Export Controls Overview
Canada’s “export control laws” under the Import and Export Permits Act place “controls” on the export of certain sensitive goods, technology and data. This ranges from basic goods of economic interest, to military, nuclear and strategic goods (famously described as “sharp and pointy things that go bang”). Underlying technology, information and know-how are also controlled as are “dual-use” goods.
Goods subject to export control are set out in Canada’s Export Control List (ECL), which requires experience to apply. This is magnified by the complexity of the fact that: (1) all U.S.- origin goods and technology are controlled (because of Canada’s bilateral commitments), and (2) all goods are controlled when sent to countries on the Area Control List (ACL).
Canadian Controlled Goods Program (CGP)
A special subset of Canada’s “export controls” relates to “Controlled Goods”. This includes goods such as certain munitions, all military items (tanks, naval vessels, helicopters), and most space and missile-related goods and technology, which are all generally Controlled and referenced with a capital “C”.
SOME REAL-LIFE EXAMPLES
- Receiving a 1950’s helicopter rotor from Vietnam for refurbishment?
- Visiting a Nova Scotia shipyard to consult on a naval ship-building process?
- Thinking about manufacturing a high-tech skateboard bearing?
- Just find out a Canadian subsidiary is working on a component of the F-35 Joint Striker Force Jet in Toronto, Canada?
Each of these situations involved the application of the CGP – much to the Client’s ultimate surprise.
These are regulated under the Defence Production Act, which prohibits an unregistered person from knowingly examining, possessing, or transferring a “controlled good”, including related information, technology, and know-how. Non-compliance penalties are extreme and can range from a summary conviction offence (liable to a fine of up to $100,000 or imprisonment of up to two years, or both) to an indictable offence (liable to a fine of up to $2,000,000 or imprisonment of up to 10 years, or both).
Registration Requirements
Registration under the CGP is mandatory in cases when access to Controlled Goods is either desired or required by businesses that operate within many of these industries. The application process involves the appointment of an Authorized Person and a Designated Official, the submission of an extremely detailed Application Form, and comprehensive Security Checks and Security Plans.
Bottom Line
Unwary business owners may pay the “pound” for the “cure” if not taking steps to proactively comply in this area. Reacting to government enforcement action (rather than proactively seeking advice) is not a good option. Seek legal advice ahead of time!
While seemingly straightforward, the CGP Registration process is not a cookie-cutter exercise and can be difficult to navigate. Each business and each Security Plan, will involve different considerations – with specialized assistance usually a good thing.