Order Amending the General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations: SOR/2023-188
Canada Gazette, Part II, Volume 157, Number 19
SOR/2023-188 September 1, 2023
EXPORT AND IMPORT PERMITS ACT
The Minister of Foreign Affairs makes the annexed Order Amending the General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations under subsections 7(1.1)footnote a and 10(1)footnote b of the Export and Import Permits Act footnote c.
Ottawa, August 28, 2023
Minister of Foreign Affairs
Order Amending the General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations
1 Subsection 3(2) of the General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations footnote 1 is amended by striking out “or” at the end of paragraph (c) and by replacing paragraph (d) with the following:
- (d) are referred to in any of subparagraphs 3(3)(c)(i) to (iii) of the Export Permits Regulations; or
- (e) are intended for the development, production or use of rocket systems or unmanned aerial vehicles with a range of 300 km or greater.
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.)
As a result of Canada’s status as a participating state in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (the Wassenaar Arrangement) and a separate bilateral arrangement with the United States, certain dual-use and strategic goods and technology are subject to export permit requirements under the Export and Import Permits Act (EIPA).
Canada and its major trading partners have implemented similar procedures to streamline processes for the export or transfer of certain controlled goods and technology deemed to be of lower risk.
Since 2015, General Export Permit No. 41 (GEP 41) allows the export of certain lower risk dual-use and strategic goods and technology to certain lower risk eligible destinations by means of a streamlined administrative procedure. This does not include pre-approval from Global Affairs Canada (GAC), as opposed to the standard procedure of having to obtain an individual export permit, which includes pre-approval from GAC. Such items and destinations were determined to be of lower risk from a Canadian foreign and defence policy perspective.
GEP 41 has served its purpose well over the past eight years. It is being amended to make an addition to the list of “unauthorized goods and technology” and to update a reference to a provision in another regulation that has been renumbered.
The EIPA authorizes the Governor in Council to establish a list of goods and technologies called the Export Control List (ECL), which identifies goods and technology that are controlled for export or transfer from Canada to other countries. Most items on the ECL derive from Canada’s commitments under the multilateral export control regimes in which it participates with other like-minded countries or from Canada’s obligations as a signatory to multilateral or bilateral international arrangements.
Canada’s export control regime aims to balance national and international security considerations associated with the export and transfer of strategic and military goods and technology with Canada’s interests as a trading nation. The introduction of a streamlined export or transfer process for lower-risk transactions allows the Government of Canada to provide Canadian businesses with a mechanism to compete more efficiently in the global marketplace while maintaining a robust system of export controls.
Subsection 7(1.1) of the EIPA authorizes the Minister of Foreign Affairs to issue to all residents of Canada a general permit to export or transfer goods or technology included in the ECL, subject to such terms and conditions as described in the permit. These General Export Permits (GEPs), created by regulation, allow the export or transfer of certain specified items from Canada to certain eligible destinations by means of a simplified administrative procedure as opposed to the standard, lengthier process of applying for an individual export permit. The current practice includes citing the relevant GEP on the export declaration form that is provided to the Canada Border Services Agency at the time of export.
On July 22, 2015, the Minister of Foreign Affairs issued, under SOR/2015-200, General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations to provide a streamlined process for the export and transfer of certain controlled goods and technology to certain eligible destinations.
GEP 41 authorizes, subject to certain terms and conditions, the export or transfer of most goods and technology listed in Group 1, as well as item 5504.2.a. to 5504.2.g of the ECL to consignees when destined for use in an eligible destination. These destinations include like-minded countries that are members of at least one multilateral export control regime of which Canada is a member and have implemented an effective system of export controls. These countries are Australia, Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom or the United States. The selection of authorized goods and technology and eligible destinations, along with the terms and conditions imposed on the use of the GEP, ensure that this streamlined process does not represent a strategic risk to Canada’s security or that of its allies.
Unmanned aerial vehicles and rocket systems
The Missile Technology Control Regime (MTCR) was established in 1987 to address concerns about the proliferation of missiles, complete rocket systems, and unmanned air vehicles (UAVs) capable of delivering weapons of mass destruction. The MTCR requires member nations to exercise restraint in the consideration of transfers of items that are subject to its Technical Annex and all such transfers must be considered on a case-by-case basis. This includes certain unmanned aerial vehicles and rocket systems that meet specific technical parameters.
Recent technological advancements in autonomous systems have led to increased applications for long-range UAVs and a commensurate increase in the number of such UAVs produced, marketed and sold around the world.
GEP 41 does not allow the export of long-range unmanned aerial vehicles and rocket systems; however, it does allow the export of items (e.g. parts and components) that could be used in such vehicles.
None of the items eligible for export under GEP 41 are identified in the MTCR’s Technical Annex (the Regime’s list of controlled items including key equipment, materials, software, and technology needed for missile development, production, and operation). However, it is possible that an item that is eligible for streamlined permitting could be used in a long-range UAV or rocket system that is subject to the MTCR. Not all GEP 41 eligible destination countries are members of the MTCR.
