Canada Gazette, Part I, Volume 153, Number 11: General Export Permit No. 47 — Export of Arms Trade Treaty Items to the United States
March 16, 2019
Export and Import Permits Act
Department of Foreign Affairs, Trade and Development
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Permit.)
The Government of Canada wishes to accede to the Arms Trade Treaty (ATT or the Treaty).
The ATT establishes common standards for international trade in a broad range of conventional arms with the goal of ensuring that states have effective national systems to review and control the arms trade. Accession to the ATT gives Canada the opportunity to further strengthen its export control regime. Article 13 of the ATT requires that States Parties report on the export of eight categories of full-system conventional arms listed in Article 2(1): battle tanks, armoured combat vehicles, large-calibre artillery systems, combat aircraft, attack helicopters, warships, missiles and missile launchers, and small arms and light weapons. Canada hitherto controlled the export of all ATT-listed items to all destinations other than the United States and only required permits for the export of certain ATT items to the United States (e.g. prohibited firearms and missiles).
On December 13, 2018, An Act to amend the Export and Import Permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments) [the Act] received royal assent. However, in line with concerns raised by stakeholders during parliamentary debate on the Act, and with a view to increasing transparency and ensuring full compliance with the ATT, the Government of Canada is proposing regulatory changes that would collect data to allow Canada to report on exports of ATT items to the United States without requiring individual permits.
Through a separate regulatory package submitted to the Governor in Council (the Regulatory Impact Analysis Statement for the Brokering Control List) an amendment to the Export Control List is being proposed to require a permit for the export of ATT-listed items to the United States. This general export permit (GEP) would facilitate that process and reduce the administrative burden on Canadian companies and the impact on the Canadian economy, while ensuring reporting on the export of ATT items to the United States.
The Export and Import Permits Act (henceforth referred to as “the EIPA”) authorizes the Governor in Council to establish a list of goods and technology called the Export Control List, which identifies goods and technology that are controlled for export or transfer from Canada to other countries. Most items on the Export Control List derive from Canada’s commitments to like-minded countries that participate in multilateral export control regimes or from Canada’s obligations as a signatory to bilateral or multilateral international agreements (Wassenaar Arrangement, Missile Technology Control Regime, Nuclear Suppliers Group, Australia Group, and the Arms Trade Treaty, amongst others.)
The principal objective of Canada’s export control regime is to ensure that exports of goods and technology included on the Export Control List are in accordance with Canada’s foreign and defence policies. Unless otherwise stated, exports or transfers of goods and technology included on the Export Control List require a permit issued under the authority of the Minister of Foreign Affairs, Trade and Development in order to be lawfully exported or transferred from Canada.
Subsection 7(1.1) of the EIPA authorizes the Minister of Foreign Affairs, Trade and Development to issue to all residents of Canada a general permit to export or transfer goods or technology included in the Export Control List subject to such terms and conditions as described in the permit. These general export permits allow the export or transfer of certain specified items from Canada to certain eligible destinations by means of a simplified procedure as opposed to the more burdensome and lengthier process of applying for an individual export permit. When making use of a general export permit, exporters must abide by all associated terms and conditions, including any pre-notification or reporting requirements.
During the debates surrounding Canada’s accession to the ATT and recent public consultations on “Global Affairs Canada’s proposed strengthening of Canada’s export controls regime” (December 13, 2018, to February 11, 2019), civil society and certain academic stakeholders called for increased transparency over the export of ATT items to the United States. Industry stakeholders indicated that the permit-free movement of most controlled items between Canada and the United States is vital for the preservation of the Canadian defence industry. Parliamentarians recognized both points of view and the Government of Canada committed to explore options to increase transparency that would not involve a requirement for new individual permits for exports to the United States.
The objective of General Export Permit No. 47 — Export of Arms Trade Treaty Items to the United States (GEP-47 or General Export Permit No. 47) would be to provide a streamlined permitting process for the export of most ATT items to the United States. The reporting requirements in GEP-47 would enable the Government of Canada to fill a significant reporting gap and increase transparency by reporting on the permanent export of ATT items to the United States.
