Vol. 145, No. 7 — March 30, 2011
SOR/2011-67 March 10, 2011
EXPORT AND IMPORT PERMITS ACT
ARCHIVED — Order Amending the Export Control List
P.C. 2011-398 March 10, 2011
Whereas the Governor in Council deems it necessary to control the export of goods and technology to ensure that arms, ammunition, implements or munitions of war, naval, army or air stores or any articles deemed capable of being converted into those things or made useful in the production of those things or otherwise having a strategic nature or value will not be made available to any destination where their use might be detrimental to the security of Canada;
Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to paragraph 3(1)(a) (see footnote a), subsection 3(2) (see footnote b) and section 6 (see footnote c) of the Export and Import Permits Act (see footnote d), hereby makes the annexed Order Amending the Export Control List.
ORDER AMENDING THE EXPORT CONTROL LIST
1. Item 5505 of the schedule to the Export Control List (see footnote 1) is replaced by the following:
5505. (1) Goods and technology whether or not included elsewhere on the List if their properties and any information made known to the exporter by any intermediary or final consignee or from any other source would lead a reasonable person to suspect that they will be used
(a) in the development, production, handling, operation, maintenance, storage, detection, identification or dissemination of
(i) chemical or biological weapons,
(ii) nuclear explosive or radiological dispersal devices, or
(iii) materials or equipment that could be used in such weapons or devices;
(b) in the development, production, handling, operation, maintenance or storage of
(i) missiles or other systems capable of delivering chemical or biological weapons or nuclear explosive or radiological dispersal devices, or
(ii) materials or equipment that could be used in such missiles or systems; or
(c) in any facility used for any of the activities described in paragraphs (a) and (b).
(2) Goods and technology whether or not included elsewhere on the List if the Minister has determined, on the basis of their properties and any additional information relating to such matters as their intended end-use or the identity or conduct of their intermediary or final consignees, that they are likely to be used in the activities or facilities referred to in subitem (1).
(3) Subitem (1) applies to goods and technology intended for export to all destinations unless
(a) they are intended for end-use in Argentina, Australia, Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom or the United States;
(b) their intermediary consignees, if any, are located in those countries; and
(c) their final consignee is located in one of those countries.
(4) Subitem (2) applies to goods and technology intended for export to all destinations.
COMING INTO FORCE
2. This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issue and objectives
Canada’s export control system is a significant component of our multilateral commitments to restrict the illicit proliferation of weapons of mass destruction by states and non-state actors. Canada implemented a “catch-all” control to respond to these commitments in 2002, but a number of concerns expressed by the Standing Joint Committee for the Scrutiny of Regulations (Standing Joint Committee) have resulted in a need to revisit this measure. Consequently, the Department of Foreign Affairs and International Trade (DFAIT) has amended the Export Control List (ECL), specifically “Item 5505 — Goods and Technology for Certain Uses.” This amendment addresses the concerns of the Standing Joint Committee and updates the Regulations to reflect current foreign policy and security considerations.
Description and rationale
Canada is a participating state in four multilateral export control regimes (the Wassenaar Arrangement, the Nuclear Suppliers Group, the Missile Technology Control Regime, and the Australia Group) and is a party to the Nuclear Non-proliferation Treaty and the Chemical Weapons Convention. Together, they form the basis of Canada’s non-proliferation export control policies and procedures. In order to implement appropriate controls, several export control regimes maintain lists of goods and technology that could be used in the development and production of weapons of mass destruction applications, and each participating state has committed to control the export of these goods and technology. In Canada, all of these goods and technology are included in the ECL.
Since it is not possible to control all goods and technology that could potentially be used, directly or indirectly, in the proliferation of a weapon of mass destruction, several multilateral export control regimes have defined a “catch-all” control. A catch-all control is designed to cover goods and technology that are intended to be used in the development or production of chemical, biological or nuclear weapons, but are not otherwise subject to export controls.
On April 11, 2002, Canada added Item 5505 to the ECL to implement a catch-all control in domestic law. Item 5505 imposes a permit requirement on the export of items not listed elsewhere on the ECL when they are likely to be used in an activity or facility associated with weapons of mass destruction or their delivery systems.
