WASHINGTON, Aug 15 (Reuters) - The U.S. State Department

told the U.S. Congress on Thursday that Australia, Britain and

the United States now have comparable export-control regimes, a

significant step needed to facilitate technology sharing and

allow the trilateral AUKUS defense pact to move ahead.

AUKUS, formed in 2021 to address shared worries about

China's growing power, is designed to allow Australia to acquire

nuclear-powered attack submarines and other advanced weapons

such as hypersonic missiles.

However, the sharing of closely guarded technology, which is

governed by strict U.S. International Trafficking in Arms

Regulations (ITAR), has been a hurdle for cooperation.

The 2024 U.S. National Defense Authorization Act (NDAA)

required President Joe Biden to determine whether Australia and

Britain have export control regimes "comparable to the United

States" and thereby qualify for ITAR exemptions.

"Today, the Department of State submitted to the Congress a

determination that Australia and UK export control systems are

comparable to those of the United States and have implemented a

reciprocal export exemption for U.S. entities," the State

Department said in a statement.

It said it would publish an interim final rule on Friday to

amend ITAR and implement export licensing exemptions for

Australia and Britain effective from Sept. 1.

The final rule, however, will include a list of sensitive

technologies excluded from ITAR exemptions and analysts say this

will likely mean that significant bureaucratic hurdles will

still need to be overcome to realize the AUKUS projects.

Earlier on Thursday, Australian Defence Minister Richard

Marles nevertheless called the reforms a "generational change"

and a British government statement called it a "historic

breakthrough."

"These critical reforms will revolutionize defense trade,

innovation and cooperation, enabling collaboration at the speed

and scale required to meet our challenging strategic

circumstances," Marles said in a statement.

A State Department official told reporters that for the

U.S., approximately 80% of the value of current commercial

defense trade would be covered by the licensing exemptions,

increasing the speed and predictability of those transactions.

The U.S. issues around 3,800 defense export control licenses

for Australia each year which have taken up to 18 months to

approve, while approvals in Britain have taken 100 days.

Australian and U.S. officials said the U.S. State Department

will have a 45-day window to decide on the transfer of

technologies on the excluded list between governments and

industry, and 30 days for government-to-government transfers.

The State Department said a 90-day public comment period for

the interim final rule would "allow for further refinement in

subsequent rule-making."

It said the aim was "maximize innovation and mutually

strengthen our three defense industrial bases by facilitating

billions of dollars in secure license-free defense trade."

A draft rule made public at the end of April was hailed as a

game-changer by Australia, although some experts on defense

export controls said then the exclusion list was so broad as to

make the policy changes almost meaningless. Among the exclusions

were certain technologies for submarines and hypersonics.

The State Department official said the updated list of

exclusions still contained "certain submersible technology,

certain undersea acoustics technology" relevant to AUKUS.

However this did not mean they could not be exported. "All

it means is that we need to see a license for that before it

goes," the official said, adding that the applications would

have to be processed within 30 to 45 days.

"We are going to make sure ... that the trade can occur,

that it can occur at the speed of relevance, securely," the

official said.

The unveiling of the draft in April was followed by a

month-long comment period in which industry bodies and defense

firms called for the list of exclusions to be narrowed.

The Republican chair of the U.S. House Foreign Affairs

Committee Michael McCaul welcomed Thursday's move, but called it

long overdue and said "there are still too many items that are

critical to fully implementing AUKUS that are not included in

this exemption.

"Until the Excluded Technologies List is limited to only a

handful of items - as Congress intended - big government

regulation will continue to hamper this crucial alliance's

ability to truly deter a conflict in the Indo-Pacific," he said

in a statement.

Jeff Bialos, a former senior Pentagon official now a partner

at the Eversheds Sutherland law firm, said the details of the

final ITAR waiver would be critical as if they were too

administratively unwieldy, they would fall into disuse and

undermine the aim of enhanced technology cooperation.