Canada currently controls all ATT-listed items for export to all destinations, other than the United States. Controls on the export of ATT items to the United States are currently limited to items such as prohibited firearms and certain missiles. While all ATT items are captured in different parts of Group 2 of the Export Control List, a new Group 9 (Arms Trade Treaty) of the Export Control List is being proposed through a separate regulatory package submitted to the Governor in Council in order to capture all ATT items in one distinct identifiable group.
The current reciprocal permit-free movement of most military items between Canada and the United States has been in place since World War II, pursuant to various arrangements between the governments of both countries. A series of Exchanges of Notes between Canada and the United States stemming from the Hyde Park Agreement of 1941 reference the need and the general principles required for greater economic and defence integration. One such Exchange of Notes dated October 26, 1950, states that “Barriers which impede the flow between Canada and the United States of goods essential for the common defense efforts should be removed as far as possible.” The combined proposed regulatory amendments to the Export Control List and the creation of the new General Export Permit No. 47 are not intended to alter this existing and long-standing permit-free movement of such military goods. Canada continues to benefit from its close defence and security relationship with the United States and continues to have confidence in the highly rigorous nature of the U.S. export control system.
The Government of Canada believes that it continues to be in Canada’s best interest to ensure an expedited process for the movement of military goods between Canada and the United States. Therefore, in parallel with the proposed amendments to the Export Control List that would require individual permits for the export of all Group 9 items to the United States, the Minister of Foreign Affairs, Trade and Development proposes to create this general export permit. General Export Permit No. 47 would allow Canadian companies and residents intending to export the majority of goods to be listed in the proposed Group 9 of the Export Control List in order to export the goods without applying for an individual permit, if they pre-notify Global Affairs Canada of their intent to export these items in a calendar year. Exporters using GEP-47 would be required to report biannually on their exports.
General Export Permit No. 47 would authorize, subject to certain terms and conditions, the export of certain goods to be listed in the proposed group. The requirement to report on permanent exports of Group 9 items would increase transparency on Canadian ATT exports to the United States. This is in line with the Government of Canada’s commitment to further strengthen the rigour and transparency of Canada’s export controls.
Global Affairs Canada has proactively consulted stakeholders interested in this proposal. There are, broadly speaking, three main groups of stakeholders: the Canadian security, defence and aerospace industry; Canadian civil society organizations, including academics, whose work focuses on the global arms trade, human rights, and conflict prevention and mitigation; and Canadian firearms owners and users. These groups were consulted during the recent online consultation entitled “Global Affairs Canada’s proposed strengthening of Canada’s export controls regime” that was undertaken from December 13, 2018, until January 31, 2019. In addition to the online consultation, departmental officials met with representatives from industry and civil society through a series of meetings, workshops, webinars and roundtable discussions that took place across the country between December 13, 2018, and February 11, 2019. Beyond these recent consultations, these groups of stakeholders were actively consulted throughout the parliamentary process for the amendments to the Export and Import Permits Act and in the negotiations of the ATT.
During these consultations, industry stakeholders were supportive of the Government of Canada’s intention to join the ATT and were supportive of the proposal to create a general export permit with reporting requirements for the export of ATT-listed items to the United States. Civil society stakeholders also welcomed Canada’s desire to accede to the ATT and have urged the Government of Canada to apply further rigour and transparency in its assessments of Canada’s controlled exports. During the legislative process, some civil society stakeholders expressed concerns about the existing practice of not requiring permits for the export of all ATT items to the United States. During both parliamentary consideration of the Act and the recent consultations, they asked the Government of Canada to increase its transparency by reporting on ATT exports at least to the same level of rigour as ATT exports to all other destinations.
Canadian firearms owner groups have expressed concerns that the ATT could be used to reintroduce a gun registry and that ATT reporting requirements might include details of individual gun owners, thus leading to a de facto gun registry. Officials have sought to clarify that neither the ATT nor its implementation in Canada would result in such changes.
