Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
DEFENCE TRADE CONTROLS BILL 2011
SUPPLEMENTARY EXPLANATORY MEMORANDUM
(Amendments to be moved on behalf of the Government)
(Circulated by authority of the Minister for Defence,
the Honourable Stephen Smith MP)
DEFENCE TRADE CONTROLS BILL 2011
GENERAL OUTLINE
The Defence Trade Control Bill 2011 (the Bill) was introduced on 2 November
2011 and was referred to the Senate Foreign Affairs, Defence and Trade
Legislation Committee for inquiry and report. The Committee provided a
preliminary report on the Bill on 15 August 2012 which recommended some
amendments to the Bill and Explanatory Memorandum as well as recommending
further consultation be undertaken.
Following the release of the preliminary report the Minister for Defence
appointed Mr Ken Peacock and Dr Alex Zelinsky to conduct further
consultations on the Bill. Mr Peacock and Dr Zelinsky have held
consultations with key University and research sector stakeholders, the
Chief Scientist and the Department of Industry, Innovation, Science,
Research and Tertiary Education.
The following amendments address the recommendations provided by the Senate
Committee and Mr Peacock and Dr Zelinsky. The amendments to the Bill
provide for:
. The commencement provisions in the Bill to be amended to allow for
commencement of the majority of the clause to be proclaimed. This will
provide for a period for industry and the academic and research sector
to transition to the new strengthening export controls in Part 2 of
the Bill introduces and enable the staggered commencement of
provisions of the Bill.
A definition for the term "arranges" to be included, as recommended by
the Senate Committee, to provide greater certainty as to the
activities the brokering provisions are intended to cover.
. The concept of Defence services to be removed from the offence and
brokering provisions in Part 2 as explicit coverage of these services
is unnecessary as the services will now be covered by the definition
of 'DSGL technology'.
. The offences of supplying DSGL technology to be adjusted to remove the
controls of supply inside Australia and the concept of supplying
technology be adjusted to include supply by way of providing access to
technology.
. The clarification of decision making criteria for giving a permit for
the supply of the DSGL technology and for a permit in relation to
arranging the supply of DSGL goods or technology. This amendment will
give effect to the recommendation of the Senate Committee that
criteria relating to international relations; human rights; regional
security; national security; and foreign policy that are specified in
the Explanatory Memorandum be reflected in the legislation.
. The inclusion for a new offence for publishing or disseminating DSGL
technology to the public, or to a section of the public by electronic
or other means.
. Technical adjustments to better reflect the scope of the two parts of
the Defence Trade Cooperation Munitions List
. The adjustment of record-keeping requirements to reduce the
administrative burden on industry and the academic and research
sectors.
. Establishment of Strengthened Export Controls Steering Group.
Financial Impact Statement
Funding for the scheme to implement the provisions related to the Treaty
has been provided as an administered appropriation to the Department of
Defence. There are no additional costs associated with this Bill beyond
the costs already included in the current Budget and forward estimates to
implement the Treaty.
DEFENCE TRADE CONTROLS BILL 2011
NOTES ON AMENDMENTS
Amendment (1)
1. Amendment 1 will substitute new commencement provisions for the majority
of clauses in the Bill. Clauses 3 to 74 will commence on a day or days
to be fixed by proclamation. The proclamation must not specify a day
that occurs before the day the Treaty between the Government of Australia
and the Government of the United States of America concerning Defense
Trade Cooperation done at Sydney on 5 September 2007 enters into force.
However, if any of the provisions do not commence within the period of 2
years beginning on the day the Treaty enters into force, they commence on
the day after the end of that period. The Minister must notify in the
Gazette the day on which the Treaty enters into force.
2. Clauses 74A and 75 commence on the day on which the Bill receives Royal
Assent. This will allow the Strengthened Export Controls Steering Group
and the regulation making power to commence operation on assent.
3. Commencement of clauses 1 and 2 remains as the date of Royal Assent.
4. Commencement by proclamation for clauses 3 to 74 allows for a phased
transition period. This period will last 2 years from the day the Treaty
enters into force. It is anticipated that during the first year, the
Defence Export Control Office will focus on assisting research and
industry institutions with a comprehensive education and awareness
raising program that will assist organisations to build their internal
compliance arrangements. This will include a pilot program, which is
further detailed in this Explanatory Memorandum under section 74A.
