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In short:
American weapons will be exported to Australia much sooner after the US removes key export and arms regulations next month.
The move mirrors the UK and Australia's removal of export controls for the AUKUS partners for weapons and technology worth billions of dollars.
What's next?
The federal government says defence trade will grow exponentially from the move, while critics argue Australia is restricting local development of defence technology.
Strict requirements governing the export of American weapons to Australia will be lifted from next month as the three AUKUS partners look to share military technology.
Australia, the United Kingdom and the United States have finalised plans to "streamline defence trade" in a move the Albanese government says will unlock billions of dollars of investment and cut red tape for local industry and AUKUS partners.
At present the sharing of closely guarded American technology is governed by strict US International Trafficking in Arms Regulations (ITAR), which has been considered a barrier for closer cooperation between AUKUS partners.
Under the changes that take effect on September 1, licence-free trade will be enabled for over 70 per cent of defence exports from the US to Australia that are currently subject to the US regulations, as well as 80 per cent of the trade that is subject to further US export regulations.
The government says the changes will also eliminate around 900 export permits required under Australia's previous controls system, for products sent to the US and UK, valued at $5 billion per year.
Approximately 200 export permits required for defence exports from the UK to Australia will also be removed, valued at over $129 million per year.
In a statement, Defence Minister Richard Marles praised AUKUS partners for their "tireless efforts to deliver this generational change so quickly."
"These critical reforms will revolutionise defence trade, innovation and cooperation, enabling collaboration at the speed and scale required to meet our challenging strategic circumstances," Mr Marles said.
Earlier this year, Australia's parliament passed the Defence Trade Controls Amendment Act which implemented national exemptions for the UK and the US, with those countries also introducing similar changes to their export controls.
Under the Defence Trade Controls regime, 25 nations are included in the Foreign Country List which exempts them from certain offences, with the government soon moving to add more members including India, South Korea, Latvia, Lithuania, Estonia and Argentina.
One senior Australian official described the move towards a licence-free environment as "the most ambitious and the most successful reform of defence trade between the three countries seen in nearly two decades".
However, critics of the idea say Australia is now effectively binding itself to the US export system which they warn will hurt the sales of locally developed systems like Ghost Bat, which are so far already exempt from American restrictions.