DEFENCE TRADE CONTROLS AMENDMENT BILL 2023 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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DEFENCE TRADE CONTROLS AMENDMENT BILL 2023

2022-2023 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA HOUSE OF REPRESENTATIVES DEFENCE TRADE CONTROLS AMENDMENT BILL 2023 EXPLANATORY MEMORANDUM Circulated by the authority of the Minister for Defence, the Honourable Richard Marles MP

GLOSSARY The following abbreviations and acronyms are used throughout this Explanatory Memorandum. Abbreviation Definition Criminal Code Criminal Code Act 1995 The Guide to Framing the Guide to Framing Commonwealth Offences, Infringement Commonwealth Offences Notices and Enforcement Powers published by the Attorney-General's Department DTC Act Defence Trade Controls Act 2012 DTC Amendment Act Defence Trade Controls Amendment Act 2023 the Bill Defence Trade Controls Amendment Bill 2023 DSGL Defence and Strategic Goods List Minister Minister for Defence SAMS Act Defence Amendment (Safeguarding Australia's Military Secrets) Act 2023

DEFENCE TRADE CONTROLS AMENDMENT BILL 2023 GENERAL OUTLINE Purpose of the Bill 1. The Defence Trade Controls Amendment Bill 2023 (the Bill) amends the Defence Trade Controls Act 2012 (DTC Act) through the insertion of provisions which: a. regulate the supply of certain Defence and Strategic Goods List (DSGL) military or dual-use technology to foreign persons within Australia; b. regulate the supply of certain DSGL military or dual-use goods and technology from a place outside of Australia to another place outside of Australia, or to a foreign person; c. regulate the provision of services in relation to DSGL Part 1 military goods or technology to foreign persons or entities; and d. remove the requirement to obtain a permit for supplies of certain DSGL goods and technology and the provision of certain DSGL services to the United Kingdom or the United States. 2. Regulated military and dual-use goods and technology are specified in a legislative instrument, the DSGL, as defined in regulation 2 of the Customs (Prohibited Exports) Regulations 1958 and made under paragraph 112(2A)(aa) of the Customs Act 1901. Goods and technology within the scope of the DSGL require a permit issued by Defence before the supply of those regulated goods or technology can occur. 3. The effect of the Bill is that: a. A person would commit an offence if they transfer technology listed on the DSGL to a foreign person or entity within Australia without a permit. b. A person would commit an offence if goods or technology on the DSGL that were previously exported or supplied out of Australia, are then supplied (or provided access to, in the case of technology) from a foreign country to: i. a person outside Australia (whether an Australian person or a foreign person); or ii. a foreign person (whether they are outside Australia or within Australia). c. A person would commit an offence if they provide DSGL services in the form of assistance (including training) to foreign persons, whether in Australia or abroad, in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarisation, destruction, processing, or use of Part 1 DSGL goods or technology without a permit. 1

4. The Bill will provide for an exemption from the need for a person to obtain a permit for certain supplies of goods and technology on the DSGL, or for the provision of certain services related to goods and technology on the DSGL, made to the United Kingdom or the United States. Policy Background 5. Australia's export control system is a key element of Australia's protective security framework. It aims to stop military goods and technology--and goods and technology that can be used in chemical, biological and nuclear weapons--from being transferred to individuals, states or groups with interests prejudicial to Australia's security, defence or international relations. 6. The Defence Strategic Review made clear that Australia is facing the most difficult set of strategic circumstances since the Second World War. To keep pace with these emerging challenges, it is essential that Australia has a robust protective security environment. It is also critical that Australia works with like-minded partners, especially with the United Kingdom and the United States, to enhance defence trade, deepen military interoperability and enhance defence capabilities. 7. Realising the full potential of AUKUS will not be possible without major changes to the way that AUKUS partners cooperate on defence industrial and technology issues. 8. To improve the speed and scale of technology transfer between AUKUS partners, Australia, the United Kingdom and the United States are reviewing their export control regimes to support the creation of an export licence-free environment among and between AUKUS partners. 9. This export licence-free environment will revolutionise trade among and between AUKUS partners and encourage industry, higher education and research sectors in all three nations to innovate and cooperate with lower technology transfer barriers and costs of trade. This would provide Australia and our partners a genuine capability development edge. 10. The purpose of this Bill is to strengthen Australia's export control framework in order to establish an export control regime that is comparable to the one the United States administers. Further, if implemented, these legislative proposals will create a licence-free environment for the supply of DSGL goods and technology and the provision of DSGL services from Australia to the United Kingdom and the United States. FINANCIAL IMPACT STATEMENT 11. The Department of Defence will be responsible for resourcing associated with the administration of the measures in the Bill. A detailed implementation plan will be developed and considered by the National Security Committee and the Expenditure Review Committee as part of the 2024-25 Budget Submission. 2

IMPACT ANALYSIS 12. A full Impact Analysis is available at https://www.defence.gov.au/about/reviews- inquiries/defence-trade-controls-amendment-bill-2023. STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS 13. The Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. 14. A full Statement of Computability with Human Rights is attached to this Explanatory Memorandum. 3

NOTES ON CLAUSES Clause 1 Short title 1. This clause would provide for the short title of the Act to be enacted by the Bill to be the Defence Trade Controls Amendment Act 2023 (DTC Amendment Act). Clause 2 Commencement 2. This clause would provide for the commencement of the provisions in the DTC Amendment Act in accordance with the table. 3. Item 1 of the table provides that sections 1 to 3, as well as anything else in the DTC Amendment Act not covered by an item in the table, commences on the day the Act receives the Royal Assent. 4. Item 2 of the table provides that the provisions contained in Schedule 1 of the DTC Amendment Act would commence on a single day to be fixed by Proclamation. However, if the provisions of the Act do not commence within the period of 6-months following the day the DTC Amendment Act receives the Royal Assent, they commence on the day after the end of that period. In effect, this would mean that if the DTC Amendment Act were to receive the Royal Assent on, for example, 1 January 2024, then the provisions of the Act would commence on 2 July 2024 if no Proclamation commencing the Act was made. 5. Item 3 of the table provides that the provisions contained in Schedule 2 of the DTC Amendment Act would commence on the later of: a. Immediately after the commencement of the provisions covered by item 2 of the table (see paragraph [4]); and b. Immediately after the commencement of the Defence Amendment (Safeguarding Australia's Military Secrets) Act 2023 (SAMS Act). 6. This would mean, for example, that if the provisions in item 1 commenced on 1 July 2024 and the SAMS Act commenced on 1 September 2024, then provisions covered by item 3 of the table would also commence on 1 September 2023, noting that this is the later of the two dates. However, if the SAMS Act does not commence, the provisions covered by item 3 will not commence. This is because the amendments being commenced by item 3 require the SAMS Act to be in force. Clause 3 Schedules 7. This clause would provide that the legislation that is specified in a Schedule to the DTC Amendment Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the Act has effect according to its terms. 8. The only legislation that is specified in a Schedule to the Bill is the DTC Act, as this is the only primary legislation that the Bill would amend. 4

SCHEDULE 1--MAIN AMENDMENTS Defence Trade Controls Act 2012 Item 1 Section 3 9. Item 1 of the Bill amends the simplified outline of the DTC Act to expand the reference to DSGL technology to include reference to DSGL goods and DSGL services. Item 2 Subsection 4(1) 10. Item 2 of the Bill inserts the following definitions into subsection 4(1) of the DTC Act. 11. Australian person means the Commonwealth, a State or a Territory or an authority of the Commonwealth, a State or a Territory, an individual who is an Australian citizen; an individual who is a permanent resident of Australia, or a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory. The purpose of this definition is to establish who is a foreign person, through the process of exclusion, by defining who is an Australian person. The definition is also used to establish the classes of persons and entities who fall within the application of subparagraph 10C(1)(d)(i) and are therefore subject to the offence provisions within subsection 10C(1). The intent of this definition and its use in subparagraph 10C(1)(d)(i) is to limit the offence provision to persons with sufficient connection to Australia. 12. constitutional DSGL services references subsection 5B(2) (inserted by item 5 of the Bill) for its meaning. 13. constitutional supply references subsection 5B(1) (inserted by item 5 of the Bill) for its meaning. 14. covered security clearance means a security clearance that: a. is given by the Australian Government Security Vetting Agency or by another Commonwealth, agency that is authorised or approved by the Commonwealth to issue security clearances; or is given by or on behalf of the Government of Canada, New Zealand, the United Kingdom or the United States of America or an authority of any of those governments; and b. is of a kind prescribed by the regulations for the purposes of this definition. 15. This definition is relevant to an exception that would be provided for the existing offence in section 10 of the DTC Act, as well as the new offences at sections 10A, 10B and 10C inserted by item 15 of the Bill. 16. DSGL goods means goods within the scope of the Defence and Strategic Goods List (DSGL). 17. DSGL services means the giving of assistance (including training) in relation to the design, development, engineering, manufacture, production, assembly, testing, repair, 5

maintenance, modification, operation, demilitarisation, destruction, processing or use of DSGL goods or DSGL technology that are within the scope of Part 1 of the DSGL. 18. This definition is relevant to item 15 of the Bill, which inserts new section 10C to the DTC Act. This new section would establish an offence where a person provides DSGL services to a foreign person in certain circumstances without a permit issued under section 11 of the DTC Act. Item 3 Subsection 4(1) (note to the definition of DSGL technology) 19. Item 3 removes the note related to exceptions listed in the DSGL. Item 4 Subsection 4(1) 20. Item 4 of the Bill inserts the following definitions into section 4 of the DTC Act: 21. foreign person means a person other than an Australian person. This definition is relevant for certain elements of the new offence provisions inserted by item 15 of the Bill, which concern the supply of DSGL technology to a foreign person within Australia, certain supplies of DSGL goods or DSGL technology from outside Australia to another place outside of Australia or to a foreign person, and the provision of DSGL services. 22. permanent resident of Australia means a person who is a permanent resident within the meaning of the Australian Citizenship Act 2007. 23. relevant DSGL service references subsection 5C(2) (inserted by item 5 of the Bill) for its meaning. All DSGL services will be a 'relevant DSGL service' unless they meet the criteria set out in subsection 5C(2) of the Bill. 24. relevant supply references subsection 5C(1) (inserted by item 5 of the Bill) for its meaning. All supplies of DSGL goods, or DSGL technology, will be a 'relevant supply' unless they meet the criteria set out in subsection 5C(1) of the Bill. Item 5 After section 5A 25. Item 5 of the Bill inserts new sections 5B and 5C into the DTC Act. Section 5B defines the meaning of 'constitutional supply', 'constitutional DSGL service' and other associated definitions. Section 5C defines the meaning of 'relevant supply' and 'relevant DSGL service' for the purposes of the Act. Section 5B Constitutional supplies and constitutional DSGL services 26. Section 5B defines the concept of 'constitutional supply' and 'constitutional DSGL service'. The purpose of this provision is to set out the Commonwealth constitutional heads of power that are being relied on for the offences contained in the Bill. Constitutional supplies 27. Subsection 5B(1) sets out the meaning of a constitutional supply. The purpose of this definition is to set out what types of supplies of DSGL goods or DSGL technology are regulated by the Bill. As such, the following types of supplies of DSGL goods and DSGL technology are regulated: 6

a. a supply of DSGL goods or DSGL technology made by, or on behalf of, or to a 'constitutional corporation' or a body corporate incorporated or registered in a Territory. The meaning of 'constitutional corporation' is provided in paragraph [32]. b. a supply of DSGL goods or DSGL technology made by, or on behalf of, or to: the government of a foreign country or of part of a foreign country an authority of the government of a foreign country an authority of the government of part of a foreign country c. a supply of DSGL goods or DSGL technology made by or to an 'alien'. A person is typically considered to be an 'alien' at law if they are not an Australian citizen. d. a supply of DSGL goods or DSGL technology: that wholly occurs outside Australia that is to or from a place outside Australia that is supplied or received outside of Australia--where the supply is the provision of access to DSGL technology e. a supply of DSGL goods or DSGL technology that occurs in the course of constitutional trade or commerce. The meaning of 'constitutional trade or commerce' is provided in paragraph [35]. f. a supply of DSGL goods or DSGL technology that occurs wholly or partly within a Territory (of Australia). g. a supply of DSGL goods or DSGL technology made by way of postal, telegraphic, telephonic or other like service. 'Other like services' typically include things such as the internet and telecommunications networks. 28. The effect of a supply of DSGL goods or DSGL technology falling into one of the categories above and being a constitutional supply is that the supply will be subject to the relevant offence provisions in section 10, 10A and 10B. It also means that a supplier would be required to apply for a permit under section 11 to authorise the making of the constitutional supply, unless an exception applies. Constitutional DSGL services 29. Subsection 5B(2) sets out the meaning of a constitutional DSGL service. The purpose of this definition is to set out what types of DSGL services are regulated by the Bill. As such, the following types of DSGL services are regulated: a. DSGL services provided by, or on behalf of, or to a constitutional corporation or a body corporate incorporated or registered in a Territory. The meaning of 'constitutional corporation' is provided in paragraph [32]. b. DSGL services provided by, or on behalf of, or to: the government of a foreign country or of part of a foreign country 7

an authority of the government of a foreign country an authority of the government of part of a foreign country c. DSGL services provided by or to an alien. A person is typically considered to be an 'alien' at law if they are not an Australian citizen. d. DSGL services provided wholly or partly outside Australia. e. DSGL services that occur in the course of constitutional trade or commerce. The meaning of 'constitutional trade or commerce' is provided in paragraph [35]. f. DSGL services that occurs wholly or partly within a Territory (of Australia). g. DSGL services made by way of postal, telegraphic, telephonic or other like service. 'Other like services' typically include things such as the internet and telecommunications networks. 30. The effect of a DSGL service falling into one of the categories above and being constitutional DSGL services is that the DSGL services will be subject to the relevant offence provision in section 10C. It also means that a provider would be required to apply for a permit under section 11 to authorise the provision of those constitutional DSGL services, unless an exception applies. Definitions 31. Subsection 5B(3) provides definitions for several terms used in section 5B. 32. In this section, the term constitutional corporation is defined to mean a corporation to which paragraph 51(xx) of the Constitution applies. Paragraph 51(xx) of the Constitution applies to 'foreign corporations' and 'trading or financial corporations formed within the limits of the Commonwealth'. 33. An entity may be a 'foreign corporation' depending on whether the corporation has been formed outside of Australia. 34. An entity may be a 'trading or financial corporation' depending on the activities undertaken by the entity. 'Trading' is the activity of providing, for reward, goods or services, and typically extends to business activities carried on with a view to earning revenue. 'Financial' activities are generally commercial dealings in finance, including transactions in which the subject is inherently financial in nature, such as banking or financial services. 35. In this section, the term constitutional trade or commerce is defined to mean trade or commerce: a. between Australia and places outside Australia; or b. among the States; or c. within a Territory, between a State and a Territory or between 2 Territories. 36. The effect of this definition is to set out when a supply of DSGL goods or DSGL technology, or the provision of DSGL services between two or more persons constitute conduct arising in the course of 'constitutional trade or commerce'. 8