5. The subsequent 12 months in the transition period will allow
institutions to seek permits under section 11, register as brokers under
section 15 and seek brokering permits under section 16. During this
period the relevant offence provisions will not apply.
6. Record-keeping obligations will commence as soon as a permit is
obtained. Record-keeping offence provisions will not commence until other
offence provisions relating to strengthened export controls commence
Amendment (2)
7. Amendment 2 revises the simplified outline of the Act in relation to
Part 2 the Bill to reflect the amendments.
Amendment (3)
8. Amendment 3 inserts a reference to the meaning of arranges which is
specified in section 5A.
Amendment (4)
9. Amendment 4 inserts a new definition of DSGL technology into clause 4 of
the Bill. DSGL technology means technology or software as defined in the
Defence and Strategic Goods List, and within the scope of that list.
10. Under the DSGL, technology means specific information necessary for the
development, production or use of a product. This information may take
the form of technical data or technical assistance. For many DSGL goods,
the technology will be controlled if the supplied technology would enable
the 'production' or 'development' of the DSGL good. For more sensitive
DSGL goods, the technology will be controlled if the supplied technology
would enable the 'production', 'development' or 'use' of the DSGL good.
Further, it is only the information which is peculiarly responsible for
achieving or extending the controlled performance levels, characteristics
or functions of that DSGL-listed item that is controlled by the term DSGL
technology.
11. It is noted that the DSGL contains exemptions relating to technology or
software in the public domain and to basic scientific research.
12. As a consequence of the new definition of DSGL technology amendments 9,
10, 11 and 13 will adjust clauses 10, 14 and 15 of the Bill to apply the
definition of DSGL technology in place of the current concept of
"technology relating to goods, where the technology is listed on the
DSGL". Other minor consequential amendments will be made to the Bill to
reflect the removal of the concept of defence services and the inclusion
of the definition of DSGL technology.
Amendment (5)
13. Amendment 5 adjusts the definition of supply to also include, in
relation to DSGL technology, providing access to DSGL technology.
Amendment (6)
14. Amendment 6 makes a consequential amendment to the definition of
Article 3(1) US Defence Article as a result of the amendment to the
Defence Trade Munitions List (DTCML) at clause 36 of the Bill (amendment
18). An Article 3(1) US Defence Article means goods that are listed on
Part 1 of the DTCML and are not listed on Part 2 of the DTCML and where
the goods are initially moved from a United States Community Member to an
Australian Community member for an activity within the scope of the
Defense Trade Cooperation Treaty.
Amendment (7)
15. Amendment 7 makes the same consequential amendment as amendment 6 the
definition of Article 3(3) US Defence Article. An Article 3(3) US Defence
Article means goods listed on Part 1 of the DTCML and not listed on Part
2 DTCML, acquired by Australia through the Foreign Military Sales (FMS)
program which fall within the scope of the Treaty.
Amendment (8)
Amendment 8 inserts a new clause 5A which provides meaning for the term
arranges. This provides that a broker arranges for another person to
supply goods or DSGL technology if the broker acts as an agent of a
person, or as an intermediary between two or more persons in relation to
the supply. This provision will apply where the broker receives, or is
to receive, any commission, fee or other benefit for so acting, or where
the broker so acts for the purpose of advancing a political, religious or
ideological cause.
16. The term 'arranges' is not intended to cover situations where a first
person provides a second person with a point of contact for the supply of
DSGL goods or technology and there is no fee, commission or other benefit
obtained by the first person.
17. This clause is not intended to limit the meaning of arranges for the
purposes of the Act.
Amendment (9)
18. Amendment 9 substitutes a new clause 10 which provides for offences
relating to the supply of DSGL technology. The amendment adjusts clause
10 to remove the controls of supply inside Australia and includes the new
concept of supplying technology by way of providing access.
19. Subclause 10(1) creates an offence where a person:
a) supplies DSGL technology to another person; and
b) either:
i. the supply is from a place in Australia to a place outside
Australia; or
ii. if the supply is the provision of access to DSGL technology
- at the time of the provision of access, the supplier is in
Australia and the other person is outside Australia; and
c) the supplier either:
i. does not hold a permit under section 11; or
ii. contravenes a condition of their permit.
