EXPLANATORY STATEMENT
CUSTOMS (PROHIBITED EXPORTS) REGULATIONS (AMENDMENT)
STATUTORY RULES 1989 NO. 59
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR INDUSTRY, TECHNOLOGY AND COMMERCE
Section 112 of the Customs Act 1901 provides in part that:
“(1) The Governor-General may, by regulation, prohibit the exportation of goods from Australia.
(2) The power conferred by sub-section (1) may be exercised - …..(c) by prohibiting the exportation of goods unless specified conditions or restrictions are complied with
The Customs (Prohibited Exports) Regulations (the Regulations), impose restrictions on goods specified in Schedules to the Regulations, by prohibiting exportation absolutely, or subject to the permission of a specified Minister of State.
Regulation 13E prohibits the exportation of goods specified in Gazette No. P37 of 16 December 1987 (essentially militarily sensitive dual-use technology items nominated by the Co-ordinating Committee for Multilateral Export Controls (COCOM) for restricted or controlled access) to countries listed in Schedule 16 of the Regulations.
Background
In November 1988 the Government agreed to the amendment of the Customs (Prohibited Exports) Regulations to extend Australia’s existing export controls over “dual-use” technology to all exports of such technology, in exchange for various trade concessions from the United States to facilitate Australian participation in and access to intra-COCOM trade in advanced technology.
By way of background, the United States and a number of other (mainly NATO) countries, concerned at the implications of access to militarily sensitive dual-use technology, operate through a Co-ordinating Committee for Multilateral Export Controls (“COCOM”) to restrict access by “eastern-block” countries to such technology.
Although not a member of COCOM, Australia has for some years voluntarily adhered to the COCOM objectives by restricting access by the prescribed eastern-block countries to such dual-use technology, and in recent years has introduced amendments to the regulations to implement that policy. Australia has done so in accordance with its own strategic interests and in order to protect its access to United States’ and other COCOM high technology.
The present Australian COCOM regulatory regime is contained in regulations 13E to 13H of the Customs (Prohibited Exports) Regulations. Regulation 13E, added by Statutory Rules 1987 No. 115, prohibits the exportation to the eastern-block countries (identified in Schedule 16 of the Regulations) of any of the goods specified in Gazette No. P37 of 16 December 1987), unless a permission for such exportation is granted by the Minister for Defence in accordance with that regulation. Regulation 13F provides that the Minister for Defence may, by notice published in the Gazette, declare that a permission granted under regulation 13E shall cease to have force on the day of gazettal.
Following the introduction of regulation 13E, it was discovered that “COCOM” goods were being exported indirectly to the proscribed countries, by a process of diversion through non-proscribed third-party countries. To combat this, regulation 13G was introduced to give the Minister for Defence a broad discretion to prevent such diversion.
It has been acknowledged that while these controls meet most of the COCOM requirements, adjustments are necessary to make them fully COCOM comparable.
As the export concessions from the United States which the Government’s decision prescribed as a pre-condition to adjusting Australia’s COCOM regulations were satisfactorily settled in negotiations with the United States in mid-December of last year, the extension of Australia’s COCOM controls is now appropriate.
The proposed Statutory Rule amends the Regulations to achieve the following:
a. the new system prohibits the exportation of COCOM goods to all countries, unless a licence or a permission is first obtained;
b. generally, a licence will be available for export of middle and lower-range dual-technology goods to COCOM countries, or for lower range goods to COCOM co-operating counties; otherwise, a permission will be required on a shipment by shipment basis.
c. the Minister’s limited power to revoke a permission where the holder of the permission fails to comply with a condition or requirement specified in the permission, is extended to cover licenses as well.
Details of the amendments are set out in the Attachment to this Explanatory Statement.