Section 5C Relevant supplies and relevant DSGL services 37. Section 5C defines the concept of a 'relevant supply' and a 'relevant DSGL service'. Relevant supply 38. By default, supplies of DSGL goods or DSGL technologies will be a relevant supply. For the existing offence in section 10 of the DTC Act, as well as the new offences inserted by item 15 (sections 10A and 10B), one of the elements of these offences will be that the supply is a 'relevant supply'. The effect of this is that when a person makes a 'relevant supply' of DSGL goods or DSGL technologies (as defined by the Bill) they will fall within the scope of the offence provisions. 39. However, paragraph 5C(1)(a) provides that a supply of DSGL goods or DSGL technology will not be a 'relevant supply', and therefore not subject to the requirement of a permit, where the supply is made to any of the following: a. an Australian person; b. a citizen or permanent resident of the United Kingdom or United States of America; c. a body corporate incorporated by or under a law of the United Kingdom or United States of America, or of a part of either of those countries; d. the Government of the United Kingdom or United States of America, or the government of a part of either of those countries; or e. an authority of the Government of the United Kingdom or United States of America, or the government of a part of either of those countries. 40. Paragraph 5C(1)(b) also requires that: a. the supply must be to, or occur wholly at, a place in Australia, or the United Kingdom or the United States; or b. if the supply is the provision of access to DSGL technology--at the time of the provision of access, the person to whom the access is provided is in Australia, the United Kingdom or the United States of America. 41. An example of a supply of DSGL technology being made 'to' a place in one of the three countries could be a supply of DSGL controlled unmanned aerial vehicle technology made from company A incorporated and located in Australia to company B incorporated and located in the United States. An example of a DSGL supply that 'occurs wholly' at a place in Australia, the United Kingdom or the United States could be a conference that occurs in the United Kingdom, where an Australian citizen shows a colleague who is a citizen of the United Kingdom DSGL technology related to the development, production or use of a hydrophone. An example of a supply through the provision of access under subparagraph 5C(1)(b)(ii), could be the provision of the aforementioned technology from company A to company B; however, access is facilitated by providing login details and credentials to access a remote database or share point site, rather than sending the technology in physical or electronic form. 9

42. Subparagraph 5C(1)(ii) also introduces the concept of a supply through the provision of access. This can occur in any situation where a person does not affect the actual transfer of DSGL technology to the recipient, but may instead enable, facilitate or otherwise give rise to the means by which another person can view, make use of or otherwise derive the benefit of the relevant DSGL technology. 43. Paragraph 5C(1)(c) requires that the supply cannot include certain DSGL goods or DSGL technology that have been excluded by a determination made by the Minister and in force under subsection 5C(3). This requirement has the effect of placing certain specified limitations on specified types of DSGL goods or DSGL technology that can otherwise be supplied to the United Kingdom or the United States without a permit. 44. Paragraph 5C(1)(d) provides that any other requirements prescribed by regulations in relation to that paragraph must also be satisfied. The effect of this provision is to provide the Government with the power to set out any ancillary requirements that a person must meet when making a supply of DSGL goods or DSGL technology in order for that supply to not be considered a 'relevant supply' for the purposes of this section. Relevant DSGL services 45. Similar to a relevant supply in paragraph [38], by default, the provision of DSGL services will be relevant DSGL services. For the new offence inserted by item 15 (section 10C), one of the elements of the offence will be that the DSGL services are 'relevant DSGL services'. The effect of this is that when a person provides a 'relevant DSGL service' (as defined by the Bill), they will fall within the scope of the offence provision. 46. However, paragraph 5C(2)(a) provides that DSGL services will not be 'relevant DSGL services' where the DSGL services are provided to any of the following: a. an Australian person; b. a citizen or permanent resident of the United Kingdom or United States of America; c. a body corporate incorporated by or under a law of the United Kingdom or United States of America, or of a part of either of those countries; d. the Government of the United Kingdom or United States of America, or the government of a part of either of those countries; e. an authority of the Government of the United Kingdom or United States of America, or the government of a part of either of those countries. 47. Paragraph 5C(2)(b) also requires that the DSGL services are received at a place in Australia, or the United Kingdom or the United States. An example of a DSGL services being 'received' at a place in Australia, the United Kingdom or the United States could be where a person is engaged to assist a company located and incorporated in the United Kingdom with designing and developing an Aircraft Missile Protection System. 48. Paragraph 5C(2)(c) requires that the DSGL services must not be in relation to DSGL goods and DSGL technology that have been excluded by a determination made 10

by the Minister and in force under subsection 5C(3). This requirement has the effect of placing certain specified limitations on the DSGL services that can be provided to the United Kingdom or the United States without a permit. 49. Paragraph 5C(2)(d) provides that any other requirements prescribed by regulations in relation to that paragraph must also be satisfied. The effect of this provision is to provide the Government with the power to set out any ancillary requirements that a person must meet when providing DSGL services in order for those services to not be considered 'relevant DSGL services' for the purposes of this section. 50. The cumulative effect of subsections 5C(1) and 5C(2) of the Bill is to establish a targeted exemption to the requirement to hold a permit for certain supplies of DSGL goods or DSGL technology, or for certain provisions of DSGL services, to the United Kingdom and the United States. The purpose of this exemption is to enhance and expedite collaboration between and among AUKUS partners to help maintain Australia's capability edge, while strengthening the capability to protect sensitive technologies that underpin our security. Excluded DSGL goods or DSGL technology 51. Subsection 5C(3) provides that the Minister may, by legislative instrument, determine DSGL goods or DSGL technology is excluded for the purposes of paragraph 5C(1)(c) or 5C(2)(c). The effect of this provision is to enable the Minister to specify certain DSGL goods and DSGL technology that will continue to be a 'relevant supply' and 'relevant DSGL services' and subject to the permit requirements and conditions, irrespective of whether the supply is being made to the United Kingdom or the United States. This will ensure that certain technologies will not be transferred to the United Kingdom or the United States without appropriate controls and restrictions. Definitions 52. Subsection 5C(4) also provides the meaning of place for the purposes of this section. For the purposes of this section place includes: a vehicle, vessel or aircraft; and an area of water; and a fixed or floating structure or installation of any kind. The use of the word 'includes' in the definition of this term is to make it clear that the term is not limited to its ordinary meaning of a fixed geographic place. Item 6 Section 9A 53. Item 6 of the Bill amends the simplified outline for Part 2 of the DTC Act to omit current paragraphs (a), (b) and (c), and insert new paragraphs (a), (b), (c) and (d). The purpose of this amendment is to reflect that the Bill will establish new offences in Part 2 that will not only apply to the supply of DSGL technology, but also to the supply of DSGL goods and the provision of DSGL services. Item 7 Section 9A (after the paragraph beginning "There are offences for persons") 54. Item 7 of the Bill amends the simplified outline for Part 2 of the DTC Act to clarify that the Act will contain offences for the following types of supplies: 11

a. supplies of DSGL technology from a person in Australia to another person outside Australia; b. supplies of DSGL technology from a person in Australia to a foreign person; c. supplies of DSGL goods that were, or DSGL technology that was, previously exported or supplied from Australia, from a foreign country to another country, or within the same foreign country. 55. Certain activities involving persons with a specified connection to Australia, the United Kingdom or the United States of America are excluded from being covered by the offences. Item 8 Section 9A 56. Item 8 of the Bill removes the existing paragraph (c) in the simplified outline and replaces it with simplified language which reflects that goods listed on the Defence and Strategic Goods List is now referred to as DSGL goods. This aligns with the term 'DSGL technology' which is already used to refer to technology that is listed on the DSGL. Item 9 Section 9A (paragraph beginning "Registered brokers") 57. Item 9 removes the words "goods in the Defence and Strategic Goods List" and replaces it with "DSGL goods". The purpose of this change is to simplify the language and align it with references to "DSGL technology", which is already used to refer to technology that is listed on the Defence and Strategic Goods List. Item 10 Section 10 (at the end of the heading) 58. Item 10 of the Bill adds the words 'from in Australia to outside Australia' to the section heading for section 10 of the DTC Act. 59. The purpose of this amendment is to clarify that this offence is concerned with the supply of, or provision of access to, DSGL technology from within Australia to outside Australia. This is in contrast to one of the new offences being inserted by item 15 of the Bill, which is concerned with the supply of DSGL technology within Australia to a foreign person. Item 11 After paragraph 10(1)(b) 60. Item 11 of the Bill inserts new paragraphs (ba) and (bb) as elements of the offence contained in subsection 10(1) of the DTC Act. 61. Paragraph (ba) requires that the supply of DSGL technology must be a 'constitutional supply'. Paragraph [27]-[28] provides further details when a supply of DSGL technology will be a 'constitutional supply'. The effect of this provision is to ensure that there is a sufficient connection between the conduct regulated by the offence and the legislative head of power under which the offence is established. 62. Paragraph (bb) requires that the supply of DSGL technology must be a 'relevant supply'. As outlined in paragraphs [37]-[44], by default, all supplies of DSGL goods and DSGL technology will be a 'relevant supply', unless they meet the conditions set 12

out in subsection 5C(1). In effect, this provision ensures that the offence provision in section 10 applies to all supplies of DSGL technology unless they fall within the category of supplies intended to be excluded from the operation of the DTC Act. Item 12 Subsection 10(1A) 63. Item 12 of the Bill repeals existing subsection (1A) of the DTC Act and inserts new subsections (1A) and (1B). Absolute liability 64. Subsection 10(1A) provides that absolute liability applies to paragraph 10(1)(ba). This paragraph establishes the requirement for a supply of DSGL technology to be a 'constitutional supply' as an element of the offence in section 10 of the Bill. The meaning of 'constitutional supply' is set out in paragraphs [27]-[28]. 65. Subsection 6.2(2) of the Criminal Code provides that if absolute liability applies to a particular physical element of an offence, there are no fault elements for that physical element of the offence. Additionally, the defence of mistake of fact is not available to a defendant in relation to that element of the offence. 66. The effect of this is that, for paragraph 10(1)(ba), the prosecution will only be required to show that the physical element was engaged in, or existed (i.e. that the supply was a 'constitutional supply'). They would not have to prove a corresponding fault element (i.e. that the supplier knew or was reckless as to whether it was a 'constitutional supply'). The application of absolute liability to this element of the offence is reasonable and appropriate, as the element does not relate directly to the substance of the offence, but rather is a matter of fact. Application to supplies to employees etc. 67. Subsection 10(1B) sets out the application of the offence provision in subsection 10(1) in circumstances where the supply of DSGL technology is made to officers or employees of a supplier. The purpose of this provision is to clarify that where such a supply occurs, the entity supplying the DSGL technology to its officers or employees will be considered the supplier, and the recipient officer or employee will be considered another person, for the purpose of the offence in subsection 10(1). This recognises that there will be instances where DSGL technology will be supplied by companies to their officers or employees in the course of business. Item 13 Before subsection 10(2) 68. Item 13 of the Bill inserts the subheading 'Exceptions' within section 10 of the DTC Act. The purpose of this inclusion is to clarify for a reader that all the provisions following the heading are exceptions to the offence set out in subsection 10(1) of the DTC Act. Item 14 Subsections 10(3) and (3A) 69. Item 14 of the Bill repeals subsections 10(3) and 10(3A) of the DTC Act and substitutes them with new subsections (3), (3A) and (3B). These subsections set out exceptions that will apply to the offence contained in subsection 10(1) of the DTC Act. 13

