AUKUS, the Australia-U.K.-U.S. security initiative, is considered critical to Indo-Pacific security.

U.S. Secretary of State Antony Blinken calls it “a vital security partnership.” At the initial announcement, President Joe Biden ticked off every security planning priority — meeting regional challenges, connecting partners, enhancing capabilities, integrating research communities — that the deal addresses.

Reports then that the biggest obstacle to getting AUKUS done are U.S. restrictions on sharing technology are, um, confounding. Experts warn that the International Traffic in Arms Regulations (ITAR) regime, rules that govern U.S. trade in weapons and defense products, could undermine the entire project. The U.S. is waking up to the threat and trying to fix this problem. But the ITAR debate is indicative of a larger concern: how the U.S works with allies in a world transformed.

AUKUS is best known as “the submarine deal,” an agreement to transfer cutting-edge submarine technology to Australia. That characterization sells AUKUS short. The subs are just one part — Pillar One — of the deal. Just as, if not more, important is Pillar Two, which deals with a range of critical and emerging technologies, including artificial intelligence, quantum, unmanned systems and hypersonic missiles that the three countries will work on together. A third pillar deals with coproduction of legacy capabilities.

William Greenwalt, a former U.S. undersecretary of defense for industrial policy now at the American Enterprise Institute, and Tom Corben, a research fellow at the United States Studies Center (USSC) in Sydney, warn in a new report that “without significant reform, AUKUS writ large is at risk of failing to meet its full potential.”

The problem, in their telling, is ITAR, which impacts all cooperation envisioned under AUKUS. They cite former U.S. ambassadors to Australia who call ITAR “the most significant obstacle” to modernizing the alliance and warn that AUKUS “cannot achieve its ambitious goals of sharing and codeveloping critical and emerging technologies, from nuclear submarines to hypersonic missiles and autonomous systems, without revising ITAR.”

Greenwalt and Corben offer a list of ITAR shortcomings, an indictment that includes eight deadly sins. I’ll focus on four. The first is nondiscrimination, or the fact that ITAR does not distinguish among recipients: Ally, partner, friend, neutral or foe are all treated the same. It seems obvious that U.S. allies should get special treatment when considering access to technology; an alliance should count for something. But, the authors complain, under ITAR Australia is “effectively regarded as being on equal legal terms as a country like Serbia.”

Second, there is the problem of extraterritoriality, or the ability of the U.S. to apply its laws to a recipient country in a subsequent transaction involving that equipment. In other words, if the U.S. exports a good to Australia, Canberra must go back to the U.S. for permission to re-export to another end user.

That makes some sense except for the third problem: universality. The U.S. broadly defines defense articles “as anything and everything that might touch a defense item.” The possibility that a company might fall afoul of U.S. export control laws by exporting a component that has a military serial number but is also available in the commercial market has led to great reluctance to work with the U.S. Greenwalt and Corben warn that this aversion is “one of the biggest barriers to future defense innovation including through AUKUS.”

The fourth issue is “export contamination,” which the authors call the “most problematic attribute of ITAR.” This stems from a combination of items two and three, which results in an even more perverse outcome. If a U.S. engineer contributes design input into a defense article no matter where it originated and no matter how minimal or insignificant, they have performed a service that gives the U.S. control of the underlying technology. As Greenwalt and Corben explain, “working with the U.S. at any level on that technology effectively guarantees the loss of control of that intellectual property to the State Department through the ITAR process.”

As a result, U.S. allies either incur huge costs — Michael McCaul, chair of the House Committee on Foreign Affairs, complained at a hearing last month that one AUKUS ally dedicates 1% of its annual defense budget just to dealing with U.S. export controls — or don’t cooperate with the U.S. for fear of getting squeezed out. At the same hearing, another Congressman said that he was told of a U.K. company that didn’t want to work with the U.S. on hypersonic missiles because of fear of losing control of its technology. That echoed the warning of Corben and Miah Hammond-Errey, director of the emerging technology program at the USSC, in the Nikkei Asia Review last month that “Absent meaningful reform of (ITAR), innovative Australian companies will demur on collaboration for fear of losing control of their intellectual property.”

McCaul has used his perch to highlight the arms regulation regime's shortcomings, arguing that “ITAR and our antiquated arms sales processes need legislative fixes for AUKUS to be successful.” U.S. Sens. Jim Risch and Bill Hagerty last month tabled the Truncating Onerous Regulations for Partners and Enhancing Deterrence Operations Act, also known as TORPEDO, to speed up cooperation with the U.K. and Australia on controlled technologies. Among its key provisions is identifying the two countries as domestic sources for the purposes of the Defense Production Act, which would reduce if not eliminate many obstacles to technology sharing. The Biden administration is reportedly going to ask Congress to do just that.

While conceding that more must be done, State Department officials point to a 15-year effort to modernize and address ITAR and other export control shortcomings. In congressional testimony, Jessica Lewis, head of the State Department's bureau charged with administering those programs, said that the U.S. is already “innovating with the existing regulatory system” while pushing for additional reform through legislation and international agreements. A first step is identifying AUKUS specific technology and giving it preferential treatment, using a preapproval process to expedite tech transfers. A pilot project has been under way for a year and it’s being evaluated. A State Department official added that these initiatives are proof that the narrative of bureaucratic opposition to ITAR reform is false.

At the same time, U.S. officials worry about allies’ ability to protect U.S. technology and intellectual property. Corben writes that the U.S. has been increasingly vocal in private about the integrity of Australian and U.K. information and technology protections. Until recently, however, “those concerns were rarely articulated with the detail or specificity that would help Australia to understand the issues, let alone address them.”

ITAR restraints are legacies of a previous era and are part of the most pernicious problem: the U.S. mindset. Washington’s approach is rooted in a world in which the U.S. is the source of cutting-edge technologies and allies and partners are along for the ride. That’s no longer true, explained Corben in an email. “America's top Asian allies are increasingly capable of being more than just passengers of U.S. military-technological dominance: They want to make valuable — and valued — contributions to developing cutting edge military capabilities that will benefit our collective interests.” They may not be able to develop entire platforms, but they can develop niche inputs that fill vital gaps. But that will not happen in the current regulatory environment.

The U.S. understands that it can’t do everything alone. There must be more collaboration with allies and partners throughout the defense industrial complex. The 2022 U.S. National Defense Strategy is explicit: “Business as usual ... is not acceptable.” The pace of change is painfully slow, however, raising doubts about the eventual success of AUKUS and other initiatives.

The Biden administration’s pursuit of multilateralism and promotion of alliances is a welcome rejection of the unilateralist strand in U.S. foreign policy. But it’s not enough.

Success demands a genuine partnership that requires reworking how those mechanisms operate. In the case of AUKUS, the question is, does the U.S. need allies to innovate or just to fight? Washington must be prepared to share burdens and responsibilities, and, most importantly, rethink the way it leads. That is the key to success in today’s world.

Brad Glosserman is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of “Peak Japan: The End of Great Ambitions” (Georgetown University Press, 2019).