The Standing Joint Committee requested that DFAIT confirm its legislative authority to implement the catch-all control and clarify when an application to export an item not listed elsewhere on the ECL is required. This amendment reformulates the catch-all control in light of the underlying legislative authority found in the Export and Import Permits Act (EIPA), in subsection 3(2), and clarifies that an exporter is required to submit an application only if the item’s properties (i.e. technical characteristics or capabilities) and any other information made known to the exporter would lead a reasonable person to suspect that it will be used in the specified proliferation contexts.
This amendment explicitly designates the Minister of Foreign Affairs as the person responsible for making determinations that an item meets the criteria applicable to catch-all controls outlined under Item 5505. This is authorized under subsection 3(2) of the EIPA, which indicates that a description of goods listed on the ECL “may contain conditions that are based on approvals, classifications or determinations made by specified persons or specified government entities.”
Item 5505 currently includes a list of exempt destination countries. By reducing the due diligence that exporters should undertake in relation to customers in these countries, this exemption list ensures that the catch-all measure does not inordinately restrict or impede legitimate trade. DFAIT has reduced the list of exempt destination countries under Item 5505 to those that participate in all four of the multilateral export control regimes, which include some of Canada’s largest trading partners such as the United States, Japan, the United Kingdom and Germany. In addition, the exempt destination country list will henceforth apply only to subitem 5505(1), as opposed to Item 5505 in its entirety, thereby giving the Minister the ability to impose a permit requirement on exports to any destination if a determination has been made that those exports are destined to a weapons of mass destruction program. It is not anticipated that these changes will increase the administrative burden of compliance with export controls, but will provide a stronger counter-proliferation tool to the Government in the rare cases when it is needed.
This amendment also broadens the types of weapons subject to control under Item 5505 to include nuclear explosive and radiological dispersal devices, in order to address the potential proliferation of such weapons.
Consultations on this amendment have been held within the Department of Foreign Affairs and International Trade and with other departments of the Government of Canada, specifically the Department of Justice.
This amendment was pre-published in the Canada Gazette, Part I, on June 19, 2010, and a period of 30 days was provided for interested parties to register comments with DFAIT. Two written representations were received on the proposed amendment. A number of questions and concerns were raised regarding the implications of the proposed amendment on the Canadian exporting community. One of the representations also expressed ideas on how the Government should implement the amendment to Item 5505. All comments were taken into consideration.
Based upon consideration of the comments and recommendations received from the public, and further interdepartmental consultations with the Department of Justice, it was determined that the proposed amendment could move forward with one amendment.
In order to ensure that Item 5505 can be applied in conjunction with other Items listed on the ECL, such as Item 5400, the phrase “not listed elsewhere on the List” has been removed from subitem 5505(1) and subitem 5505(2) and replaced with “whether or not listed elsewhere on the List.” This amendment also ensures that an individual permit requirement can be imposed if a determination has been made that an item that is subject to a General Export Permit is likely to be used in the proliferation of weapons of mass destruction. DFAIT views this amendment as minor in nature as it does not change the intent of the Regulations and does not broaden the scope of export controls.
Responses to the key issues raised during consultations are summarized below:
1. Consistency with the export control policies and practices of like-minded countries
Comment: As a result of the amendments, Item 5505 is more restrictive than that of our allies and other like-minded countries, therefore putting Canadian exporters at a competitive disadvantage.
Response: The United States, Japan, Australia, New Zealand and the United Kingdom are examples of like-minded countries that possess a catch-all control. All countries implement catch-all controls according to national legislation and foreign policy and security priorities. Although the structure and application of Canada’s catch-all controls may vary from that of other like-minded countries, it is consistent with Canada’s international obligations and commitments and with the practices of these other jurisdictions.
The list of exempt destination countries that applies to subitem 5505(1) was promulgated to enhance predictability and reduce due diligence obligations on exporters. Although this amendment reduces the list of exempt destination countries to which 5505(1) applies, Canada still maintains a longer list of destination exemptions than other like-minded countries. As such, DFAIT does not perceive that this amendment will place Canadian exporters at a competitive disadvantage.
2. Wide discretion of the Minister of Foreign Affairs under subitem 5505(2)
Comment: Subitem 5505(2) gives the Minister of Foreign Affairs the discretion to make a determination that the catch-all control applies to any destination.