20. This offence regulates the supply of DSGL technology from Australia to
a place outside Australia. The offence also applies to the supply of
information where a person in Australia provides access to DSGL
technology to another person outside Australia. This offence will
apply to situations where the supplier does not actually send information
to another person rather they make access to the information available to
another person outside Australia. For example, the provision of access to
DSGL technology may occur by the sharing of data through centralised
servers on computer networks, internet-based hyperlinked documents, or
through the use of distributed peer-to-peer networking.
21. The maximum penalty for an offence under subclause 10(1) remains as 10
years imprisonment or 2,500 penalty units or both.
22. A consequential amendment is made to the exception in subclause 10(2)
as a result of the amendment to clause 36 of the Bill (amendment 18).
23. Amendment 9 also substitutes a new clause 11 which provides for permits
for the purposes of clause 10. The amendment adjusts clause 11 to apply
the definition of DSGL technology and remove the concept of defence
services as a result of amendment 4.
24. Clause 11 is also amended to ensure that in giving a permit under
clause 11 the Minister has regard to the criteria prescribed by the
regulations and to any other matters that the Minister considers
appropriate. This amendment will give effect to the recommendation of
the Senate Foreign Affairs, Defence and Trade Legislation Committee that
criteria relating to international relations; human rights; regional
security; national security; and foreign policy that are specified in the
Explanatory Memorandum be reflected in the legislation.
Amendment (10)
25. Amendment 10 substitutes a new clause 14 into the Bill to remove the
reference to the Minister giving a notice prohibiting the provision of
defence services, as defence services are now covered by the new
definition of DSGL technology (Amendment 4).
Amendment (11)
26. Amendment 11 substitutes a new offence provision for clause 14 to
remove the reference to defence services which is now covered by the new
definition of DSGL technology (Amendment 4).
Amendment (12)
27. Amendment 12 introduces a new offence for publishing or dissemining
DGSL technology.
28. Clause 14A(1) makes it an offence for a person to publish or otherwise
disseminate DSGL technology to the public, or to a section of the public,
by electronic or other means where the person does not hold an approval
under this section.
29. This offence will cover persons who intentionally release controlled
DSGL technology into the public domain. As a safeguard the offence
provision will include the ability for the Minister to give written
approval for the publication or dissemination of DSGL technology if it is
in the public interest to do so.
30. The offence does not apply if the DSGL technology has already been
lawfully made available to the public, or to the section of the public.
31. The defendant bears the burden of proof for the exception to the
offence. The term 'evidential burden' is defined in subsection 13.3(6)
of the Criminal Code Act 1995 as the burden of adducing or pointing to
evidence that suggests a reasonable possibility that a matter exists or
does not exist.
32. Where a defendant seeks to raise the defence, it is appropriate and
practical to require the defendant to adduce or point to evidence that
suggests the particular exception applies as these would be matters
within the defendant's personal knowledge.
33. Clause 14(3) provides that the Minister may, in writing, approve a
person publishing or otherwise disseminating specified DSGL technology to
the public or to a specified section of the public. The Minister may give
an approval only if the Minister is satisfied it is in the public
interest to do so.
34. The Minister's power to approve publication or dissemination is
included to cover the rare occasion that the public interest in sharing
DSGL technology outweighs the security risk of sharing that information.
For example, in case of the H5N1 Avian Influenza, there was a risk of
pandemic and it is arguable that the public interest benefit of sharing
the controlled information may have outweighed the security risk of
sharing the controlled information.
35. Clause 14A (5) provides that section 15.2 (extended geographical
jurisdiction - category B) of the Criminal Code Act 1995 applies to an
offence against subsections 14A(1). This means the offences will apply
to:
a) Australian citizens, residents and bodies corporate for conduct in
or outside of Australia;
b) conduct by any person that occurs wholly or partly in Australia;
or
c) conduct by any person outside Australia where the result of the
conduct occurs wholly or partly in Australia.
36. An approval from the Minister under clause 14 is not a legislative
instrument.
Amendment (13)
37. Amendment 13 substitutes a new clause 15 which provides an offence for
arranging supplies in relation to the DSGL. The amendment adjusts clause
15 to apply the definition of DSGL technology and remove the concept of
defence services as a result of amendment 4.