Exception (supply to an officer or employee) 70. Subsection (3) provides that the offence in subsection 10(1) does not apply in circumstances where the supply of DSGL technology is made by a person or body to an employee or officer in the course of their duties. Additionally, the employee or officer to whom the supply of DSGL technology is made must be: a. an Australian citizen or permanent resident of Australia; or b. a citizen or permanent resident of a foreign country that is specified in the Defence Trade Control Act 2012 - Foreign Country List--made under subsection 15(4A) of the DTC Act. 71. This exception recognises that, in some instances, the risk posed by the supply of DSGL technology may be acceptably mitigated. The purpose of this provision is to provide an exception to the offence in circumstances where a person or company supplies DSGL technology to one of their officers or employees as part of their duties, provided that they fall within a specified class of people. An example of circumstances that could engage this exception is where Company X located in Australia supplies files containing DSGL technology on guided missiles to an employee (Australian citizen) employed in a country outside Australia to review. This exception recognises that, in some instances, the risk posed by the supply of DSGL technology may be reasonably mitigated. 72. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. That subsection provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification provided by the law creating an offence bears an evidential burden in relation to that matter. An evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist. 73. The effect of this note is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. It is appropriate for a defendant to bear the evidential burden when seeking to rely on this exception because information such as citizenship status and employee duties would typically be peculiarly within a defendant's knowledge. 74. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to or by a class of person in the course of their duties) 75. Subsection (3A) provides that the offence in subsection 10(1) does not apply if the DSGL technology is supplied by or to a person who is: a. a member of the Australian Defence Force, an APS employee, an employee of ASIO, an employee of ASIS, an employee of ASD, a member or special member of the Australian Federal Police or a member of the police force of a State or Territory; and 14

b. the supply occurs in the course of the person's duties as such a person; and c. the supply is made solely or primarily for a purpose prescribed by regulations. 76. The purpose of this provision is to provide an exception to the offence in circumstances where a supply is made either by or to certain cohorts of people, such as employees of Australian intelligence agencies and members of an Australian police force, provided that the supply is made as part of the duties of their role. This recognises that certain professions and occupations may necessarily be required to deal with DSGL technology within the course of their duties. 77. The exception requires that the supply of DSGL technology must also be solely or primarily for a purpose prescribed by regulations. The reason for this is to specify the circumstances wherein a supply of DSGL technology to a person within one of the mentioned cohorts will fall within the scope of this exception, as well as when it will not. 78. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraphs [72]-[74] provide further detail about the application of subsection 13.3 of the Criminal Code, as well as the evidential burden. 79. The effect of this note is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. 80. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to a holder of a covered security clearance) 81. Subsection (3B) provides that the offence in subsection 10(1) does not apply if the DSGL technology is supplied to a person who holds a 'covered security clearance' and the supply is made solely or primarily for a purpose prescribed by the regulations. 82. The purpose of provision is to provide an exception to the offence in circumstances where a supply is made to a person who has been assessed and found suitable by a Commonwealth, Canadian, New Zealand, UK or US security vetting agency to hold a security clearance prescribed to be a 'covered security clearance'. Due to the various assessments a person must undertake before being deemed suitable to hold a security clearance, it is reasonable that a supply made to a clearance holder can be subject to an exception from the offence, given the overall lower risk profile of the supply. 83. The exception requires that the supply of DSGL technology to a clearance holder must also be solely or primarily for a purpose prescribed by regulations. The reason for this is to specify the circumstances wherein a supply of DSGL technology to a clearance holder will fall within the scope of this exception, as well as when it will not. 84. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal 15

Code. Paragraph [72] provides further detail about the application of subsection 13.3 of the Criminal Code. 85. The effect of this note is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Item 15 After section 10 86. Item 15 of the Bill inserts new sections 10A, 10B and 10C into the DTC Act. These three sections establish offences, which regulate: a. the supply of DSGL technology within Australia to a foreign person; b. the supply of DSGL goods or DSGL technology from a place outside Australia to a foreign country or foreign person; c. the provision of DSGL services to a foreign person. 87. Each of these sections also set out several exceptions where these offences will not apply. Section 10A Offence--supply of DSGL technology in Australia to foreign person 88. Section 10A establishes an offence provision for the supply of DSGL technology in Australia to a foreign person. This section also sets out several exceptions to the offence--these being circumstances where the offence will not apply. Offence 89. The offence in subsection 10A(1) is relevant to people who supply DSGL technology to a foreign person within Australia without a permit authorising the supply. 90. The offence is structured so that a person only commits the offence if every physical element and corresponding fault element of the offence, as set out in paragraphs (a)-(g), are proved. Section 13.1 of the Criminal Code establishes that the prosecution bears a legal burden of proving every element of an offence relevant to the guilt of the person charged. Section 13.2 of the Criminal Code provides that the standard to which the prosecution must prove every element of the offence is beyond reasonable doubt. 91. Paragraph (a) of the offence requires that the supplier supplies DSGL technology to another person. The term 'supply' is defined in the DTC Act to include: a. supply by way of sale, exchange, gift, lease, hire or hire-purchase; and b. in relation to DSGL technology--includes providing access to DSGL technology. 92. As the definition of supply uses the word 'includes', it is intended to enlarge the scope of the ordinary meaning of the word to additionally encompass the matters listed above. However, these matters are not intended to be exhaustive. 16

93. Paragraph (b) of the offence requires that the other person (to whom the supplier supplies DSGL technology) is a 'foreign person'. A 'foreign person' is defined in subsection 4(1) (as inserted by item 4) to mean a person other than an 'Australian person'. An 'Australian person' is defined to mean: a. the Commonwealth, a State or a Territory; or b. an authority of the Commonwealth, a State or a Territory; or c. an individual who is an Australian citizen; or d. an individual who is a permanent resident of Australia; or e. a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory. 94. Therefore, a supply of DSGL technology that is not made to an 'Australian person' listed above would be a supply to a 'foreign person', due to the construction of that term. 95. Paragraph (c) of the offence requires that the supply (made by the supplier to a foreign person) is a constitutional supply. Paragraphs [27]-[28] provides the meaning of a 'constitutional supply'. The effect of this provision is to ensure that there is a sufficient connection between the regulated conduct and the legislative head of power under which the offence is established. 96. Paragraph (d) of the offence requires that the supply (made by the supplier to a foreign person) is a relevant supply. As set out in paragraphs [37]-[44], all supplies of DSGL goods and DSGL technology are a relevant supply, unless they meet the conditions set out in subsection 5C(1) (inserted by item 5). Paragraph [50] provides further detail as to the purpose for excluding certain supplies from being 'relevant supplies' under the DTC Act. This is broadly to establish a national exemption to the requirements of the DTC Act for the United Kingdom and United States to optimise technology transfer among and between AUKUS partners. 97. Paragraph (e) of the offence requires that any of subparagraphs (i)-(iii) apply. Subparagraphs (i)-(iii) set out where the supply of DSGL technology from a supplier to a 'foreign person' must occur. a. Subparagraph (e)(i) is intended to cover supplies where the supplier and the foreign person are both located in Australia, but the supply of DSGL technology is not made in the same place (for example in the same building). An example of this could be a supplier of military hardware based in South Australia emailing a copy of DSGL controlled technical schematics to a foreign person located in New South Wales. b. Subparagraph (e)(ii) is intended to cover supplies where the supplier and the foreign person are both located in Australia and are both in the same place when the supply is made. An example of this could be a supplier of military hardware attending a conference in Queensland and providing a foreign person at the conference with a copy of DSGL controlled technical schematics for a new weapons system. 17

c. Subparagraph (e)(iii) is intended to cover supplies where the supplier provides a foreign person with access to the DSGL technology. An example of this could be where the supplier and a foreign person are at a conference in Victoria and the supplier provides the foreign person with the relevant password to access a secure server on which is stored DSGL controlled software being developed for military use. 98. Paragraph (f) of the offence requires that either of subparagraphs (i) or (ii) must apply. These provisions provide the following: a. Subparagraph (f)(i) requires that the supplier does not hold a permit under section 11 of the DTC Act authorising the supply of DSGL technology to the foreign person. b. Subparagraph (f)(ii) requires that the supplier does hold a permit issued under section 11 of the DTC Act, but the supply of DSGL technology to a foreign person breaches a condition of that permit. 99. Under section 11 of the DTC Act, the Minister may issue a permit to a person authorising certain supplies of DSGL technology. The purpose of paragraph (f)(i) and paragraph (f)(ii) therefore, is to ensure that a supplier who holds, and complies with the conditions of a permit issued under the DTC Act is not committing an offence if that permit authorises a supply of DSGL technology within Australia to a foreign person. As mentioned in paragraph [90], this is because all elements of the offence must be satisfied for the offence to apply. 100. Paragraph (g) of the offence requires that there is no notice in force under subsection 14(1) of the DTC Act in relation to the supplier and the supply. The purpose of this element of the offence is to ensure that, where there is a prohibition notice in force that applies, the offence under section 14 of the DTC Act will apply rather than this offence. Subsection 14(1) of the DTC Act (as amended by item 22) provides that the Minister may give a person a notice prohibiting them from doing certain activities (including a supply of DSGL technology) altogether or until the notice is complied with, if the Minister reasonably believes that the activity would prejudice the security, defence or international relations of Australia. The offence of contravening a prohibition notice in force contained in subsection 14(10) of the DTC Act is imprisonment for 10 years or 2,500 penalty units, or both. 101. The following is an example of how this offence may operate in practice. Example--a supplier supplies DSGL technology to a foreign person in Australia Person A, who is an Australian citizen, has a permit to present information constituting DSGL technology at a company presentation located in Australia. Person A applied for and obtained this permit because they were aware that there would be foreign attendees at the company presentation. A condition of the permit is that the DSGL technology must not be provided to a person from country B. One of the invited attendees (Person B) at the company presentation is a citizen of country B, and Person A presented the information even though they were aware that Person B was in attendance. 18

102. The penalty for committing the offence set out in subsection 10A(1) is imprisonment for 10 years or 2,500 penalty units, or both. 103. The penalty amount imposed for this offence is intended to provide an effective deterrent and reflects the seriousness of the conduct contemplated by the offence. The penalty imposed for this offence is consistent with the established principals of Commonwealth criminal law policy as set out in the Attorney-General's Department's 'A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers' (the Guide to Framing Commonwealth Offences). 104. The penalty amount also complements comparable offences in other Commonwealth legislation. For example, the offence of exporting of non-regulated goods in contravention of Minister's prohibition notice issued under subsection 112BA(12) of the Customs Act 1901 carries a penalty of imprisonment for 10 years or 2,500 penalty units, or both. Absolute liability 105. Subsection 10A(2) provides that absolute liability applies to paragraph 10A(1)(c). This paragraph establishes the requirement for a supply of DSGL technology to be a 'constitutional supply' as an element of the offence in section 10A of the Bill. The meaning of 'constitutional supply' is set out in paragraphs [27]-[28]. 106. Subsection 6.2(2) of the Criminal Code provides that if absolute liability applies to a particular physical element of an offence, there are no fault elements for that physical element of the offence. Additionally, the defence of mistake of fact is not available to a defendant in relation to that element of the offence. 107. The effect of this for paragraph (1)(c) is that the prosecution will only be required to show that the physical element of the offence was engaged in, or existed (i.e. that the supply was a 'constitutional supply'). They would not have to prove a corresponding fault element (i.e. that the supplier knew it was a 'constitutional supply'). 108. The application of absolute liability to this element of the offence is reasonable and appropriate for this element of the offence. This is because it does not relate directly to the substance of the offence, but rather is a matter of fact. Application to supplies to employees etc. 109. Subsection 10A(3) sets out the application of the offence provision in subsection 10A(1) in circumstances where the supply of DSGL technology is made to officers or employees of a supplier (where that supplier is not an individual). 110. The purpose of this provision is to clarify that where such a supply occurs, the entity supplying the DSGL technology to its officers or employees will be considered the supplier, and the recipient officer or employee will be considered another person, for the purpose of the offence in subsection 10A(1). This recognises that there will be instances where DSGL technology will be supplied by companies to their officers or employees in the course of business. 19

Exception (supply made under the Defense Trade Cooperation Treaty) 111. Subsection 10A(4) provides that the offence in subsection 10A(1) does not apply to certain supplies of DSGL technology that are made in compliance with the terms of the Australia-United States Defense Trade Cooperation Treaty. The purpose of this exception is to ensure that supplies of technology made under the Treaty are not affected by the requirements set out in Part 2 of the DTC Act (as amended by the Bill). 112. The exception also ensures that supplies of DSGL technology regulated by the terms of the Treaty are not inadvertently subject to a legal 'double jeopardy' by also being captured by the offence provision in subsection 10A(1). 113. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 114. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to an employee or officer of a body corporate) 115. Subsection 10A(5) provides that the offence in subsection 10A(1) does not apply in circumstances where the supply of DSGL technology is made by a person or body to one of their employees or officers of as part of their duties in their role. Additionally, the employee or officer to whom the supply is made must be a citizen or permanent resident of a foreign country that is specified in the Defence Trade Control Act 2012 - Foreign Country List--made under subsection 15(4A) of the DTC Act. This exception recognises that, in some instances, the risk posed by the supply of DSGL technology may be acceptably mitigated. 116. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 117. The effect of this note on the operation of this exception is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. It is appropriate for a defendant to bear the evidential burden when seeking to rely on this exception because information such as an employee's citizenship and employment duties would be peculiarly within their knowledge. 118. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. 20

