The Biden administration is asking Congress to make the Australian and British industrial bases eligible for grants and loans under the Defense Production Act as part of their efforts to advance the trilateral AUKUS agreement.

Biden announced that he would seek legislation to designate Australia as a “domestic source” under Title III of the Defense Production Act – a privilege currently only enjoyed by Canada – when he met with Australian Prime Minister Anthony Albanese at the G7 summit in Japan on Saturday.

His remarks came after the Pentagon submitted an April 28 legislative proposal to Congress that would amend the law to add both Australia and the U.K. to Title III, which would allow the president to direct grants and loans to companies in each country as if they were U.S. companies.

“Doing so would streamline technological and industrial base collaboration, accelerate and strengthen AUKUS implementation and build new opportunities for United States investment in the production and purchase of Australian critical minerals, critical technologies and other strategic sectors,” noted a joint U.S.-Australia statement released after Biden’s meeting with Albanese.

Assistant Secretary of Defense for Strategies, Plans and Capabilities Mara Karlin told the House Foreign Affairs Committee on Wednesday that using Defense Production Act grants for the Australian and British industry would help implement the technology-sharing components of AUKUS, known as Pillar II. These capabilities stand apart from the plan to help Australia develop its own nuclear-powered submarine fleet. They include joint development on hypersonic weapons, quantum technologies and artificial intelligence.

“Pillar II – the scope, the scale, the complexity of it – it’s really unlike anything that we have ever done,” said Karlin. “We’re still looking, of course, at what it would mean for specific AUKUS projects.”

“This is a two-way street,” added Karlin. “Given of course the security environment, given the rapidly evolving technological environment, we need to be able to work with one another as much as possible.”

When the House passed its version of the National Defense Authorization Act last year, it included an amendment from Rep. Joe Courtney, D-Conn., that would have put Australia and the U.K within the purview of the Defense Production Act. However, Congress dropped the provision in the final bill after negotiations with the Senate.

Courtney said he hopes that Biden’s endorsement at the G7 would spur Congress to pass his legislation into law this year.

Defense Production Act

“Under current law, the [Defense Production Act] allows the president to stimulate investments in technology in both U.S. and Canadian companies to allow our nations to tackle pressing national priorities in partnership with private companies, as we saw during the COVID-19 pandemic,” Courtney told Defense News in a statement. “By expanding the definition of a ‘domestic source’ to include both Australia and the United Kingdom, we can accelerate innovation in critical technologies to fulfill the goals of the AUKUS security agreement.”

Both Biden and former president Donald Trump used the Defense Production Act to procure vital medical supplies amid significant supply chain disruptions during the pandemic. The White House also invoked the Defense Production Act in March in the hopes of speeding up hypersonic weapons development. Adding Australia and the U.K. to Title III could allow defense contractors in both countries to take advantage of U.S. grants and loans for their own hypersonics programs.

Biden also used the Defense Production Act last year to unlock $43 million in funding to address critical mineral shortfalls in large-capacity batteries. China largely controls the global supply chain for critical minerals like cobalt needed to produce these batteries.

Putting Canberra within the purview of the Defense Production Act could stimulate U.S. investment in Australian mines. The Australian government’s geoscience agency notes that Australia remained the world’s largest lithium producer in 2021, controlling 53% of the global market. It is also among the world’s top five producers of cobalt and antimony, an alloy largely controlled by China that is needed to make bullets and ammunition.

Congress allocated $600 million in Defense Production Act funding as part of a Ukraine aid package last year, in part to shore up critical mineral supply chains that were further disrupted after Russia’s invasion. The State Department also developed a minerals security partnership to bolster these supply chains with 10 other allies, including Australia.

Bryant Harris is the Congress reporter for Defense News. He has covered U.S. foreign policy, national security, international affairs and politics in Washington since 2014. He has also written for Foreign Policy, Al-Monitor, Al Jazeera English and IPS News.

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