Through prepublication in the Canada Gazette, Part I, interested parties will have 30 days to register comments with Global Affairs Canada. All comments and concerns received during the prepublication exercise will be taken into consideration.
As is customary when dealing with potential regulatory changes, consultations have been held with the various Government of Canada organizations that are partners in the administration and enforcement of Canada’s export control regime. Recommendations made by these organizations have been taken into consideration in the drafting of this general export permit.
Although other non-regulatory instruments were considered, Global Affairs Canada determined that the most effective mechanism to capture data on the export of ATT items to the United States, while still maintaining the free movement of those items and not unduly burdening industry, was through an amendment to the Export Control List to require a permit for the export of ATT items to the United States, and the creation of a related general export permit for these newly listed items, with reporting requirements.
One non-regulatory option that was considered was to draw on data already available through Statistics Canada on the export of defence material to the United States. These figures are derived from data collected by the Canada Border Services Agency based on the Harmonized Commodity Description and Coding System (HS codes). However, since there is no correlation between the HS codes used by Statistics Canada and the ATT classifications of conventional arms, a meaningful comparison of the information from these sources is not possible. For instance, the same HS code may include both controlled ATT items and non-military goods, such as civil-certified aircraft, or guns designed exclusively for industrial uses such as those used in the lighting of gas flares at oil wells. Global Affairs Canada also spoke with international partners who had also attempted to use HS codes for this purpose without success.
Some stakeholders recommended that the Government of Canada consider instituting a policy of voluntary reporting for exporters of ATT items. There is a limited number of companies whose line of business includes exporting such items to the United States and that are already familiar with the export controls system. However, a policy of voluntary reporting would lack rigour as the absence of a legal requirement to report would make it difficult for Global Affairs Canada to follow up with exporters and ensure compliance, particularly individuals and entities not familiar with Canada’s export controls and reporting mechanisms.
Benefits and costs
The incremental costs to businesses and individuals of the proposed Order Amending the Export Control List (Arms Trade Treaty) would be for the application for individual permits for the export of ATT items to the United States that do not already require individual export permits (prohibited firearms, prohibited weapons, prohibited devices and items in items 2-4.a and 2-2.a of the Export Control List, which includes large calibre weapons, bombs, torpedoes, and missiles). These costs would mostly be negated by the proposed General Export Permit No. 47. However, there would be a small new additional pre-notification and reporting requirement for businesses or individuals permanently exporting ATT items to the United States.
As ATT items would be controlled by both Group 2 and Group 9 of the Export Control List, exporters of ATT items that are exported to non-U.S. destinations would be encouraged to also assess the goods they intend to export in light of the new Group 9 when completing their individual permit application, in accordance with the existing practice. Around 25 companies apply for permits to export ATT items to non-U.S. destinations. Global Affairs Canada would advise these companies and work with them to ensure that they understand this minor change that should result in no incremental costs (no new field/box will be added to the export permit application).
The companies that export the larger full-system conventional arms that would fall under the scope of the ATT are already familiar with the process for reporting on their exports and imports of these items, and would therefore already have administrative procedures in place to address this requirement. There may be modest costs to those not accustomed to reporting on their exports, such as those in the film industry exporting ATT items to the United States. This is expected to be a small number of cases. With respect to exports of firearms, measures have been put in place to limit the burden with respect to the reporting requirement, as exporters would only have to report on permanent exports that are destined for end use by police or military forces in the United States. This scope is compliant with the reporting requirements of the ATT (Article 13.3) and the UN Register of Conventional Arms.
Small business lens
Overall, no significant or disproportionate impacts are anticipated for small business. The number of exporters of ATT items from Canada is very low (less than 25 exporters for export to non-U.S. destinations). The proposed permit aims to lower the administrative burden on business, particularly on small businesses, which would also be able to benefit from this streamlined process. Small businesses do not manufacture the items for which the export to the United States would require reporting under this regulatory amendment, except for certain small arms and light weapons.