Exception (supply to or by a class of person in the course of their duties) 119. Subsection 10A(6) provides that the offence in subsection 10A(1) does not apply if the DSGL technology is supplied by or to a person who is: a. a member of the Australian Defence Force, an APS employee, an employee of ASIO, an employee of ASIS, an employee of ASD, a member or special member of the Australian Federal Police or a member of the police force of a State or Territory; and b. the supply occurs in the course of the person's duties as such a person; and c. the supply is made solely or primarily for a purpose prescribed by regulations. 120. The operation and general purpose of this exception is previously detailed in paragraphs [75]-[77]. 121. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is also previously outlined in paragraph [79]. 122. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to a holder of a covered security clearance) 123. Subsection 10A(7) provides that the offence in subsection 10A(1) does not apply if the DSGL technology is supplied to a person who holds a 'covered security clearance' and the supply is made solely or primarily for a purpose prescribed by the regulations. 124. The operation and general purpose of this exception is previously detailed in paragraphs [81]-[83]. 125. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is previously outlined in paragraph [85]. 126. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (prescribed by the regulations) 127. Subsection 10A(8) provides that the offence in subsection 10A(1) does not apply in circumstances prescribed by the regulations for the purposes of this subsection. The effect of this provision is to provide the Government with a level of flexibility to legislate additional exceptions to the offence provision in subsection 10A(1) by way of regulations made by the Governor-General in council. This ensures that, in the event 21

that the legislation should for some reason, provide an exception to the offence, but does not, the Government has the option to address this without requiring an amendment to the primary legislation. 128. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 129. The effect of this note on the operation of this exception is that where a defendant seeks to rely on an exception prescribed by the regulations, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. 130. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Definition 131. Subsection 10A(9) provides the meaning of place for the purposes of this section. The details of this definition are previously set out in paragraph [52]. Section 10B Offence--certain supplies of DSGL goods or DSGL technology from outside Australia 132. Section 10B establishes an offence provision for certain supplies of DSGL goods or DSGL technology from a place outside of Australia to: a. a foreign person; or b. a foreign country where those DSGL goods or DSGL technology were previously exported or supplied from within Australia to a place outside Australia. This offence is intended to regulate the secondary supply of goods and technology after they have been supplied to a recipient outside of Australia. For the avoidance of doubt, this section does not create liability for the person making the initial lawful supply or export from Australia to a place outside Australia in accordance with the DTC Act, or with regulations made under the Customs Act 1901. Liability arises in relation to a person who receives the lawful supply or export outside Australia and subsequently engages in conduct contrary to this section. 133. The section also sets out several exceptions to the offence--these being circumstances where the offence will not apply. Offence 134. The offence in subsection 10B(1) is relevant to people who receive DSGL goods or DSGL technology from Australia while outside Australia, and subsequently supply or transfer those goods or technology to a foreign person or another foreign country without a section 11 permit authorising the activity. 22

135. The offence is structured so that a person only commits the offence if every applicable element of the offence, as set out in paragraphs (a)-(h), are proved. Section 13.1 of the Criminal Code establishes that the prosecution bears a legal burden of proving every element of an offence relevant to the guilt of the person charged. Section 13.2 of the Criminal Code provides that the standard to which the prosecution must prove every element of the offence is beyond reasonable doubt. 136. Paragraph (a) of the offence requires that the supplier supplies DSGL goods or DSGL technology to another person. The term 'supply' is defined in the DTC Act; this is previously set out in paragraphs [91]-[92]. 137. This supply of goods or technology is referred to as the current supply. The reason for using this term is because one of the elements of this offence is that the supplier obtained the goods or technology from Australia by way of an earlier export or supply. As such, the use of the term current supply is to clarify that this offence applies to the current supply, rather than the earlier export or supply. 138. Paragraph (b) of the offence requires that the current supply (made by the supplier to another person) is a 'constitutional supply'. Paragraphs [27]-[28] details the meaning of a 'constitutional supply'. The effect of this provision is to ensure that there is a sufficient connection between the conduct regulated by the offence and the legislative head of constitutional power under which the offence is established. 139. Paragraph (c) of the offence requires that the current supply (made by the supplier to another person) is a 'relevant supply'. As set out in paragraphs [38]-[44], all supplies of DSGL goods and DSGL technology are a relevant supply, unless they meet the conditions set out in subsection 5C(1) (inserted by item 5). Paragraph [50] provides further detail as to the purpose for excluding certain supplies from being relevant supplies under the DTC Act. This is to establish a national exemption to the requirements of the DTC Act for the United Kingdom and United States to optimise technology transfer among and between AUKUS partners. 140. Paragraph (d) of the offence requires that any of the requirements set out in subparagraphs (i), (ii), or (iii) must apply in relation to the current supply. a. Subparagraph (d)(i) requires that the current supply wholly occurs at a place outside Australia. 'Wholly outside' Australia would cover circumstances where the supplier and the other person to whom the supply is being made are both in the same geographical place that is outside Australia when the supply takes place. Example--the current supply wholly occurs outside Australia Company 1 is located in Foreign Country A and is in possession of DSGL technology (designs for a quantum navigation system) pursuant to a permit. An employee of that company provides a copy of that design without a permit to a Foreign Country A national who is visiting Company 1's laboratory in Foreign Country A. 23

b. Subparagraph (d)(ii) requires that the current supply originates from a place outside Australia and is made to a place outside Australia or to a foreign person. To a place outside Australia: subparagraph (d)(ii) requires that the current supply is made from a place outside Australia to a place outside Australia. This would cover circumstances where the supplier and the other person to whom the current supply is being made are in two separate geographical places outside Australia when the supply takes place. Example--the supplier makes the current supply from a place outside Australia to a place outside Australia Company 1 is located in Foreign Country A and is in possession of DSGL technology (designs for a quantum navigation system) pursuant to a permit. An employee of Company 1 emails a copy of that design without a permit to a national of Foreign Country B who is located in Foreign Country B at the time of the supply. To a foreign person: subparagraph (d)(ii) requires that the current supply is made from a place outside Australia to a foreign person. This would cover circumstances where the supplier makes the current supply to a foreign person who is located either outside or within Australia. Paragraphs [93]-[94] provides detail as to the meaning of a 'foreign person'. Example--the supplier makes the current supply from a place outside Australia to a foreign person Company 1 is located in Foreign Country A and is in possession of DSGL technology (designs for a quantum navigation system) pursuant to a permit. An employee of Company 1 emails a copy of that design without a permit to a national of Foreign Country B who is located in Australia. c. Subparagraph (d)(iii) requires that if the current supply is the provision of access to DSGL technology--at the time of the provision of access, the supplier is outside Australia and the other person is outside Australia or is a foreign person. To a person located outside Australia: subparagraph (d)(iii) requires that the other person to whom the access to DSGL technology is provided is located outside Australia at the time the access is provided by the supplier. Example--at the time of providing access to DSGL technology, the supplier and the other person are both outside Australia Person A is a national of Foreign Country A and works for Company 1, located in Foreign Country A. Person A has DSGL technology (designs for a missile guidance system) pursuant to a permit. Person A places the designs on a share point site and without a permit, emails 24

Person B who is located in Foreign Country B, the login details to access the designs. To a foreign person: subparagraph (d)(iii) requires that the other person to whom the supplier provides access to DSGL technology to is a foreign person. This would cover circumstances where the supplier provides access to DSGL technology to a foreign person who is located either outside or within Australia at the time the access to the technology is provided by the supplier. Paragraphs [93]-[94] provides detail as to the meaning of a 'foreign person'. Example--at the time of providing access to DSGL technology, the supplier is outside Australia and the other person (to whom the access is provided) is a foreign person Person A is a national of Foreign County A and works for Company 1, located in Foreign Country A. Person A has DSGL technology (designs for a missile guidance system) pursuant to a permit. Person A places the designs on a share point site and without a permit, emails Person B, who is a national of Foreign Country B but is located in Australia, the login details to access the designs. 141. Paragraph (e) of the offence requires that the supplier must have obtained the DSGL goods or DSGL technology (for the current supply) as a direct or indirect result of an earlier export or supply of the DSGL goods or DSGL technology: a. from a place in Australia to a place outside Australia; or b. if the earlier export or supply was access to DSGL technology--at the time of the provision of access, the person providing access was in Australia and the person to whom access was provided was outside Australia. 142. This earlier export or supply of goods or technology is not the same as the current supply that is regulated by this offence. However, depending on the export or supply coming out of Australia, this earlier export or supply could still be subject to other regulatory provisions (e.g. the offence in section 10 of the DTC Act, which regulates the supply of DSGL technology to outside of Australia). 143. For paragraph (e), it is intended that a supplier will receive an earlier export or supply as a 'direct result' where it is clear that the supplier was the intended recipient of the earlier export or supply. Conversely, it is intended that a supplier will receive an earlier export or supply as an indirect result where someone received DSGL goods or DSGL technology in circumstances where they were not the intended recipient of the initial supply or export out of Australia. For example, where a person obtains the technology by virtue of: a. an unauthorised subsequent supply by a party who originally received the DSGL goods or DSGL technology by reason of a validly issued permit; or b. an unauthorised supply by a third party who unlawfully had the DSGL goods or DSGL technology in their possession; or 25

c. an erroneous supply by a party who mistakenly supplied DSGL goods or DSGL technology to a recipient, not intending to do so. 144. Paragraph (f) of the offence requires that either of the requirements in subparagraphs (i) or (ii) must have applied in relation to the earlier export or supply mentioned in paragraph (e) (irrespective of whether the requirements were complied with). The requirements of the subparagraphs are as follows: a. Subparagraph (i) provides that the earlier export required permission (however described) under regulations made under the Customs Act 1901. b. Subparagraph (ii) provides that the earlier supply required a permit under section 11 of the DTC Act. The purpose of these requirements are to ensure that the current supply is required to be regulated as a re-export or resupply. If the earlier supply or export was not subject to permit requirements upon leaving Australia, this offence would not be relevant, as it is concerned with regulating re-exports and re-transfers of goods and technology. 145. Paragraph (g) of the offence requires that either of subparagraphs (i) or (ii) must apply. These provisions require that: a. the supplier does not hold a permit under the DTC Act authorising the current supply; or b. the supplier holds a permit issued under the DTC Act, but the supply contravenes a condition of that permit. 146. The requirement to hold and comply with the conditions of a permit is common to all three of the offences inserted by the Bill. Accordingly, the purpose and effect of this element of the offence is intended to be the same as what is already set out at paragraph [99]. 147. Paragraph (h) of the offence requires that there is no notice in force under subsection 14(1) of the DTC Act in relation to the supplier and the supply of DSGL goods or DSGL technology. This offence element is also common to all three of the new offences inserted by the Bill. Accordingly, the purpose and effect of this provision is intended to be the same as what is already set out at paragraph [100]. 148. The penalty for committing the offence set out in subsection 10B(1) is imprisonment for 10 years or 2,500 penalty units, or both. 149. The penalty amount imposed for this offence is intended to provide an effective deterrent and reflects the seriousness of the conduct contemplated by the offence. The penalty imposed for this offence is consistent with the established principals of Commonwealth criminal law policy as provided for in the Guide to Framing Commonwealth Offences. As set out in paragraph [104], this penalty amount also complements comparable offences in other Commonwealth legislation. 26

Application to supplies to employees etc. 150. Subsection 10B(2) sets out the application of the offence provision in subsection 10B(1) in circumstances where the supply of DSGL goods or DSGL technology is made to officers or employees of a supplier (where that supplier is not an individual). 151. The purpose of this provision is to clarify that where such a supply occurs, the entity supplying the DSGL goods or DSGL technology to its officers or employees will be considered the supplier, and the recipient officer or employee will be considered another person, for the purpose of the offence in subsection 10B(1). This recognises that there will be instances where DSGL goods or DSGL technology will be supplied by companies to their officers or employees in the course of business. Absolute and strict liability Subsection 10B(3)--absolute liability 152. Subsection 10B(3) provides that absolute liability applies to paragraph 10B(1)(b). 153. This paragraph establishes the requirement for a supply of DSGL goods or DSGL technology to be a 'constitutional supply' as an element of the offence in section 10B. The meaning of 'constitutional supply' is set out in paragraphs [27]-[28]. 154. Subsection 6.2(2) of the Criminal Code provides that if absolute liability applies to a particular physical element of an offence, there are no fault elements to be proved for that physical element of the offence. Additionally, the defence of mistake of fact is not available to a defendant in relation to that element of the offence. 155. The effect of absolute liability for paragraph (1)(b) is that the prosecution will only be required to show that the physical element of the offence was engaged in, or existed (i.e. that the supply was a 'constitutional supply'). They would not have to prove a corresponding fault element (i.e. that the supplier knew it was a 'constitutional supply'). 156. The application of absolute liability to this element of the offence is reasonable and appropriate for this element of the offence. This is because it does not relate directly to the substance of the offence, but rather is a matter of fact. Subsection 10B(4)--strict liability 157. Subsection 10B(4) provides that strict liability applies to paragraph 10B(1)(f). 158. This paragraph establishes the requirement for the earlier export or supply of DSGL goods or DSGL technology to have required permission under the Customs Act 1901 or a permit under the DTC Act. This is to ensure that the current supply that is the subject of the offence is actually a re-export or re-supply of regulated goods or technology. 159. Subsection 6.1(1) of the Criminal Code provides that if strict liability applies to a particular physical element of an offence, there are no fault elements to be proved for that physical element of the offence. However, the defence of mistake of fact under section 9.2 of the Criminal Code is available to a defendant in relation to that element of the offence. 27