38. The term arranges is defined in the new clause 5A(amendment 8).
Amendment (14)
39. Amendment 14 is a consequential amendment which removes the reference
to defence services and includes a reference to the new term DSGL
technology for the offence provision relating clause 14, as a result of
amendment 4.
Amendment (15)
40. Amendment 15 is a consequential amendment to include the new term DSGL
technology in clause 16 which provides for registered brokers to apply
the Minister for permits, as a result of amendment 4.
Amendment (16)
41. Amendment 16 is amended to ensure that in giving a permit for a
brokering arrangement under clause 16 the Minister has regard to the
criteria prescribed by the regulations and to any other matters that the
Minister considers appropriate. This amendment will give effect to the
recommendation of the Senate Foreign Affairs, Defence and Trade
Legislation Committee that criteria relating to international relations;
human rights; regional security; national security; and foreign policy
that are specified in the Explanatory Memorandum be reflected in the
legislation.
Amendment (17)
42. Amendment 17 is a consequential amendment which amends Note 2 at the
end of subclause 27(1) of the Bill to include the new term DSGL
technology, as a result of amendment 4.
Amendment (18)
43. Amendment 18 adjusts subclause 36(3) of the Bill. Clause 36 requires
the Minister to make a document known as the Defense Trade Cooperation
Munitions List (DTCML). The DTCML must contain two parts. Part 1 is to
contain a list of either or both of the goods listed in the DSGL and
goods listed in the United States Munitions List referred to in Article
1(1)(n) of the Treaty. Part 2 of the DTCML is to contain a list of goods
that are exempt from the scope of the Treaty.
44. The amendment to subclause 36(3) is a technical amendment to better
recognise that there will be two parts of the DTCML which must be read
together.
Amendments (19) and (20)
45. Amendment 19 substitutes a new clause 58 which provides for the keeping
and retaining of records and amendment 20 makes a consequential
adjustment to a reference used in clause 59.
46. The amendments will reduce the administrative burden on industry and
the academic and research sectors. The record keeping requirements are
intentionally broad and provide that the person must only keep records of
the relevant activity that the person does. The regulations will
prescribe the information that is to be included in a record.
Amendment (21)
47. Amendment 21 is a consequential amendment adjusting a reference in
clause 63 which deals with the review of decisions, as a result of
amendment 9.
Amendment (22)
48. Amendment 22 is a consequential amendment adjusting a reference in
clause 71 which deals with the forfeiture, as a result of amendment 4.
Amendment (23), (24) and (25)
49. Amendment 23 adjusts subclause 73(2) which deals with those decisions
of the Minister which cannot be delegated to include decisions made under
the new clause 14A(3). The amendment will ensure that a decision to give
an approval to a person to publish or disseminate DSGL technology to the
public, or a specific section of the public, can only be made by the
Minister.
50. There are a limited a number of decisions under the Bill which have
specific factors that justify that the decision remain with the Minister.
This is due to their highly sensitive content and the fact that they
involve issues of the highest consequence to Government. It is considered
that the decision to approve publication or dissemination in clause
14A(3) falls within these types of decisions and should be non-delegable.
51. Amendments 24 and 25 are consequential amendments adjusting references
in clause 73 which deals with delegations made by the Minister, as a
result of amendment 9.
Amendment (26)
52. Amendment 26 inserts a new clause 74A which will establish the
Strengthened Export Controls Steering Group (the Steering Group). This
Group will provide oversight and independent advice until all the
provisions commence or up until the end of the Act's two year transition
period. The Group will report to the Minister for Defence and the
Minister responsible for research, currently the Minister for Tertiary
Education, Skills, Science and Research (the Ministers).
53. Subclause 74A(1) provides that the Steering Group will be established
as soon as is practicable after the Act receives Royal Assent. Members
must be appointed by the Minister for Defence in writing.
54. Subclause 74A(2) provides that the Minister for Defence will determine
the functions of the Steering Group. It is expected that the Group's
functions may include providing independent advice to the Department of
Defence and the Ministers throughout the transition period, including:
a) advising of the adequacy of organisational and government
arrangements to identify, assess and manage risks, costs and
administrative burden associated with intangible transfers of
DSGL technologies;
b) providing oversight, design and delivery advice regarding the
pilot program, to identify the adequacy of the legislation,
regulations, implementation arrangements and resources for
regulating intangible transfers;
c) providing recommendations on amendments to legislation,
regulations and implementing arrangements; and
d) advising the Department of Defence on how to obtain appropriate
technical expertise regarding Australian Government
consideration of the control lists of international regimes and
the Australian DSGL.
