Part 1: Export Control
by Amara Graps
It’s a significant milestone, in the development of any nascent technology, to be recognized by policy makers as important for national security. Australia is one of a group of countries across the world which have recently imposed export controls on quantum technology, while some of the field’s leaders, such as Michael Biercuk, founder and CEO of quantum startup: Q-CTRL, questions the need from a technical perspective.
Export Control: Double-Edged Sword
Export Control is a double-edged sword, switching between the pros of: 1) national security protection, 2) meeting international obligations, 3) national economic interests, and 4) encouraging domestic innovation with the cons of: 1) economic impact on companies, 2) trade barrier retaliation, 3) stifling innovation and 4) compliance burdens.
Australia’s own training for their export control begins with a message of the “Four Ws: When? Where? Why? Who?” to show the security dimension:
- Are the goods controlled for export- either military or dual-use?
- Could the goods be used in a WMD program?
- Are the goods for a military end use?
GQI’s answer from a quantum technology perspective: “Yes, but not today.”
GQI encourages investors to recognise that most quantum technologies will ultimately be dual use in nature. We must expect tightening export controls, evolving defense-related regulations, and the need for international legal frameworks. The legal dimension of quantum technology is characterized by a race to establish IP rights. As quantum capabilities grow, we can expect increasingly sophisticated and possibly contentious legal challenges, requiring careful balance between fostering innovation, ensuring national security, and protecting individual rights.
Export Control: AUKUS
Australia’s quantum export control discussion began several years ago. In September 2021, to unlock investment and cut red-tape, Australia established an export License-free partnership: AUKUS, with the United Kingdom and the United States, with the goal of strengthening defense and security cooperation between the three countries, especially in the area of emerging technology. Quantum technology is one such emerging technology.
Since 2021, the three countries have worked to harmonize their export policies under the AUKUS agreement. This new, in-depth study, by Greenwalt and Corben, evaluates their progress: AUKUS enablers? Assessing defence trade control reforms in Australia and the United States. The report highlights the significant decision-making power of the US with concerns that they have ultimate authority in the decision-making process, which may not fully reflect the trilateral spirit of AUKUS. In addition, there is a noted cultural and information bias towards US military technology, with underappreciation of allied contributions. These preferences have, as result, encouraged Australian businesses to relocate to the US, as described in Mayo and Corben’s Defence Industry Roundtable Series 2 report, in order to scale and sell their goods to the US Department of Defense.
Export Control: Strategic Communication Needed
One potential risk, highlighted in the Greenwalt and Corben report, regards the consequences of controversies: that AUKUS exemptions could be suspended under controversial conditions, thereby increasing the importance of managing compliance and regulatory literacy amongst Australian companies. Therefore, the Australian government must emphasize their strategic communication.
The Australian Policy makers have some alignment with their Public, who understands that their exports are key to the country’s growth. In a statement from their public discussion:
“The opportunities for future growth in Australia’s exports are immense and reflect changing global trends, expanded market access, new technology and innovative products. Taking advantage of these opportunities will require collaboration across industry and government; investment; and a continued commitment to open trade.”
The Australian government can do better, however. The key to avoiding controversies is strategic government communication, which is one of the key findings of Mayo and Corben’s Roundtable Series 2 report. The authors write that the Department of Defence, government and industry are all aware of the need to enhance the quality and regularity of their strategic communication in the interests of better understanding and aligning each constituency’s strategy and bottom-line objectives.
Such strategic communication is needed especially now.
Export Control: Tightened with an Unusual Penalty
Australia’s Department of Defence recently imposed stricter export controls on quantum computing technology. Earlier this year, the government passed the Defence Trade Controls Amendment Act 2024 and the Safeguarding Australia’s Military Secrets Act 2024, which amended Australian defence trade controls, to more closely emulate specific elements of US regulations, and to provide UK and the US with reciprocal licensing exemptions.
The additional compliance burdens are not the main problem with the stricter export controls, however. Michael Biercuk explains that it is the asymmetric penalty structure, which doesn’t apply under similar conditions to their peers in the US and UK.
In particular, Biercuk describes the absolute liability combined with criminal penalties under Sec 10A. Even unintentional infractions of the new regulations may result in up to 10 years in prison with no chance of criminal defense, unless a special license is obtained for each and every transfer of the technology. Such penalties will have an impact on the entire Australian quantum ecosystem.
Part 2 will describe what part of Australia’s Quantum Ecosystem can help clarify their communication.
August 29, 2024