160. Similar to paragraph (1)(b), the effect of strict liability for paragraph (1)(c) is that the prosecution will only be required to show that the physical element of the offence was engaged in, or existed (i.e. that the earlier export or supply was subject to regulatory requirements). They would not have to prove a corresponding fault element (i.e. that the current supplier knew that the earlier export or supply was subject to regulatory requirements). 161. The application of strict liability to this element of the offence is reasonable and appropriate for this element of the offence. This is because the earlier export or supply being regulated is an essential precondition to the conduct that this offence addresses. Exception (supply made under the Defense Trade Cooperation Treaty) 162. Subsection 10B(5) provides that the offence in subsection 10B(1) does not apply to the current supply where it is made in compliance with the terms of the Defense Trade Cooperation Treaty. The purpose of this exception is to ensure that supplies of goods or technology made under the Treaty are not affected by the requirements set out in Part 2 of the DTC Act (as amended by the Bill). 163. The exception also ensures that supplies of goods or technology regulated by the terms of the Treaty are not inadvertently subject to a legal 'double jeopardy' by also being captured by the offence provision in subsection 10B(1). 164. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 165. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to an employee or officer of a body corporate) 166. Subsection 10B(6) provides that the offence in subsection 10B(1) does not apply in circumstances where the supply of DSGL goods or DSGL technology is made by a person or body to one of their employees or officers of as part of their duties in their role. Additionally, the employee or officer to whom the supply is made must be: a. an Australian citizen or permanent resident of Australia; or b. a citizen or permanent resident of a foreign country that is specified in the Defence Trade Control Act 2012 - Foreign Country List--made under subsection 15(4A) of the DTC Act. 167. This exception recognises that, in some instances, the risk posed by the supply of DSGL goods or DSGL technology may be acceptably mitigated. Further detail as to the purpose of this exemption is previously provided in paragraph [71]. 168. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal 28

Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 169. The effect of this note on the operation of this exception is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. It is appropriate for a defendant to bear the evidential burden when seeking to rely on this exception because information such as an employee's citizenship and employment duties would be peculiarly within their knowledge. 170. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to or by a class of person in the course of their duties) 171. Subsection 10B(7) provides that the offence in subsection 10B(1) does not apply if the current supply of DSGL goods or DSGL technology are supplied by or to a person who is: a. a member of the Australian Defence Force, an APS employee, an employee of ASIO, an employee of ASIS, an employee of ASD, a member or special member of the Australian Federal Police or a member of the police force of a State or Territory; and b. the supply occurs in the course of the person's duties as such a person; and c. the supply is made solely or primarily for a purpose prescribed by regulations. 172. The operation and general purpose of this exception is previously detailed in paragraphs [75]-[77]. 173. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is also previously outlined in paragraph [79]. 174. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to a holder of a covered security clearance) 175. Subsection 10B(8) provides that the offence in subsection 10B(1) does not apply if the current supply of DSGL goods or DSGL technology are supplied to a person who holds a 'covered security clearance' and the supply is made solely or primarily for a purpose prescribed by the regulations. 176. The purpose of this exception is previously detailed in paragraphs [81]-[83]. 177. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal 29

Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is also previously set out in paragraph [85]. 178. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (prescribed by the regulations) 179. Subsection 10B(9) provides that the offence in subsection 10B(1) does not apply in circumstances prescribed by the regulations for the purposes of this subsection. The purpose of this exception is previously detailed in paragraph [127]. a. For example, it is intended that the regulations would prescribe an exception that applies to certain supplies of DSGL goods and technology that are made from a foreign country that is specified in the Defence Trade Control Act 2012 - Foreign Country List--made under subsection 15(4A) of the DTC Act. 180. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 181. The effect of this note on the operation of this exception is that where a defendant seeks to rely on an exception prescribed by the regulations, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. 182. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Geographical jurisdiction 183. Subsection 10B(10) provides that section 15.4 of the Criminal Code (extended geographical jurisdiction--category D) applies to an offence against subsection 10B(1). Under section 15.4 of the Criminal Code, the effect of category D jurisdiction is that the offence applies: a. whether or not the conduct constituting the alleged offence occurs in Australia; and b. whether or not a result of the conduct constituting the alleged offence occurs in Australia. 184. The effect of this subsection is that the offence of making certain supplies of DSGL goods or DSGL technology from outside Australia extends to conduct by a person located outside Australia. 185. Category D jurisdiction is appropriate to ensure that this offence appropriately applies to further supplies of DSGL goods and DSGL technology made to foreign countries and foreign people after the goods and technology have been supplied to a place outside 30

of Australia. To regulate these supplies of DSGL goods and DSGL technology outside of Australia, it is necessary for section 15.4 of the Criminal Code to apply to the offence. Definition 186. Subsection 10B(11) provides the meaning of place for the purposes of this section. The details of this definition are previously set out in paragraph [52]. Section 10C Offence--provision of DSGL services 187. Section 10C establishes an offence provision for the provision of certain DSGL services within or outside Australia to a foreign person. The section also sets out several exceptions to the offence--these being circumstances where the offence will not apply. The offence 188. The offence in subsection 10C(1) is relevant to people who provide 'DSGL services'-- called providers. The offence is structured so that a person only commits the offence if every element of the offence, as set out in paragraphs (a)-(g) of subsection (1), is proved. Section 13.1 of the Criminal Code establishes that the prosecution bears a legal burden of proving every element of an offence relevant to the guilt of the person charged. Section 13.2 of the Criminal Code provides that the standard to which the prosecution must prove every element of the offence is beyond reasonable doubt. 189. Paragraph (a) of the offence requires that the provider 'provides' DSGL services to another person. The terms provider and 'provides' are not defined in the Bill or the DTC Act. Therefore, these terms take on their ordinary meaning in the context of the legislation. 190. Paragraph (b) of the offence requires that the DSGL services provided by the provider are to a foreign person. A 'foreign person' is defined in subsection 4(1) (as inserted by item 4) to mean a person who is not an 'Australian person'. An Australian person is defined to mean: a. the Commonwealth, a State or a Territory; or b. an authority of the Commonwealth, a State or a Territory; or c. an individual who is an Australian citizen; or d. an individual who is a permanent resident of Australia; or e. a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory. 191. Therefore, a provision of DSGL services that is not made to an 'Australian person' as listed above would be considered a provision of DSGL services to a 'foreign person', due to the construction of that term. 192. Paragraph (c) requires that the services are constitutional DSGL services. Paragraphs [29]-[30] details the meaning of a 'constitutional DSGL services'. The effect of this provision is to ensure that there is a sufficient connection between the conduct regulated by the offence and the legislative head of power under which the offence is established. 31

193. Paragraph (d) of the offence requires that the DSGL services (provided by the provider to a foreign person) are 'relevant DSGL services'. As set out in paragraphs [45]-[49], all provisions of DSGL services are a relevant DSGL service, unless they meet the conditions set out in subsection 5C(2) (inserted by item 3). Paragraph [50] provides further detail as to the purpose for excluding certain supplies from being relevant supplies under the DTC Act. This is to establish a national exemption to the requirements of the DTC Act for the United Kingdom and United States to optimise technology transfer among and between AUKUS partners 194. Paragraph (e) of the offence requires that either subparagraphs (i) or (ii) apply. These provisions require that: a. the provider is an 'Australian person'; or b. the DSGL services are provided at or from a place in Australia 195. The purpose of paragraph (e) is to create the requisite jurisdictional connection between Australia and the classes of people committing an offence under this section. Subparagraph (i) requires that the provider is an Australian person (as defined in paragraph [11]), while subparagraph (ii) alternatively requires that the DSGL services are provided at or from a place in Australia. The effect of this is that, if the provider is an Australian person, they can commit this element of the offence both within and outside Australia. Alternatively, if the provider is not an Australian person, then the person can only commit this element of the offence if the DSGL services are provided at or from a place in Australia. 196. Paragraph (f) of the offence requires that either subparagraphs (i) or (ii) apply. These provisions require that: a. the supplier does not hold a permit under the DTC Act authorising the provision of DSGL services to the foreign person; or b. the supplier holds a permit issued under the DTC Act, but the provision of DSGL services to the foreign person contravenes a condition of that permit. 197. This element of the offence is common to all three of the new offences inserted by the Bill. Accordingly, the purpose of this provision is intended to be the same as what is set out in paragraph [99]. 198. Paragraph (g) of the offence requires that there is no notice in force under subsection 14(1) of the DTC Act in relation to the provider and the provision of DSGL services. This offence element is also common to all three of the new offences inserted by the Bill. Accordingly, the purpose of this provision is intended to be the same as what is set out at paragraph [100]. 32

199. The following is an example of how this offence may operate in practice. Example--a provider provides DSGL services to a foreign country A surveillance aircraft containing Part 1 DSGL technology crashes in international waters and is recovered by Company 1, which is an entity located and incorporated in Foreign Country A. Company 1 approaches an Australian person and requests their professional services to understand the operational capabilities of that aircraft. The Australian person provides DSGL services to Company 1 in relation to the surveillance aircraft without a permit to do so. 200. The penalty for committing the offence set out in subsection 10C(1) is imprisonment for 10 years or 2,500 penalty units, or both. 201. The penalty amount imposed for this offence is intended to provide an effective deterrent and reflects the seriousness of the conduct contemplated by the offence. The penalty imposed for this offence is consistent with the established principals of Commonwealth criminal law policy as set out in the Guide to Framing Commonwealth Offences. As mentioned in paragraph [104], this penalty amount also complements comparable offences in other Commonwealth legislation. Absolute liability 202. Subsection 10C(2) provides that absolute liability applies to paragraph 10C(1)(c). This paragraph establishes the requirement for a provision of DSGL services to be 'constitutional DSGL services' as an element of the offence in section 10C of the Bill. The meaning of 'constitutional DSGL services is set out in in paragraphs [29]-[30]. 203. Subsection 6.2(2) of the Criminal Code provides that if absolute liability applies to a particular physical element of an offence, there are no fault elements for that physical element of the offence. Additionally, the defence of mistake of fact is not available to a defendant in relation to that element of the offence. 204. The effect of this is that, for paragraph (1)(b), the prosecution will only be required to show that the physical element was engaged in, or existed (i.e. that the provision of DSGL services were 'constitutional DSGL services'). They would not have to prove a corresponding fault element (i.e. that the supplier knew they were providing 'constitutional DSGL services'). 205. The application of absolute liability to this element of the offence is reasonable and appropriate, as the element does not relate directly to the substance of the offence, but rather is a matter of fact. Exception (provision of services made under the Defense Trade Cooperation Treaty) 206. Subsection 10C(3) provides that the offence in subsection 10C(1) does not apply to the provision of DSGL services where the services are provided in compliance with the terms of the Defense Trade Cooperation Treaty. The purpose of this exception is to ensure that DSGL services provided under the Treaty are not affected by the requirements set out in Part 2 of the DTC Act (as amended by the Bill). 33

207. The exception also ensures that the provision of DSGL services regulated by the terms of the Treaty are not inadvertently subject to a legal 'double jeopardy' by also being captured by the offence provision in subsection 10C(1). 208. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 209. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (supply to an employee or officer of a body corporate) 210. Subsection 10C(4) provides that the offence in subsection 10C(1) does not apply in circumstances where the DSGL services are provided by a person or body to one of their employees or officers in the course of their duties in the role. Additionally, the employee or officer to whom the DSGL services are provided must be a citizen or permanent resident of a foreign country that is specified in the Defence Trade Control Act 2012 - Foreign Country List--made under subsection 15(4A) of the DTC Act. 211. This exception recognises that, in some instances, the risk posed by the provision of DSGL services may be acceptably mitigated by other factors. Further detail as to the purpose of this exemption is previously provided in paragraph [71]. 212. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 213. The effect of this note on the operation of this exception is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. It is appropriate for a defendant to bear the evidential burden when seeking to rely on this exception because information such as an employee's citizenship and employment duties would be peculiarly within their knowledge. 214. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (provision of DSGL services in support of a lawful supply of DSGL goods or DSGL technology) 215. Subsection 10C(5) provides that the offence in subsection 10C(1) does not apply in circumstances where: a. DSGL services are provided in support of a lawful supply of DSGL goods, DSGL technology; and 34

b. the DSGL services provided in relation to the above mentioned goods or technology solely consists of: performing maintenance; or training to perform maintenance; and c. the maintenance or training is limited to: inspection, testing, calibration or repair (including overhaul, reconditioning, and one-to-one replacement of any defective items, parts or components); and d. the maintenance or training does not include any modification, enhancement, upgrade or other form of alteration or improvement that: enhances the performance or capability of the goods or technology mentioned above; and is not merely an alteration or improvement to the reliability or maintenance of the goods or technology mentioned above. 216. The purpose of this exception is to ensure that a person who provides limited specified support by way of training or maintenance in relation to a lawfully authorised supply of DSGL goods or DSGL technology, is not subject to the offence provision in section 10C. The exception is limited by paragraph (d) to ensure that the maintenance or training does not extend to enable an unauthorised supply of DSGL goods or DSGL technology by allowing for a person to make modifications or alterations that would provide an enhancement or upgrade to the existing goods or technology. 217. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (provision of services made to or by a class of person in the course of their duties) 218. Subsection 10C(6) provides that the offence in subsection 10C(1) does not apply if the DSGL services are provided by or to a person who is: a. a member of the Australian Defence Force, an APS employee, an employee of ASIO, an employee of ASIS, an employee of ASD, a member or special member of the Australian Federal Police or a member of the police force of a State or Territory; and b. the provision of DSGL services occurs in the course of the person's duties as such a person; and c. the provision of DSGL services is made solely or primarily for a purpose prescribed by regulations. 35

