries – does not impose controls on Australian firms, research institutions and researchers that are more restrictive of international collaborations than those that apply to counterpart organisations and researchers in the US and UK.
- The Go8 strongly recommends the formal re-establishment of the Strengthened Export Controls Steering Group (Section 74A of the Act) for a time-limited period to play the same constructive role in the practical implementation of the reforms as it did from 2012-15, with a focus on practical implementation of the new offence provisions.
- Clarity be provided on the following additional elements within the Act: meaning of employees where they are the recipients of DSGL technology or services; treatment of Australian citizens or permanent residents who also have other citizenship; and the treatment of foreign research students and training.
- The development of outreach and engagement programs, as well as tools and assistance to aid in the implementation of the amendments. This should include examples and case studies, a journey tool to navigate the exemption framework, and access to timely advice, e.g., through a hotline.
- Extension of the suggested six-month pause in the provisions coming into effect following the Act receiving Royal Assent. This is to allow universities to make any system adjustments that might be necessary and for Defence to provide sufficient outreach and training.
Expected impact of the legislative changes on Go8 universities
Global research collaboration is a key contributor to the Go8’s success both internationally and domestically, providing our universities with access to leading global experts in numerous fields, cutting-edge knowledge, and networks that promote advanced or emerging technological development. Go8 universities contribute almost 60 per cent of all international collaborations by Australian universities.
As previously noted, our universities are heavily engaged in defence and defence related research. All members have either attained or are in the process of attaining DISP membership; we account for 44 per cent of the sector’s investment in defence R&D; and we receive almost 80 per cent of total US Department of Defence funding to Australian universities. A selection of our capabilities is listed in our Defence Capability Statement, available on our website.
Based on academic co-publications, the USA and the UK are the Go8’s top two collaborators in research, ahead of China The exceptions in the Bill for transfer to citizens, permanent residents, body corporates, and governments of the USA and the UK at a place in Australia, the USA or the UK mean that permits are not required for supply of DSGL goods or DSGL technology in those circumstances. This will support the streamlined and expedited transfer of technology between the AUKUS partners.
However, the Go8 also collaborates to a significant extent with researchers from other countries, including in the Indo-Pacific and members of the European Union. China is the third highest collaborator with the Go8 based on co-publications and India is of growing significance, partly due to its status as a Quad partner. These collaborations are vital, not only to research developments to address shared global challenges, but also to support the security and geopolitical stability of our region.
In addition, Go8 universities have campuses in other countries, such as Monash University’s campuses in Indonesia and Malaysia. It is the impact on these collaborations that need to be carefully calibrated to ensure an appropriate balance.
The Go8 has:
- Over 30,000 research students, 37 per cent of which are international research students.
- International students from 175 home countries, with our international research students originating from 145 home countries, including 10 per cent (in 2023) from countries on the Foreign Countries List.
- A further breakdown is as follows:
- 2% from UK
- 2% from the USA
- 36% from China (by comparison)
Impact on international research collaborations, on foreign research staff and foreign research students
The impact of the changes to extend regulation to the control of DSGL goods and services to foreign persons in Australia and wholly outside Australia has the potential to be significant unless the exemptions are expeditiously introduced and are clear and unambiguous, including for those who hold dual Australian citizenship.
As noted above, if the exemption for fundamental research captures the majority of university activity, the impact is likely to be reduced.
However, the Go8 advises that the following factors need to be considered:
- The Amendment Bill includes an exemption for foreign employees who are citizens or permanent residents of a foreign country specified in the Act’s Foreign Country List (FCL). This means that a deemed supply permit will be required for foreign employees who are not citizens of a country on the FCL. The FCL currently contains only 25 countries, the majority of which are in Europe. Notable omissions include many strategically important countries and research collaborators across the Indo-Pacific, including India, Indonesia, South Korea, Singapore, and Malaysia. This could mean an increase in permit requests for research not covered by the fundamental research exemption.
- The implications for universities with foreign campuses is also unclear. Monash University operates campuses in Indonesia and Malaysia. The Go8 seeks advice on whether the changes will result in additional scrutiny of researchers from international campuses coming to the Australian campus and undertaking research with DSGL technologies.
Impact on employees
Given the extension of regulation under the Bill to transfer DSGL goods, technology and services within Australia and wholly outside Australia, the Go8 welcomes the exemption from the need for permits where the supply is to an employee of the university where the university is the supplier, in the course of their duties, and where the employee is an Australian citizen or a permanent resident of Australia, or a citizen or permanent resident of a country listed on the FCL.
However, an employee is not defined in the Bill, nor are there any parameters to guide a consistent approach by universities (and industry) as to who might be an employee in their organisation. This will be a threshold issue as a range of personnel may be considered employees (or not), including:
- Contracted personnel
- Casual staff
- Staff who are also students of the university
- Support staff, such as IT staff or research infrastructure specialists, who in the course of providing support may need access to DSGL goods or technology
Research teams often comprise researchers with citizenship or permanent residency of various countries. The work of these research teams that is underway will be disrupted at best, and potentially cancelled, if permit application processes do not occur speedily.