There are fewer than 10 small businesses that export firearms to the United States. There may also be small businesses operating in other sectors, such as the film industry, that may export ATT items to the United States. Global Affairs Canada understands that small businesses have special needs, and officials are prepared to assist these businesses in understanding whether they are impacted by the new obligations imposed by this permit and to support them in complying with their reporting obligations under this General Export Permit.
In addition, small businesses would benefit from measures that Global Affairs Canada would implement to support all businesses in their compliance efforts with Canada’s export controls. These include
- providing assistance to applicants who need guidance on permit applications and processes through a telephone helpline; and
- a proactive outreach campaign, including updating departmental information resources (such as the Export Controls Handbook).
This proposal is tied to the proposed Order Amending the Export Control List (Arms Trade Treaty), which is under consideration by the Governor in Council. The one-for-one rule is triggered for the proposed Order Amending the Export Control List (Arms Trade Treaty) for increasing the administrative burden under an existing regulation. The proposed General Export Permit would decrease the additional burden imposed by the proposed Export Control List amendment as the General Export Permit streamlines the authorization process for such exports. Rather than being required to apply for an individual permit, exporters would only have to notify Global Affairs Canada of their intention to use the proposed General Export Permit and to report twice a year on actual exports undertaken against the permit or advise that no exports took place. Nevertheless, as these orders are required to meet Canada’s international obligations under the ATT, they would therefore be exempted from the one-for-one rule.
Regulatory cooperation and alignment
This proposed permit aligns with the practices of almost all of Canada’s main allies, who maintain expedited measures for low-risk transactions to certain destinations, while remaining in compliance with the requirements of the ATT. For instance, in the United Kingdom, the Open General Export Licences (OGELs) are a form of general licence open to any company registered in the United Kingdom to export certain military items to select destinations, including Canada and the United States. Most OGELs require companies using them to report on any exports undertaken during the previous calendar year. Similarly, European Union Directive 2009/43/EC allows for the establishment of common general licences in defined circumstances where the exports are deemed low-risk. European Union companies making use of these general licences also have to report on the exports undertaken under the licence.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required. The approved preliminary scan determined that the proposal is unlikely to result in important environmental effects and that further analysis is not required.
Gender-based analysis plus
An assessment indicates that there are no gender-based analysis plus (GBA+) impacts in this proposed permit. However, there are relevant considerations in the broader context of Canada’s accession to the ATT. The ATT is the first international treaty that specifically mentions gender-based violence as an outcome to prevent. By acceding to the Treaty, Canada would support this objective.
Canada’s export control regime aims to balance national and international security concerns associated with the export of strategic and military goods and technology with Canada’s interests as a trading nation. The introduction of this streamlined process for exports to the United States would allow the Government of Canada to provide Canadian businesses with a mechanism to remain competitive in the global marketplace while at the same time increasing transparency and ensuring that Canada clearly meets all its obligations under the Arms Trade Treaty.
Implementation, compliance and enforcement, and service standards
Global Affairs Canada’s Export Controls Operations Division, which is responsible for issuing export licences, now includes a dedicated compliance section. This section would promote compliance with this proposed permit through its regular mechanisms, such as documentation reviews. Global Affairs Canada is currently exploring additional mechanisms to increase compliance, including through communication products and in-person outreach.
There are certain conditions associated with the proposed GEP-47, and exporters would need to comply with those conditions in order to lawfully export under this General Export Permit. It is a condition of the proposed General Export Permit that exporters pre-notify their intention to use this permit on an annual basis and report on a semi-annual basis on any permanent exports that have been carried out under the authority of the permit.
Non-compliance with any condition of this proposed General Export Permit could lead to prosecution under the relevant provisions of the Act. The Canada Border Services Agency and the Royal Canadian Mounted Police are responsible for the enforcement of export controls.