219. The operation and general purpose of this exception is previously detailed in paragraphs [75]-[77]. The difference with this exception is that it concerns the provision of DSGL services, rather than the supply of DSGL goods or DSGL technology. 220. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is also previously outlined in paragraph [79]. 221. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (provision of services made to a holder of a covered security clearance) 222. Subsection 10C(7) provides that the offence in subsection 10C(1) does not apply if the DSGL services are provided to a person who holds a 'covered security clearance' and the services are provided solely or primarily for a purpose prescribed by the regulations. 223. The operation and general purpose of this exception is previously detailed in paragraphs [81]-[83]. The difference with this exception is that it concerns the provision DSGL services, rather than the supply of DSGL goods or DSGL technology. 224. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. The effect of this note on the operation of this type of exception is also previously outlined in paragraph [85]. 225. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Exception (prescribed by the regulations) 226. Subsection 10C(8) provides that the offence in subsection 10C(1) does not apply in circumstances prescribed by the regulations for the purposes of this subsection. The effect of this provision is set out in paragraph [127]. 227. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the operation of subsection 13.3(3) of the Criminal Code. 228. The effect of this note on the operation of this exception is that where a defendant seeks to rely on an exception prescribed by the regulations, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. 229. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. 36

Geographical jurisdiction 230. Subsection 10C(9) provides that section 15.4 of the Criminal Code (extended geographical jurisdiction--category D) applies to an offence against subsection 10C(1). Paragraph [183] previously sets out the application of this jurisdiction of the Criminal Code. 231. The effect of this subsection is that the offence of providing DSGL services extends to conduct by a person located outside Australia, as well as conduct within Australia. 232. Category D jurisdiction is appropriate to ensure that this offence appropriately applies to the provision of DSGL services that are made outside Australia. To regulate the provision of DSGL services outside of Australia, it is necessary for section 15.4 of the Criminal Code to apply to the offence in subsection 10C(1). Definition 233. Subsection 10C(10) provides the meaning of place for the purposes of this section. The details of this definition are previously set out in paragraph [52]. Item 16 Section 11 (heading) 234. Item 16 of the Bill repeals the existing section 11 heading and substitutes a new heading that reads 'Permits for the purposes of sections 10 to 10C'. This amendment reflects the requirement that the offence provisions in sections 10A, 10B and 10C require a person to hold and comply with a permit in order to engage in the regulated conduct. Item 17 Subsections 11(1) to (6) 235. Item 17 of the Bill repeals and replaces subsections 11(1) to (6) of the DTC Act. These new subsections set out the requirements for a person to apply for a permit authorising certain activities under the Act. 236. Subsection (1) provides that a person may apply to the Minister for a permit under section 11 of the DTC Act to do an 'activity' that is: a. a constitutional supply of DSGL goods; or b. a constitutional supply of DSGL technology; or c. the provision of constitutional DSGL services 237. The purpose of this provision is to set out what sorts of supplies a person may apply to the Minister for a permit for. Paragraphs [26]-[30] set out when a supply or provision of services will relevantly be a constitutional supply or a provision of constitutional DSGL services. 238. A note to this subsection provides that section 66 of the DTC Act sets out the requirements for an application. 239. Subsection (2) sets out matters that an application for a permit made under subsection (1) may do. An application may do one or more of the following: a. cover 2 or more activities by the person; 37

b. cover one or more activities by the person for a period described in the application; c. cover one or more activities by the person for one or more projects described in the application. 240. As mentioned in subsection (1), an 'activity' is a constitutional supply of DSGL goods or DSGL technology or the provision of 'constitutional DSGL services', which are explained in paragraphs [29]-[30]. 241. Subsection (2A) provides that an application made under subsection (1) may cover one or more 'projects' described in the application. An application for one or more 'projects' can cover all of the following: a. One or more activities by the applicant for one or more 'projects' b. One or more activities by one or more other persons for one or more projects (each of whom are a project participant) Minister's decision 242. Subsection (3) provides that the Minister must decide an application for a permit to cover certain activities made under subsection (1) in accordance with section 66 of the DTC Act. Subsection (3)(a) specifically provides that if the application concerns a project with project participants, the Minister must decide whether to give each participant a permit for each activity covered by the application. 243. Subsection (4) provides that the Minister may give the person a permit for a specified activity if the Minister is satisfied that the activity would not prejudice the security, defence or international relations of Australia. It is necessary for the Minister to be satisfied that the activity would not prejudice the security, defence or international relations of Australia to ensure that a permit is not granted to an individual or entity that holds interests that are adverse to Australia's. 244. A note to this subsection provides that section 67 of the DTC Act deals with giving permits under the Act. 245. Subsection (5) provides that a permit given by the Minister may cover the following: a. 2 or more activities; b. one or more specified activities for a period specified in, or worked out in accordance with the permit; c. one or more specified activities for one or more specified projects. 246. Subsection (6) provides that if the Minister refuses to give the person a permit for an activity covered by the application, the Minister must give the person a notice of the refusal and the reasons for the refusal. There are two notes to this subsection. Note 1 provides that section 67 of the DTC Act deals with giving notices. Note 2 provides that section 68 of the DTC Act deals with disclosing reasons for decisions. 38

Item 18 After subsection 11(7) 247. Item 18 of the Bill inserts new subsections (7A) and (7B) into section 11 of the DTC Act. 248. Subsection (7A) provides that the conditions on a permit issued under section 11 of the DTC Act may impose obligations on a permit holder that the Minister considers reasonably necessary for the purposes of: a. promoting compliance with this Act, whether by the person to whom the permit is given or any other person; or b. managing risks associated with persons contravening this Act. 249. The purpose of this provision is to provide Defence with additional assurances, mitigate/manage risks, or increase visibility of an entity's export compliance. 250. Subsection (7B) provides that an obligation set out in a permit (as mentioned in subsection (7A) above) may apply before, at or after the time an activity covered by the permit is done. The effect of this provision is that certain obligations of a permit could require a permit holder to do certain things prior to, during and after they make a supply of DSGL goods or DSGL technology or provide a DSGL service. Item 19 At the end of section 11 251. Item 19 of the Bill adds new subsections (11), (12) and (13) at the end of section 11 of the DTC Act. 252. Subsection (11) provides that a notice under subsection (10) of the DTC Act must set out the effect of subsections (12) and (13). Subsection (10) provides that the Minister must give a person notice of the revocation of a permit and the reasons of the revocation. Certain obligations continue after revocation 253. Subsection (12) provides that if the Minister revokes a permit that specifies obligations that apply after an activity covered by the permit is done, then the permit continues in force for the purposes of: a. section 12 (changing permit conditions) b. section 13 (breaching permit conditions) c. any other provisions of the DTC Act to the extent they relate to section 12 or 13 254. The purpose of this section is to ensure that, even after a person is no longer permitted to do the activities authorised by the revoked permit, they are still required to comply with any permit obligations that apply after doing the activities. This could, for example, include keeping relevant records of a supply of provision of service made under the permit. 255. Subsection (13) provides that the Minister must not impose new permit conditions in relation the permit under subsection 12(1) of the DTC Act after the permit has been revoked. Subsection 12(1) of the DTC Act enables the Minister to impose new permit conditions. 39

Item 20 Subsection 13(3) 256. Item 20 of the Bill repeals the current subsection 13(3) of the DTC Act and substitutes it with a new subsection. The new subsection 13(3) provides that section 15.4 of the Criminal Code (extended geographic jurisdiction--category D) applies to an offence against subsection (1) of this section). 257. The effect of extended geographic jurisdiction--category D is set out in paragraph [183]. The reason for applying this jurisdiction to the offence of breaching permit conditions set out in subsection 13(1) is because the Bill introduces new offence provisions where the regulated entity will be located outside of Australia. Where that entity is the holder of a permit under section 11 of the DTC Act, it is necessary that they are able to be subject to an offence if they breach a condition of their permit, even when they are located outside of Australia. Item 21 Section 14 (heading) 258. Item 21 of the Bill repeals the current heading for section 14 of the DTC Act and substitutes it with the heading 'Minister's notice prohibiting activities'. This change is to reflect that the Minister will be able to issue prohibition notices in relation to other matters within the scope of the DTC Act, noting that it will not only regulate the supply of DSGL technology. Paragraph [236] previously details what an 'activity' is. Item 22 Subsection 14(1) 259. Item 22 of the Bill repeals subsection 14(1) of the Bill and inserts new subsections (1), (1A), (1B) and (1C). 260. Subsection (1) provides that the Minister can issue a person a notice prohibiting them from doing an activity mentioned in subsection (1A) in any circumstances or in particular circumstances if they reasonably believe the activity would prejudice the security, defence or international relations of Australia. Paragraph [263] sets out the activities covered by this subsection. 261. The purpose of this provision is to ensure that the Minister can prohibit people from engaging in certain supples of DSGL goods or DSGL technology or the provision of DSGL services. This is necessary to ensure that these exports, supplies or services do not prejudice the security, defence or international relations of Australia. 262. A note to this section provides that section 67 of the DTC Act deals with giving notices under this Act. 263. Subsection (1A) sets out the activities that may be the subject of a prohibition notice issued under subsection (1). These are as follows: a. a constitutional supply of particular DSGL goods at or from a place outside Australia to a foreign person; b. a constitutional supply to another person of particular DSGL technology; c. the provision of particular constitutional DSGL services. 40

264. Subsection (1B) provides that the activities that can be subject to a prohibition notice do not include an activity that would wholly occur outside Australia, except in certain circumstances. These circumstances are: a. where the activity is done by or on behalf of an Australian person b. where the activity relates to: DGSL goods or DSGL technology; or where the DSGL goods or DSGL technology were obtained as a direct or indirect result of an export, supply or provision of access (to technology) from a place within Australia to a place outside Australia. 265. The purpose of this provision is to create the requisite jurisdictional connection between Australia and the classes of people committing an offence under this section. 266. Subsection (1C) sets out the application of subsection (1A) in circumstances where a supply is made to officers or employees of a supplier (where that supplier is not an individual). The purpose of this provision is to clarify that where such a supply occurs, the entity making a supply to its officers or employees will be considered the supplier for the purpose of the offence in subsection 14(10). Item 23 Paragraphs 14(10)(a) and (b) 267. Item 23 of the Bill repeals and substitutes the current paragraph 14(10)(a) of the DTC Act. 268. Paragraph 14(10)(a) sets out the first element of the offence. This element requires that a person: a. supplies DSGL goods, b. supplies DSGL technology; or c. provides DSGL services. 269. Paragraph 14(10)(b) sets out the second element of the offence which is to engage in any of the conduct mentioned above in contravention of a notice, or a condition specified in a notice, that is in force under subsection 14(1) of the DTC Act. 270. The purpose of the new paragraphs (a) and (b) is to expand the elements of the offence to encompass where a person supplies DSGL goods or provides DSGL services, in addition to where a person supplies DSGL technology, which is already covered. Item 24 Subsection 14(11) 271. Item 24 of the Bill repeals the current subsection 14(11) of the DTC Act and substitutes it with new subsections 14(11) and (12). 272. Subsection 14(11) provides that section 15.4 of the Criminal Code (extended geographic jurisdiction--category D) applies to an offence against subsection (1) of this section). 41

273. The effect of extended geographic jurisdiction--category D is set out in paragraph [183]. The reason for applying this jurisdiction to the offence of contravening a prohibition notice set out in subsection 14(10) is because the Bill introduces new offence provisions where the regulated entity will be located outside of Australia. Where that entity conducts an activity that breaches a prohibition notice (or a condition of one) issued by the Minister under section 14 of the DTC Act, it is necessary that they are subject to an offence, even when they are located outside of Australia. 274. Subsection 14(12) provides the meaning of place for the purposes of this section. The details of this definition are previously set out in paragraph [52]. Item 25 Subparagraph 15(1)(a)(i) 275. Item 25 substitutes a reference to 'goods, where the goods' with 'DSGL goods, where the DSGL goods' in subparagraph 15(1)(a)(i) of the DTC Act. This change provides clarity that relevant activities concerning goods, as specified and subject to the penalty provisions under section 15, are DSGL goods. Item 26 After paragraph 15(1)(a) 276. Item 26 of the Bill inserts paragraph (aa) into subsection 15(1) of the DTC Act. This amendment establishes a new element for the offence of brokering involving supplies of Part 1 goods and technology on the Defence and Strategic Goods List. The new paragraph (aa) requires that the supply is, or is to be, a 'relevant supply'. 277. As set out in paragraphs [38]-[44], all supplies of DSGL goods and DSGL technology are a relevant supply, unless they meet the conditions set out in subsection 5C(1) (inserted by item 5). Paragraph [50] provides further detail as to the purpose for excluding certain supplies from being relevant supplies under the DTC Act. This is to establish a national exemption to the requirements of the DTC Act for the United Kingdom and United States to optimise technology transfer among and between AUKUS partners. This amendment would extend the 'relevant supply' exemption to the arranging of supplies for the purpose of this subsection of the DTC Act. Item 27 Subparagraph 15(1A)(a)(i) 278. Item 27 substitutes a reference to 'goods, where the goods' with 'DSGL goods, where the DSGL goods' in subparagraph 15(1A)(a)(i) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 28 Paragraph 15(1A)(b) 279. Item 27 substitutes a reference to 'goods' with 'DSGL goods' in paragraph 15(1A)(b) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 29 After paragraph 15(1A)(b) 280. Item 29 of the Bill inserts paragraph (ba) into subsection 15(1A) of the DTC Act. This amendment establishes a new element for the offence of brokering involving certain supplies of Part 2 goods and technology on the Defence and Strategic Goods List. The new paragraph (ba) requires that the supply is, or is to be, a 'relevant supply'. 42

