The global surge in export controls: Impacts on industry, innovation and national security

Global export controls – which limit the movement of sensitive products and services across borders – have surged in recent years, as governments expand restrictions on what companies can sell abroad. 

Overview

• Export controls, traditionally focused on protecting national security, are expanding in scope.
• Controlled exports and impacted industries are growing globally, targeting critical sectors such as investment, research and development, and supply chain resilience.
• Australia enforces controls through the Department of Defence and the Department of Foreign Affairs and Trade, with streamlined frameworks with key partners.

What are export controls?

Export controls have traditionally been used as regulatory measures to govern the movement of sensitive products and services. 

While tariffs have typically been implemented to raise revenue and protect domestic industries, export controls safeguard national security, prevent the unauthorised use of weapons or technology and support foreign policy objectives.

Export controls can restrict:

• the export of specific products
• access to technology by foreign nationals
• the transfer of goods to certain countries, end users or for use without authorisation.

How export controls are expanding

Export controls have surged globally in recent years (McKinsey & Company, How export controls are reshaping markets April 3, 2025) as governments have begun to expand their scope beyond traditional defence equipment:

• Since COVID-19, the US Department of Commerce Entity List has doubled in size (United States Department of Commerce) from 700 to approximately 1,400 as of mid-2025. These controls are increasingly being used to restrict the export of software and technology and to advance US national security, foreign policy and economic objectives.
  
• Since 2023, China's Ministry of Commerce (MOFCOM) has imposed restrictions on certain rare earth elements (essential inputs into advanced semiconductor technology supply chains), citing national security and interests.
• Since May 2021, the European Union has increased scrutiny on dual-use exports (European Commission), (items used for both civilian and military purposes e.g. drones) which carries rerouting risks as they can be diverted to unauthorised users.

Export controls can influence investment flows (McKinsey & Company, Operating in a world of growing investment controls June 16, 2025), research and development activities and supply chain configurations, particularly in high-tech sectors.

Export controls vs. tariffs  

Although both export controls and tariffs impact international trade, they serve different purposes, as outlined in the table below:

How Australia manages export controls and sanctions

Defence export controls (DEC)

Australia’s export control system is administered by Defence Export Controls (DEC) within the Department of Defence. It is based on the Defence and Strategic Goods List (DSGL), which regulates exports of:

• military-grade equipment
• dual-use items with both civilian and military applications (e.g. aerospace tech, encryption software, high-performance electronics, biological or chemical materials).

Exporting these goods whether physically, electronically or through technical assistance, typically requires a permit from DEC. Exemptions may apply to low-risk transactions, but exporters are responsible for assessing whether authorisation is required. 

Australian sanctions regime

Sanctions are managed by the Australian Sanctions Office (ASO) within the Department of Foreign Affairs and Trade (DFAT). These may prohibit exports to certain countries, individuals or entities regardless of product type for reasons such as:

• national security
• preventing unauthorised weapon production
• responding to human rights abuses
• upholding international peace and security.

All parties must check the Consolidated List to ensure compliance before proceeding with exports. Exporting these items usually requires a permit from the DEC office, exemptions may apply for low-risk transactions, but exporters must self-assess and apply for approvals where required.

Special frameworks for strategic partners

Licence-free environment (US-UK-Australia)

Australia has established a Licence-Free Environment with the US and UK to streamline defence exports between the three countries. This structure eliminates the need for individual export permits for eligible goods and is designed to enhance cooperation under agreements.

Technology Safeguards Agreement (TSA) 

The TSA between Australia and the US enables commercial space launch activities from Australian soil while maintaining compliance with US export control laws. It facilitates secure transfer and use of US space technology in Australia, benefiting the defence and aerospace sectors.