Export Controls Policy Division
Global Affairs Canada
125 Sussex Drive
PROPOSED REGULATORY TEXT
Notice is given that the Minister of Foreign Affairs, pursuant to subsection 7(1.1) footnote a of the Export and Import Permits Act footnote b, proposes to issue the annexed General Export Permit No. 47 — Export of Arms Trade Treaty Items to the United States.
Interested persons may make representations concerning the proposed Permit within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Judy Korecky, Deputy Director, Export Controls Policy Division, Global Affairs Canada, 125 Sussex Drive, Ottawa, Ontario K1A 0G2 (tel.: 343‑203‑4332; fax: 613‑996‑9933; email: email@example.com).
Ottawa, February 19, 2019
Minister of Foreign Affairs
General Export Permit No. 47 — Export of Arms Trade Treaty Items to the United States
1 The following definitions apply in this Permit.
Act means the Export and Import Permits Act. (Loi sur les licences d’exportation et d’importation)
Export Controls Operations Division means the Export Controls Operations Division of the Department of Foreign Affairs, Trade and Development. (Direction des opérations des contrôles à l’exportation)
Guide has the same meaning as in section 1 of the Export Control List. (Guide)
2 Subject to sections 3 to 6, any resident of Canada may export any of the following goods from Canada to the United States:
- (a) any good referred to in item 2-1 of the Guide; and
- (b) any good referred to in item 2-3 of the Guide; and
- (c) any good referred to in Group 9 of the schedule to the Export Control List.
3 This Permit does not authorize the export of goods
- (a) to a country other than the United States;
- (b) that are prohibited ammunition, prohibited devices, prohibited firearms or prohibited weapons within the meaning of subsection 84(1) of the Criminal Code; and
- (c) that are referred to in item 2-2.a. or 2-4.a. of the Guide.
4 A resident of Canada who exports a firearm under this Permit must
- (a) hold a licence under the Firearms Act issued by the chief firearms officer of the province in which they reside; and
- (b) if the firearm is a restricted firearm, hold a registration certificate for it issued under that Act.
5 (1) A resident of Canada who exports a good referred to in Group 9 of the schedule to the Export Control List under this Permit, must provide in writing to the Export Controls Operations Division
- (a) before exporting under this Permit in a calendar year, their name, address, telephone number, email address and any facsimile number;
- (b) within 30 days after each 6 month period ending on June 30 and December 31 of the calendar year for which the information in paragraph (a) was provided, a report stating
- (i) whether they exported a good under this Permit during that period, and
- (ii) if a good was exported,
- (A) the name and address of each consignee,
- (B) a description of the good, the provision of the schedule to the Export Control List that refers to the good and the item number of the Guide that describes the good, and
- (C) the quantity and value of the good; and
- (c) within 15 days after the day on which the resident of Canada receives a request from the Export Controls Operations Division, any information referred to in paragraph (b) that is requested by it in respect of the period specified in the request.
(2) Despite paragraph (1)(b), a resident of Canada who provides the information referred to in paragraph (1)(a) during the 6 month period ending on December 31 is not obliged to provide a report for the preceding 6 month period in the calendar year.
(3) Subsection (1) does not apply to the export of a good if the good is to be returned to Canada, and to the resident of Canada who exported it, within two years after the day of export.
Good not returned within two years
(4) If a good referred to in subsection (3) is not returned to the resident of Canada within two years after the day of export, the resident of Canada must provide in writing to the Export Controls Operations Division the information set out in subsection (1) no later than 30 days after the day that is two years after the day of export.
6 A resident of Canada who exports a good under this Permit must retain for a period of six years after the year in which the good is exported, the following records:
- (a) the date on which the good was exported;
- (b) the name and address of each consignee;
- (c) the quantity and value of the exported good; and
- (d) a description of the exported good, the provision of the schedule to the Export Control List that refers to the good and the item number of the Guide that describes the good.
Coming into Force
S.C. 2018, c. 26
7 This Permit comes into force on the day on which section 21 of the Act to amend the Export and Import Permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments) comes into force, but if it is registered after that day, it comes into force on the day on which it is registered.