ATTACHMENT
Amendments to the Customs (Prohibited Exports) Regulations
regulation 1 provides for the amendments to commence on 23 May 1989. This date of commencement is intended to provide sufficient lead time for industry to become informed of the new arrangements for licences and permissions contained in the legislation and to make the requisite licence or permission applications prior to the commencement of the new control regime.
regulation 2 is a formal machinery provision, to refer to the Customs (Prohibited Exports) Regulations as the “Principal Regulations”.
regulation 3 amends regulation 13E of the Principal Regulations, as follows:
paragraphs (a) and (b) amend subregulations 13E(1) and 13E(2) to provide that the exportation of those dual-use technology goods specified in Gazette No. P6 of 23 March 1989 (copy attached) is prohibited to all countries (not just the 13 countries “eastern-block” countries currently prescribed) unless a licence or permission (not just a permission as currently provided) to export such goods is first obtained and produced to a Collector.
paragraph (c) amends subregulation 13E(3) by deleting the first 3 paragraphs of the existing subregulation and inserting 3 new paragraphs. The new subregulation 13E(3c) sets out specific conditions which shall apply to a licence or permission issued under subregulation 13E(2). (The specific conditions previously imposed only related to permissions). The conditions relate to the following:
- that where a person is specified in the licence or permission as the consignee, the goods are exported to that person (new paragraph 13E(3)(a), similar to the current paragraph 3(b));
- that where a country is specified in the licence or permission, the goods are exported to that country (new paragraph 13E(3)(b), again similar to the current paragraph 3(b));
- that, where required by the Minister for Defence, the holder of the licence or permission will obtain from the consignee an undertaking that the consignee will not re-export or otherwise dispose of the goods (new paragraph 13E(3)(c), similar to the existing paragraph 3(c)).
- the previous condition specified in paragraph 3(a) now appears as new subregulation 13E(3c)).
paragraph (d) inserts new subregulations 13E(3A), 13E(3B), 13E(3C) and 13E(3D) to set out general conditions which may be imposed in a licence or permission issued under subregulation 13E(2). The general conditions which may be imposed include the following:
- new subregulation 13E(3A) provides that, in addition to the conditions imposed on a licence or permission under subregulation 13E(3), the holder shall comply with any other conditions specified in the licence or permission.
- new subregulation 13E(3B) provides that conditions imposed in a licence or permission under regulation 13E, shall apply, insofar as applicable, at the time the goods are exported and before and after that time. This is seen as necessary in particular to ground the condition relating to undertakings in 13E(3)(c).
- new subregulation 13E(3C) provides that goods exported pursuant to a permission shall be exported within six months of the granting of the permission, or within such other period specified in the permission.
- new subregulation 13E(3D) provides that licences may be issued for such period as is specified in the licence, or without any particular time limitation.
paragraph (e) amends subregulation 13E(7), which provides that the Minister for Defence may revoke a permission where the holder has failed to comply with a condition imposed by the permission. The amendment will extend the application of that provision to licences issued in accordance with the newly inserted provisions, so that subregulation 13E(7) will provide that, on breach of a condition, the Minister may revoke the licence or permission to which the condition relates.
regulation 4 repeals regulations 13F and 13G.
regulation 13F empowers the Minister for Defence to declare, by notice published in the Gazette, that a permission granted under regulation 13E is to cease to have force on and from a day specified in the permission.
It is considered that a power of this nature, enabling as it does the unreviewable termination of a permission, is more appropriately located in the Customs Act 1901, and an appropriate amendment will be proposed to the Act for that purpose.
regulation 13G is a mechanism designed to prevent the diversion of dual-use technology through third-party countries to countries listed in Schedule 16.
The extension of the control regime to cover all countries renders both regulation 136 and Schedule 16 redundant. (Schedule 16 is repealed by Regulation 6 of the Statutory Rule.)
regulation 5 is a consequential amendment to alter references to the permission regime already contained in the regulations to include reference to the new licence system (where appropriate).
regulation 6 repeals Schedule 16.
Schedule 16 provides the basis of the existing permission regime, by listing the countries to which dual-technology goods may not be exported.
The extension of the control regime to cover all countries renders Schedule 16 redundant.