Impact on Go8 students and researchers not covered by ‘exempted country’ provisions
The Go8 understands that the Government intends to introduce a definition of fundamental research in the export controls framework, via the DSGL. We further understand that this definition will focus on the intent to publish, and that the Department of Defence anticipates international research students who intend to publish are likely to be covered by the exemption.
The exemption will also cover those researchers who are employees but who are neither citizens nor permanent residents of Australia, the USA, the UK, or countries listed on the FCL.
As noted above, and given the criticality of this inclusion, the definition of fundamental research in the framework needs urgent attention and should be agreed with universities and the broader research sector in advance of the introduction of the Bill. The definition will need to be clear and unambiguous, while the intent for the use of the definition to exempt certain categories of researchers including students must also be explicit.
The definition of ‘fundamental research’, should encompass the varied pathways for research that are undertaken in Australian universities and with partners. While the intention to publish will likely exist in most cases, the circumstances of the research, such as not wholly within the lab, industry-focused research such as that supported by a range of Government schemes, collaborative research with industry partners in national research infrastructure facilities, may mean that publication occurs in a different timeframe or context to more traditional research. Nevertheless, there should be no confusion around the application of the exemption to such research if publication is intended.
The Go8 questions whether similar protocols should apply to HDR students who are citizens or permanent residents of countries listed on the Foreign Country List, as that which apply to employees. This will result in a small automatically exempted group of students.
DSGL services and ‘training’
The Go8 seeks confirmation that the provision of assistance (including training) in relation to the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarisation, destruction, processing or use of DSGL goods or technology does not include teaching of STEM subjects.
The Go8 seeks further clarification regarding when, and in what circumstances an offence does not apply to training. The Bill states a number of circumstances where the offence does not apply, for example if training is in relation to maintenance of the DSGL technology.
Impact on research collaboration
- Unless there is clarity, there is a risk of universities deciding not to embark on or pursue potentially highly beneficial collaborations involving controlled goods and technology. The cost is not only to the university, the sector, Australian research, but also to Australia’s long-term productivity and even national security.
- The lack of specific advice regarding the comparative risk levels that individual countries and jurisdictions present has caused a significant regulatory burden which can and should be alleviated by specific listings of countries and how they are to be treated, thereby enabling universities to apply the exports controls framework more precisely. However, exemptions for AUKUS partners go only some way to reducing that burden. The regulatory burden is also only partly allayed by the (welcome) exceptions for foreign employees who are citizens or permanent residents of foreign countries listed on the Foreign Country List.
- Given the FCL lists a small number of countries, universities will have to continue to take the same compliance approach to employees who are citizens and permanent residents of many countries (such as Singapore or South Korea) who at first glance would not present the same level of threat as countries on the Sanctions List (and those countries not on the Sanctions list but known to present geopolitical challenges).
- If countries are not specifically named on lists such as the Australian Sanctions lists, but present geopolitical challenges, universities expend considerable resources in ascertaining how collaborations are regarded under the export controls framework, so there will still remain a significant regulatory burden due to the non-listing/identification of other ‘lower-risk’ and ‘higher-risk’ countries.
- The regulatory burden will remain in relation to any foreign HDR students as they are not captured by this exemption (pending the relevance of the new definition of fundamental research).
- The Go8 is therefore concerned that the increased regulatory burden associated with the new locationally based controls will not be cancelled out or offset by the reduction of regulatory burden associated with exemptions for AUKUS partners and employees who are citizens or permanent residents of FCL-listed countries.
Supportive environment must be enhanced
The proposed amendments to the DTCA 2012 – even if they end up being largely mitigated in practice by the exemptions – represent a significant shift in approach to Australia’s defence export controls. Considerable confusion and uncertainty has already been expressed by some members of the research community through the media. The Go8 therefore stresses the need for outreach and engagement programs to educate the sector on the application of the new practices.
This should include tools to help researchers assess the need for permits for their activities. These could include:
- Examples, case studies and common scenarios published on the Defence Export Controls website
- A journey tool, similar to the DSGL online activity test, to navigate the exemption framework and advise whether a permit is likely to be required
- Access to timely advice through a chat or hotline
- Ongoing, meaningful engagement as challenges arise.
Timeframe to implementation
The Go8 notes that the Explanatory Memorandum Exposure Draft includes a clause stating that the provisions of the Act won’t commence for six-months following receipt of Royal Assent.
While we appreciate the inclusion of an adjustment period before the provisions come into effect, a six-month period may not be sufficient to take into account factors such as:
- The need for training and outreach programs to educate the sector on the changes and implications for practice
- The need for universities to update or adjust their systems to ensure that, for example, the citizenship or permanent residency status of all researchers associated with a given project is known
- To allow the provisions of associated instruments, which could impact the application of the Amendments to be made, e.g. such as any additional exceptions to be included through the Defence Trade Controls Regulation 2013 or DSGL, as noted on the consultation website.
 This is based on the last five years (2018-2022).