55. It is envisaged that the Steering Group will consider quarterly
progress reports from participants in the pilot on the implementation of
the strengthened export controls.
56. Subclause 74A(2) provides that the Steering Group give six monthly
written reports to the Ministers.
57. Subsection 74A(3) provides that the Steering Group must comply with
written instructions from the Minister for Defence.
58. Subsection 74A(4) provides that the Minister for Defence must designate
a member of the Steering Group as the Chair. It is expected that the
Steering Group will be chaired by an eminent person, and the other
members will be comprised of 10 representatives from government agencies,
industry and the research/university sectors. The Steering Group is
likely to be constituted as follows:
a) the Chair;
b) up to four representatives from the industry sector, one of whom
is the co-Deputy Chair;
c) two representatives from the university/research sectors, one of
whom is the co-Deputy Chair;
d) the CEO of the National Health and Medical Research Council, or
representative nominated by that CEO;
e) the CEO of the Australian Research Council, or representative
nominated by that CEO;
f) a representative from the Department of Industry, Innovation,
Science, Research and Tertiary Education; and
g) a representative from the Department of Defence.
59. Subclause 74A(5) provides that the Minister for Defence may determine
the terms and conditions applicable to a member of the Steering Group.
60. Subclause 74A(6) provides that being a member of the Steering Group is
not a public office within the meaning of the Remuneration Tribunal Act
1973.
61. Subclause 74A(7) provides that the Steering Group may determine its own
procedures in performing its functions.
62. Subclause 74A(8) provides that Steering Group's final report must be
given to the Ministers before the end of the period of two years after
the Treaty comes into force.
63. Subclause 74A(9) provides that the Steering Group is abolished
immediately after it has given its final report to the Ministers.
64. Subclause 74A(10) provides that the Minister must table a copy of the
Steering Group's final report in Parliament within 15 sitting days of
receiving the report.
65. Subclause 74A(11) provides that an instrument under clause 74A is not a
legislative instrument.
66. One of the main functions of the Steering Group will be to oversee the
pilot program that will be established during the Act's transition
period. There may be more than one pilot program.
67. The pilot program will determine the costs and benefits associated with
the regime, the feasibility of its implementation, the processes and
interaction required to successfully implement the Bill during the
transition period, and identify any aspects that require modification
prior to the offence provisions coming into full effect.
68. The framework for the pilot program is to be agreed by the Steering
Group and, pending consideration of the Steering Group, will span two
grant funding cycles with interim reporting to identify improvements.
69. The pilot program will review mechanisms by which organisations can
determine thresholds for technology assessments beyond which an
organisation will consult with Defence and, if required, seek a permit.
70. Specifically, the pilot program will evaluate the model where the
technology assessment process begins with an institutional assessment
process for open academically-based research in accordance with
guidelines incorporated into the supplement to the Australian Code for
the Responsible Conduct of Research. This step recognises that not all
activities to supply technology to 'develop,' 'produce,' or in some cases
'use' an item on the DSGL will involve the level of detail which is
peculiarly responsible for achieving or extending the controlled
performance levels, characteristics or functions of that DSGL-listed
item. The institution involved in activities of this type must have
processes for assessing technology and for determining when advice should
be sought from Defence about a possible permit.
This model provides exemptions from export controls for research where:
- the activity is 'basic scientific research', as defined in the
DSGL and Wassenaar Arrangements (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).
- the technology is already 'in the public domain', as defined in
the DSGL (technology or software which has been made available
without further restrictions upon its further dissemination
(copyright restrictions do not remove technology or software
from being in the public domain)).
71. Participants in the program will represent a cross section of industry
and the academic and research sectors. This will allow better analysis
of the strengthened export controls across the most relevant sectors.
72. The participants for the pilot program will be determined by the
Department of Defence.
73. The Steering Group will consider quarterly progress reports from
participants in the pilot program on implementation of the strengthened
export controls.
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