The National Defense Authorization Act for Fiscal Year 2017 expanded the legal definition of the National Technology and Industrial Base (NTIB) to include the United Kingdom and Australia. This study informs NTIB partners on barriers and opportunities for effective integration.

The United States’ National Technology and Industrial Base (NTIB) is a congressionally-mandated policy framework that is intended to foster a defence free-trade area among the defence-related research and development sectors of the United States, Canada, Australia and the United Kingdom. To date, however, the NTIB has only managed to facilitate limited bilateral cooperation between some members, falling well short of its goal. The US defence export control regime is one of the biggest barriers to NTIB integration. Specifically, bureaucratic fragmentation, its failure to treat trusted allies differently from other partners and its leaders’ reluctance to attempt politically costly reform are significant barriers to progress. Canberra’s ability to maintain its own competitive military advantage and to serve as an effective ally of the United States in the Indo-Pacific is threatened by real and growing opportunity costs in an age of rapid strategic and technological change that Australia and Australian industry face as a result of slow NTIB implementation. Australian leaders should elevate NTIB progress to the political level and accelerate efforts to make a strategic case in Washington as to why extensive and ambitious implementation of NTIB’s original vision is urgently needed.

In light of Section 881 of the National Defense Authorization Act for Fiscal Year 2017, which expanded the legal definition of the National Technology and Industrial Base (NTIB) to include the United Kingdom and Australia, this report informs NTIB partners on barriers and opportunities for effective integration. The expansion of the NTIB is based on the principle that defense trade between the United States and its closest allies enables a host of benefits, including increased access to innovation, economies of scale, and interoperability. In order to reap the greatest benefits of a new era of NTIB, this report uses the lessons learned from study of the present state of integration to identify areas of opportunity for policy reforms and greater cooperation.

There is a long history of the United States drawing upon the defence industrial bases of its allies when in need. The strategic challenges facing Australia and the United States in the Indo-Pacific today, along with the global diffusion of technological and industrial power, present a renewed case for close US allies to seek innovative ways to aggregate their collective defence industrial capabilities. The expansion of the NTIB to include Australia and the United Kingdom has laid the groundwork for larger reform and integration with allies. But while allies and officials within the United States can continue to press for further reform, it will ultimately take political will in Washington to push for a major overhaul of the US defence export control regime to bring it in line with the requirements of great power competition. Breaking down barriers and incentivising trusted allies with the R&D, knowledge and resources to continue working with the United States should be a critical priority.