281. As set out in paragraphs [38]-[44], all supplies of DSGL goods and DSGL technology are a relevant supply, unless they meet the conditions set out in subsection 5C(1) (inserted by item 5). Paragraph [50] provides further detail as to the purpose for excluding certain supplies from being relevant supplies under the DTC Act. This amendment would extend the 'relevant supply' exemption to arranging of supplies for the purpose of this subsection. Item 30 Subparagraph 15(4)(a)(i) 282. Item 30 substitutes a reference to 'goods' with 'DSGL goods' in subparagraph 15(4)(a)(i) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 31 Subsection 15(4B) 283. Item 31 substitutes a reference to 'goods' with 'DSGL goods' in subsection 15(4B) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 32 Subparagraph 15(4D)(a)(i) 284. Item 32 substitutes a reference to 'goods' with 'DSGL goods' in subparagraph 15(4D)(a)(i) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 33 Paragraph 15(4D)(b) 285. Item 33 substitutes a reference to 'goods' with 'DSGL goods' in subparagraph 15(4D)(b) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 34 Paragraph 15A(1)(a) and 286. Item 34 substitutes a reference to 'goods listed in the Defence and Strategic Goods List' with 'DSGL goods' in paragraph 15A(1)(a) of the DTC Act. The purpose of this change is to simplify the language and align it with comparable references to 'DSGL technology', which is already used to refer to technology that is listed on the Defence and Strategic Goods List. Item 35 Subparagraph 15A(10)(a)(i) 287. Item 35 substitutes a reference to 'goods, where the goods are listed in the Defence and Strategic Goods List, and' with 'DSGL goods, where' in subparagraph 15A(10)(a)(i) of the DTC Act. The effect of this amendment is previously detailed in paragraph [275]. Item 36 Paragraph 15B(1)(a) 288. Item 36 substitutes a reference to 'specified goods' with 'specified DSGL goods'. The effect of this amendment is previously detailed in paragraph [275]. Item 37 Subparagraph 15B(7)(a)(i) 289. Item 37 substitutes a reference to 'goods, where the goods' to 'DSGL goods, where the DSGL goods'. The effect of this amendment is previously detailed in paragraph [275]. 43

Item 38 Paragraph 16(1)(a) 290. Item 38 substitutes a reference to 'goods, where the goods are listed in the Defence and Strategic Goods List' with 'DSGL goods'. The purpose of this change is to simplify the language and align it with comparable references to 'DSGL technology', which is already used to refer to technology that is listed on the Defence and Strategic Goods List. Item 39 Subsection 16(2) (examples 1, 2 and 3) 291. Item 39 amends reference to 'goods' to 'DSGL goods'. The change provides clarity that relevant activities concerning goods as specified and subject to the permitting provisions under section 16 are DSGL goods. Item 40 Section 25A (note) 292. Item 40 of the Bill repeals the current note at the end of section 25A of the DTC Act and substitutes it with a new note. This note provides general clarification as to how a delegate may deal with a matter if they are satisfied that it would prejudice the security, defence or international relations of Australia. Item 41 Subsection 58(1) 293. Item 41 of the Bill amends subsection 58(1) to reflect that a permit holder under Part 2 must keep records of 'activities' that they are authorised to do under a permit given under section 11. 294. This is because the amended scope of the DTC Act will regulate services as well as supplies. For ease of reference, when referring collectively to all these different types of regulated conduct, the term 'activity' is used. Paragraph [236] provides further details as to what constitutes an 'activity'. Item 42 Paragraph 63(1)(a) 295. Item 42 of the Bill amends paragraph 63(1)(a) to omit the reference to a 'supply' and replace it with 'an activity'. As set out above, this is because the amended scope of the DTC Act will regulate services as well as supplies. Paragraph [236] provides further details as to what constitutes an 'activity'. Item 43 Subsection 73(2) 296. Item 43 of the Bill omits references to subsection 11(8) and section 14 in subsection 73(2) of the DTC Act and replaces them with references to 'section 11, 12 or 14'. 297. Subsection 73(2) of the DTC Act limits the powers or functions that the Minister may delegate under subsection 73(1) of the Act. The purpose of the amendment to this provision is to specify that the Minister cannot delegate powers or functions under this section in relation to: a. issuing permits b. changing permit conditions 44

c. Ministerial prohibition notices 298. Due to potential sensitivities related to issuing permits and changing permit conditions, the Bill provides for these powers and functions to be delegated separately (see item 44). Item 44 After subsection 73(2) 299. Item 44 of the Bill inserts new subsections (2A), (2B) and (2C) in section 73 of the DTC Act. Delegation of functions or powers under section 11, 12 or 14 300. Subsection (2A) sets out a specific provision to enable the delegation of functions or powers of the Minister under section 11 or 12 of the DTC Act. The purpose of this provision is to enable a suitably senior and qualified departmental official to exercise the Minister's powers on their behalf and to create an avenue of review to the Minister, where the decision is reviewable. 301. Subsection (2B) provide that the Minister may only delegate the Minister's functions or powers under subsection 11(8) to the Secretary or an SES employee (including an acting SES employee) within the Department of Defence. Subsection 11(8) of the DTC Act concerns the power to, by writing, revoke a permit given to a person. Because the revocation of a permit will likely be subject to certain sensitive considerations, it is appropriate that this power to only be delegated to this level. 302. Subsection (2C) provides that the Minister may, by writing, delegate any or all of their functions or powers under section 14 to the Secretary or an SES employee (including an acting SES employee) within the Department of Defence. Section 14 of the DTC Act concerns the power for the Minister to issue a notice prohibiting a person from undertaking certain activities. Item 45 Subsection 73(7) (table item 1) 303. Item 46 of the Bill repeals item 1 of the table set out in subsection 73(7) of the DTC Act. Item 46 At the end of section 73 304. Item 46 of the Bill inserts new subsections (9) and (10) at the end of section 73 of the DTC Act. 305. Subsection (9) provides that a delegate mentioned in paragraph (2A)(c) must not make a decision under section 11 to refuse to give a person a permit for an activity covered by an application for a permit, if the delegate is satisfied that the activity would prejudice the security, defence or international relations of Australia. 306. Subsection (10) provides that if subsection (9) applies, the delegate must refer the case to either the Minister or one of the delegates mentioned in subsection 73(2A)--these being the Secretary of the Department or an SES employee (including an acting SES employee). Depending on who the case is referred to, the Minister or the relevant delegate will be required to decide the case. 45

307. The purpose of these provisions is to ensure the decision maker's level of seniority is proportionate to the consequences of the decision. Item 47 Application of amendments--offences etc. 308. Item 47 of the Bill sets out how the amendments of the Bill will apply in relation to the start day. The start day means the day after the end of the period of 6 months beginning on the day this item commences. For example, if this item of the Bill commenced on 1 July 2024, then the start day would be 2 January 2025. 309. Subsection (1) provides that the amendments to section 10 of the DTC Act will apply to conduct occurring on or after the start day. 310. Subsection (2) provides that sections 10A, 10B and 10C will apply to conduct occurring on or after the start day. 311. Subsection (3) provides that the amendments to section 14 of the DTC Act will apply to an activity done on or after the start day. 312. Subsection (4) provides that the amendments to section 15 of the DTC Act will apply to conduct occurring on or after the start day. 313. Subsection (5) defines the start day, as mentioned above. Item 48 Saving provision--permits 314. Item 48 of the Bill has the effect of saving permits that were given to people under section 11 of the DTC Act before this item of the Bill commences. The effect of this provision is that permits given under section 11 of the DTC Act before it is amended by the Bill will continue to be valid and in force after the Bill commences, and may be dealt with under section 11 as if it was not amended. Item 49 Saving provision--prohibition notices 315. Item 49 of the Bill has the effect of saving prohibition notices in force under section 14 of the DTC Act before the commencement of the Bill. This ensures that any prohibition notices issued and in force under section 14 of the DTC Act prior to the Bill commencing are not invalidated once the Bill commences and the amendments to section 14 take effect. Item 50 Saving provision--delegations 316. Item 50 of the Bill has the effect of saving delegations in force under section 73 of the DTC Act before the commencement of the Bill. This ensures that any delegations made under section 73 of the DTC Act prior to the Bill commencing are not invalidated once the Bill commences and the amendments to section 73 take effect. 46

SCHEDULE 2--CONTINGENT AMENDMENTS Defence Trade Controls Act 2012 Item 1 After the heading to subsection 10C(3) 317. Item 1 of Schedule 2 to the Bill inserts subsections (2A) and (2B) to the DTC Act. These subsections are exceptions to the offence of providing a DSGL service set out in section 10C (as inserted by item 11 of Schedule 1 of the Bill). The commencement of these amendments are detailed in clauses [5]-[6]. Subsection (2A) 318. Subsection (2A) provides that the offence in subsection 10C(1) does not apply where a person holds an in force 'foreign work authorisation' to perform work, and provides DSGL services in the course of performing that work for, or on behalf of: a. a military organisation of a foreign country; or b. a government body of a foreign country 319. The meaning of 'foreign work authorisation' is defined in Part IXAA of the Defence Act 1903. The purpose of this exception is to ensure that a person who holds a valid foreign work authorisation to perform work does not commit an offence under subsection 10(1) of the DTC Act. This is because a person who already holds a foreign work authorisation issued under Part IXAA of the Defence Act is deemed to be sufficiently approved under that Act to engage in the provision of DSGL services as regulated by section 10C of the DTC Act. 320. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the application of subsection 13.3 of the Criminal Code. 321. The effect of this note is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. Subsection (2B) 322. Subsection (2B) provides that the offence in subsection 10C(1) does not apply where a person holds an in force 'foreign work authorisation' to provide training and provides DSGL services that only consist of that training to: a. a military organisation of a foreign country; or b. a government body of a foreign country 323. The purpose and reasons for this exception to the offence are the same as those set out in paragraph [319] of Schedule 2. The only difference is this exception applies to a 47

'foreign work authorisation' that is provided to a person for training, rather than for the performance of work. 324. A note to this subsection provides that a defendant bears an evidential burden in relation to the matters in this subsection and refers readers to subsection 13.3(3) of the Criminal Code. Paragraph [72] provides further detail about the application of subsection 13.3 of the Criminal Code. 325. The effect of this note is that where a defendant seeks to rely on this exception, they will need to adduce or point to some evidence that suggests there is a reasonable possibility it exists. Once a defendant has discharged the evidential burden of proof in relation to this exception, the prosecution will bear the legal burden of disproving the exception beyond a reasonable doubt. 48

STATEMENT OF COMPATABILITY WITH HUMAN RIGHTS Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 Defence Trade Control Amendment Bill 2023 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Overview of the Bill The purpose of the Bill is to address existing gaps within Australia's export control framework in order to receive a certification of comparability with United States' (US) export controls in exchange for an exemption from licencing requirements in the US Arms Export Control Act. The Bill will achieve this by introducing provisions which regulate the export or supply of certain military or dual-use goods and technology on the Defence and Strategic Goods List from Australia to certain foreign persons both within Australia, or to a place outside of Australia. The Bill will also introduce provisions which regulate the provision of services in relation to military or dual-use goods or technology on Part 1 of the Defence and Strategic Goods List. The Bill intends to protect against certain foreign persons obtaining technological know-how within and outside of Australia which could be developed and used by their country of origin in a manner prejudicial to Australia's security interests. The Bill will establish an Australian export control regime equivalent to that of the US as a condition precedent to the US effecting legislative change to ensure that Australia can access a licence-free environment amongst AUKUS partners that would revolutionise opportunities for Australian businesses and research institutions, including those engaging in defence collaboration, research, co-development, or defence-related sales activities with the United Kingdom and the United States. Human rights implications This Bill engages the following rights: • the right to work in Article 2(2), Article 4 and Article 6(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR); • the presumption of innocence in Article 14(2) of the International Covenant on Civil and Political Rights (ICCPR); and • the right to privacy and reputation in Article 17 of the ICCPR. Legitimate objective of the Bill Under international human rights law, any limitation on rights and freedoms must be reasonable, necessary and proportionate for the pursuit of a legitimate objective. For an 1

objective to be legitimate, it must address a pressing or substantial concern, and not simply seek an outcome regarded as desirable or convenient. The legitimate objective of the Bill is to regulate identified gaps in Australia's defence export controls regime for the purposes of safeguarding Australia's defence, security and international relations. The objective is also to create a suitably robust export control regime that engenders confidence in the US and UK, to enable the creation of a licence-free environment amongst AUKUS partners. Gaps in Australia's existing defence export controls have been identified as a problem over the last five years where, in a rapidly changing and deteriorating geostrategic environment, military and dual-use technical data has become more vulnerable to being obtained by foreign entities with intentions prejudicial to Australia's interest. Specifically, Australia's current defence export control framework does not regulate the following: • where DSGL technology is supplied from a person within Australia to a foreign person within Australia. • where DSGL good or DSGL technology that was initially exported or supplied from within Australia, is then re-supplied from outside Australia to: i. a person outside Australia (whether an Australian person or a foreign person); or ii. a foreign person (whether they are outside or within Australia). • where a person provides services (such as training) in relation to DSGL goods or DSGL technology to a foreign person, whether in Australia or elsewhere. The risk of military and dual-use goods and technology being acquired by entities not aligned with Australia's interests has the potential to significantly undermine Australia's security and defence, as well as Australia's reputation and cooperation with international partners. Right to work Article 2(2) of the ICESCR provides that State Parties to the Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Article 4 of the ICESCR also contains an express limitation clause, which sets out the specific parameters by which the rights of the treaty may be limited. This Article states that countries may subject economic, social and cultural rights of the ISESCR only to such limitations 'as are determined by law only in so far as this may be compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society'. Article 6(1) of the ICESCR recognises the right to work, including the right of individuals to take the opportunity to gain their living by work which they freely choose or accept, and requires appropriate steps to be taken to safeguard this right. 2