Response: Pursuant to Canada’s participation and obligations in the various export control regimes, the Government of Canada has committed to take appropriate measures to ensure that Canadian exports do not contribute to the proliferation of weapons of mass destruction. The Minister of Foreign Affairs is the designated authority under the Department of Foreign Affairs and International Trade Act for the conduct of Canada’s external affairs and international trade and the administration of the Export and Import Permits Act. As a measure to strengthen accountability and transparency, Item 5505 has been amended to explicitly designate the Minister of Foreign Affairs as the responsible authority for making a determination of whether an export from Canada will be used in the proliferation of a weapon of mass destruction. To this end, subitem 5505(2) allows the Government of Canada to meet its international commitments.
Although the Minister of Foreign Affairs may determine that the catch-all control applies to an export to any destination, the amendments define the basis on which the Minister may make that determination. Furthermore, the circumstances defined in subitem 5505(1) allow exporters to conduct due diligence verification on the same basis as the Minister and thereby promote compliance with the EIPA.
3. Impact on legitimate exporters
Comment: The amendments will result in an additional administrative burden for Canadian business.
Response: DFAIT has carefully considered the possible implications of the proposed amendment on Canadian exporters. It is anticipated that Item 5505 will be invoked infrequently. It is intended primarily to ensure that Canadian exporters do not inadvertently contribute to the development or dissemination of weapons of mass destruction. It is also intended to be used to prevent any deliberate attempt to undermine international peace and security through the use of Canadian-origin goods and technology for such activities.
In order to minimize the administrative burden for Canadian exporters and enhance their ability to assess proliferation risk, Item 5505 has been amended to clarify the circumstances in which the exporter must apply for a permit to export goods or technology that may be used in the proliferation of weapons of mass destruction. DFAIT is also maintaining the list of exempt destination countries that applies to subitem 5505(1). If an item is destined for end-use in one of the exempt destination countries, the exporter is not required by Item 5505 to apply for an export permit.
4. Implementation of the catch-all control
Comment: Subitem 5505(2) should be modified to make it clear that goods and technology will only be subject to controls if determinations by the Minister have been published or if the Minister communicates the determination to the exporter before the goods or technology have been exported.
Response: The objective of the catch-all control is to allow the Government of Canada to prevent the transfer of a particular item to an unacceptable weapon of mass destruction-related use without hampering legitimate exports of similar items to other countries or to other uses. As such, the proposed amendment will allow the Minister of Foreign Affairs to oblige an exporter to obtain an export permit for specific, individual transactions, without detriment to other exporters or Canadian industry as a whole.
A list of goods or technology that could potentially be subject to Item 5505 would be long and could lead to greater uncertainty among exporters, causing them to submit unnecessary export permit applications and imposing an additional administrative burden on them and on government. Export applications need only be made under Item 5505 following the receipt of positive information about a suspicious use or notification of such by the Minister. DFAIT will publish a revised Notice to Exporters on the administration of Item 5505. DFAIT will also continue to work closely with the exporting community through outreach seminars and one-on-one company meetings to promote compliance with the EIPA.
Item 5505 will be implemented according to established administrative practices. If an item is detained at the border, DFAIT will work with the Canada Border Services Agency to assess whether the catch-all control applies and the exporter will be notified accordingly. If in doubt as to the applicability of Item 5505 to a shipment, an exporter may, prior to export, submit an application that describes the circumstances of the transaction and, in particular, provides the information received that suggests Item 5505 applies. DFAIT will continue to work with the exporting community to inform them of their obligations under the EIPA.
Implementation, enforcement and service standard
All items listed on the ECL are subject to export permit requirements, unless otherwise stated. Failure to comply with the EIPA, or its related regulatory or other requirements, can lead to prosecution under the EIPA. The Canada Border Services Agency and the Royal Canadian Mounted Police are responsible for the enforcement of export controls.
Ms. Sammani Hinguruduwa
Export Controls Division (TIE)
Foreign Affairs and International Trade Canada
111 Sussex Drive
S.C. 2006, c. 13, s. 110
S.C. 2006, c. 13, s. 110
S.C. 1991, c. 28, s. 3
R.S., c. E-19