The measures of the Bill may limit the right to work under Article 6(1) of the ICESCR as it regulates certain supplies and the provision of services in relation to goods and technology on the Defence and Strategic Goods List (DSGL). Specifically, section 10A (within item 15) of the Bill regulates the supply of military or dual-use technology--known as DSGL technology--to foreign persons within Australia. Section 10B (within item 15) of the Bill regulates resupplies of DSGL goods or DSGL technology, where the goods or technology are initially supplied from within Australia to a place outside Australia, and then again supplied to: • a person located outside Australia (whether a foreign person or an Australian person); or • a foreign person (whether they are located within or outside Australia) Under sections 10A and 10B of the Bill, individuals who make such a supply of DSGL goods or DSGL technology will commit an offence unless they hold and comply with a permit issued by the Minister or their delegate under section 11 of the Defence Trade Controls Act 2012 (DTC Act), or an exception to the relevant offence applies. The Bill also regulates the provision of services (e.g. training) in relation to certain DSGL goods or DSGL technology--known as DSGL services--within and outside Australia. Under section 10C (within item 15) of the Bill, individuals who provide a DSGL service to a foreign person will commit an offence unless they hold and comply with a permit issued under section 11 of the DTC Act, or an exception to the offence applies. While these new measures of the Bill may limit the right to work, they also address key identified gaps in Australia's defence export controls framework. In order to effectively regulate supplies of DSGL goods and DSGL technology and the provision of DSGL services, it is necessary to expand the existing permit framework of the DTC Act to cover these activities. Deterring non-compliance with the requirement to hold a permit necessarily requires the legislation to establish corresponding offences for each of these activities. This will ensure greater regulation of supplies, re-supplies and the provision of services to other people, some of whom may have interests that are averse to Australia's. While these measures may have the effect of limiting the work people can undertake without a valid permit, there is a clear and rational connection between the restrictions imposed by the measures and achieving the legitimate objective of the Bill. The measures of the Bill may also be perceived as engaging the right to work without discrimination of any kind under Article 2(2) of the ICESCR. This is because an element of each of the offences set out in sections 10A, 10B and 10C of the Bill is that the supply or provision of services in relation to the DSGL goods or DSGL technology is made to a 'foreign person'. The Bill defines a foreign person to mean a person other than an Australian person (as defined in the Bill). The basis on which this definition in the Bill turns is the 'nationality' of a person (e.g. their citizenship or permanent residency status). At law, the characteristic of 'nationality' has been recognised as distinct from that of a person's 'national or ethnic origin' (e.g. where a person is born or where their ancestors came from). Additionally, the Bill places no restrictions on who may apply for a permit to be authorised to engage in the 3

regulated activities. For these reasons, these measures of the Bill should not be considered to limit the right to work without discrimination under Article 2(2) of the ICESCR. The scope of people that will be impacted by the measures of the Bill will be limited to those individuals whose work involves providing supplies of DSGL goods or DSGL technology, or services in relation to DSGL goods or DSGL technology. These goods and technologies are specified in the DSGL; a legislative instrument that is regularly updated to reflect changes in regulated goods and technology. While the measures of the Bill create additional requirements a person must meet to engage in this type of work, they do not wholly restrict any person or class of person from applying for a permit. The measures of the Bill are only designed to ensure that the Government is able to effectively regulate and maintain oversight of the supply of DSGL goods and DSGL technology, and provision of services in relation to, military and dual- use goods and technology within and outside of Australia. The Bill provides that a person will be able to apply to the Minister in order to be able to supply or provide a service in relation to military or dual-use goods and technology. When making a decision to issue a permit for these purposes, the Minister (or their delegate) must have regard to all the relevant factors to ensure the activities would not prejudice Australia's security, defence or international relations. If the Minister or delegate decides to refuse the application for a permit, the Bill requires that they provide the person with a notice for the refusal and the reasons for the refusal. A person will not be required to hold a permit in circumstances where the supply of DSGL goods or DSGL technology, or the provision of a DSGL service, is made to the United Kingdom or the United States and the supply or service meets the requisite preconditions. The effect of this is that a person will be able to make supplies and provide services to the United Kingdom or the United States without having to apply for a permit to authorise the activity where it would typically be required. This will positively engage the right to work, as more people will be able to more seamlessly collaborate with colleagues in the United States and the United Kingdom on work and academic projects, without first having to be issued a permit authorising the activity. The Minister may further exempt via regulation, other types of supplies and provision of services from the requirement to obtain a permit. Additionally, the Bill provides an exemption to certain offences in the Bill for employees and officers who are citizens or permanent residents of countries listed in the DTC Act - Foreign Country List where the supply occurs in the course of their employment duties. This will ensure that foreign employees and officers who may be supplied DSGL technology as part of their everyday employee duties are sufficiently protected from the application of certain offences in the Bill. Accordingly, the limitation on the right to work as proposed under the Bill is sufficiently proportionate, reasonable and necessary for the legitimate objective of closing identified regulatory gaps within Australia's defence export controls regime. The Bill intends to implement the least restrictive regulatory scheme by providing for certain exceptions from the requirement to have a permit, while also promoting the security, defence and international relations of Australia. 4

For these reasons, to the extent the Bill limits the right to work under Article 6 of the ICESCR, the limitations are acceptable, as they achieve a legitimate objective that is permissible under Article 4 of the ICESCR, being solely for the purpose of promoting the general welfare in a democratic society. Presumption of innocence Article 14(2) of the ICCPR provides that 'everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty'. In General Comment No. 32 (CCPR/C/GC/32), the United Nations Human Rights Committee provides that the presumption of innocence 'imposes on the prosecution the burden of proving the charge'. In effect, the presumption of innocence imposes on the prosecution the burden of proving the charge and guarantees that no guilt can be presumed until the charge has been proved beyond reasonable doubt. The presumption of innocence may be limited provided the limitation 'is reasonable in the circumstances' and necessary and proportionate to achieve a legitimate objective. The offences of the Bill require the prosecution to prove each element of the offence beyond a reasonable doubt, and as such does not presume guilt in a way that would be inconsistent with the presumption of innocence. The measures of the Bill may limit the presumption of innocence by placing an evidentiary burden on the defendant with respect to certain exceptions to the offences in the Bill. However, it is reasonable for a defendant to be required to adduce some evidence to establish the existence of an exception to an offence, as the exceptions within the Bill relevantly concern matters that would typically be within the knowledge of the defendant. For example, a defendant seeking to rely on the exception provided for supplies made to employees or officers in the course of their duties should have sufficient knowledge of the matters required to demonstrate this exception (e.g. that the person to whom they made the supply is one of their employees or officers). The application of absolute liability to an element of the offences of the Bill may also be perceived as engaging the presumption of innocence. The effect of absolute liability is that the prosecution will only be required to show that the physical element of the offence was engaged in, or existed. They do not have to prove a corresponding fault element for that element of the offence. Additionally, the defence of mistake of fact is not available to a defendant when absolute liability applies. The new offences in sections 10A, 10B and 10C of the Bill, as well as the existing offence in section 10 of the DTC Act, all contain an element to which absolute liability applies. The element requires that the supply (or DSGL service) must be a 'constitutional DSGL supply' (or 'constitutional DSGL service'). These terms are set out in section 5B of the Bill and capture a wide range of supplies of DSGL goods and DSGL technology, and DSGL services. Due to the construction of these terms, it is expected that most supplies of DSGL goods and DSGL technology and the provision of DSGL services will meet the requirements to be a 'constitutional DSGL supply' or 'constitutional DSGL services' respectively. 5

It is reasonable and appropriate for absolute liability to apply to this element of each of the offences. This is because it is not an element that goes to the substance of the offence, but rather concerns the existence of a mere matter of fact about the underlying supply or service being made. It would be time-consuming of a courts' resources if the prosecution were required to inquire into the state of mind of a defendant about, for example, whether they knew or were reckless as to the fact that they were making a supply of DSGL technology to another person by way of the internet. Similarly, if a defendant was able to rely on the defence of mistake of fact to displace this element of the offence (e.g. proving that the defendant did not know they were making a supply of DSGL technology by way of the internet) this could likewise have the effect of frustrating or defeating the purpose of the legislation, and place an unreasonable burden on the court's time and resources while such basic elements are proven beyond a reasonable doubt. The offence in section 10B has a further element of the offence to which strict liability applies. The effect of strict liability is that the prosecution will only be required to show that the physical element of the offence was engaged in, or existed. Subsection 10B(4) provides that strict liability applies to the element of the offence in paragraph 10B(1)(e) of the Bill. This paragraph establishes the requirement for the earlier export or supply of DSGL goods or DSGL technology (from within Australia to outside Australia) to have required: • permission under the Customs Act 1901; or • a permit under the DTC Act. The effect of this element of the offence is to ensure that the current supply that is the subject of the offence in subsection 10B(1) is actually a re-export or re-supply of DSGL goods or DSGL technology that were initially regulated when they left Australia. The application of strict liability to this element of the offence is reasonable and appropriate because the initial export or supply being regulated upon leaving Australia is a necessary precondition to the offence in subsection 10B(1) being committed. This however, does not prevent a defendant from raising a defence of mistake of fact to this particular element of the offence, noting that they may have lacked the relevant knowledge as to the regulated status of the DSGL goods or DSGL technology prior to receiving them. For these reasons, to the extent that the provisions of the Bill limit the presumption of innocence under Article 14(2) of the ICCPR, the limitations are reasonable, necessary and proportionate to achieving the legitimate objective of the Bill. Right to privacy Article 17 of the ICCPR states that no one shall be subjected to arbitrary or unlawful interference with his or her privacy, family, home or correspondence, nor to unlawful attacks on their honour and reputation. The United Nations Human Rights Committee have interpreted the right to privacy as comprising freedom from unwarranted and unreasonable intrusions into activities that society recognises as falling within the sphere of individual autonomy. The right to privacy may be limited where the limitation is lawful and not arbitrary, and where it is reasonable, necessary and proportionate to achieve a legitimate objective. 6

The measures of the Bill may limit the right to privacy under Article 17 of the ICCPR, as the Bill provides that a person cannot supply DSGL goods or DSGL technology, or provide DSGL services, without holding a permit issued under section 11 of the DTC Act. An application for a permit under the new measures of the Bill must: • contain information required by the approved form; and • by accompanied by any documents that the approved form requires In order to assess an application for a permit, the Minister (or their delegate) will require access to this information, in order to determine whether a permit for a specified activity or activities should be issued. This is because the Minister or delegate must be satisfied that the granting of the permit will not prejudice the security, defence or international relations of Australia. The collection, use and disclosure of personal information in this way may therefore limit the prohibition on arbitrary interference with privacy. However, this limitation is necessary to achieve the legitimate objective of the Bill, as it will ensure that the Government maintains a sufficient level of control and oversight over who should be authorised to conduct supplies of DSGL goods and DSGL technology and DSGL services both within and outside of Australia. Without this information, the Government would not be able to effectively assess an application for a permit and would therefore not be able to determine whether a person should be authorised to supply DSGL goods or DSGL technology, or provide DSGL services. The interference with privacy is not arbitrary in these circumstances, as the information an application for a permit needs to include is set out in section 66 of the DTC Act. That section provides that the application must be in the form approved by the Minister, contain the information required by the form, be accompanied by any documents required by the form and include the fee prescribed by the Defence Trade Control Regulations 2013. Furthermore, the powers and functions set out in the Bill, as well as those in the Act, are required to be exercised in compliance with the Privacy Act 1988. On this basis, to the extent that the measures in the Bill limit the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR, these measures are prescribed by law and not arbitrary. For these reasons, the limitation on the right to privacy under Article 17 of the ICCPR is reasonable, necessary and proportionate to achieve the legitimate objective of regulating identified gaps in Australia's defence export controls regime for the purpose of safeguarding Australia's defence, security and international relations. Conclusion The Bill is compatible with human rights because, to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate. 7

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