Export Permits Regulations reference
GEP 41 makes direct reference to a provision in the Export Permits Regulations (EPRs) that were amended on June 1, 2023, under SOR 2023-522. As a result, the numbering of the EPRs reference in GEP 41 is no longer correct.
The objectives of this amendment to General Export Permit No. 41 — Dual-use Goods and Technology to Certain Destinations are
- to make an addition to the list of “unauthorized goods and technology” for items related to long-range UAVs or rocket systems; and
- to address a housekeeping measure to update a reference to a provision in the Export Permits Regulations that has been renumbered.
The amendment to GEP 41 will
- make a narrow change to the list of “unauthorized goods and technology” under subsection 3(2) to include the export of items intended for the development, production or use of rocket systems or unmanned aerial vehicles with a range of 300 km or greater; and
- reflect in paragraph 3(2)(d) the new numbering of a provision of the EPRs that has changed further to a recent amendment, so as to read “are referred to in any of subparagraphs 3(3)(c)(i) to (iii) of the Export Permits Regulations.”
Consultation with stakeholders
When the Department elaborated GEP 41 in 2015, the Department consulted with various industry stakeholders regarding the proposed introduction of this GEP. These stakeholders indicated that they are supportive of any measures to streamline the export or transfer process for lower risk transactions.
Given that the technical parameters delineating the unmanned aerial vehicles and rocket systems of concern are the same as the agreed upon parameters at the MTCR and the fact that exporters will nonetheless be able to apply for individual export permits, no further consultations were undertaken with the public or stakeholders regarding this amendment.
Modern treaty obligations and Indigenous engagement and consultation
This initiative does not affect any Indigenous peoples, either positively or negatively, and thus, the duty to consult is not triggered by this regulatory undertaking.
Authority for GEPs is established in the EIPA and, therefore, amendments to GEP 41 can only be carried out through Orders made by the Minister of Foreign Affairs under the EIPA.
Benefits and costs
The benefit of this regulatory amendment is to further support Canada’s commitments to the MTCR by requiring individual export permits for items that could support long-range rocket systems and unmanned aerial vehicles, which aligns with Canada’s foreign and defence policies.
This amendment will impact only a small subset of the Canadian defence and dual-use industry — namely companies that use GEP 41 to export certain items when intended for use related to certain long-range rocket systems and unmanned aerial vehicles. These companies will now be required to apply for individual permits to export such items to the destinations listed on the GEP, as they must do to export to all other destinations. These applications will now be assessed on a case-by-case basis. Given that these destinations are low risk, it is anticipated that applications will generally be processed expeditiously against the 10-day service standard. These companies are all well established and already familiar with the export permit application process.
Impacts would occur if an individual export permit application were to be denied; however, any such denial would be made pursuant to Canada’s defence and security policies and/or Canada’s multilateral commitments, including an assessment against the potential risk of gender-based violence or violence against vulnerable groups. There are typically minimal denials to these low-risk destinations unless items are for onward use in another country. A denial does not preclude an exporter from exporting those items to a different buyer.
The other amendment is a housekeeping measure that will have no direct impacts on exporters.
Small business lens
The amendment of GEP 41 is not expected to result in any significant increase in the administrative burden for small businesses within Canada. This amendment will impact only a subset of transactions for a subset of companies that use GEP 41 that will now be required to apply for an individual export permit.
These few companies are typically well-established firms that are familiar with the permitting process; so applying for an export permit would not be onerous or costly. For some companies, filling the application form could be less onerous than complying with the semi-annual reporting requirements under the general permit. Given that these destinations are low risk, it is anticipated that applications will generally be processed expeditiously against the 10-day service standard.
As the one-for-one rule did not apply to this GEP when issued in 2015, a minor precision regarding what constitutes unauthorized goods and technology does not trigger the applicability of this rule.
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.
Gender-based analysis plus
No significant gender-based analysis plus (GBA+) impacts have been identified for this initiative.
Firms likely to be impacted by this narrow amendment would be distributed throughout the country (western Canada, including the territories, Ontario, Quebec, and the Atlantic provinces), as Canada’s defence and security industry operates in all those regions. Women comprise only 25% of the workforce in the defence industry. The disparity in employment between men and women is most acute in the occupations related to science, technology, engineering, and mathematics (STEM occupations), where those identifying as women account for only 17% of all employees.
Regulatory cooperation and alignment
To further support commitments to the MTCR, Canada is now requiring individual export permits for items that could support long-range rocket systems and unmanned aerial vehicles. This approach aligns with Canada’s foreign and defence policies.
Implementation, compliance and enforcement, and service standards
This amendment will be implemented at the time of registration. All users of GEP 41 must pre-notify the Department of their intention to use GEP 41. All current users of GEP 41 will be informed directly of the amendment and how it may impact their use of this general permit.
Compliance and enforcement
An export permit is required to export or transfer goods and technology listed on the ECL to any destination, except as otherwise provided in the ECL. The export of a controlled good or technology without a valid export permit issued under the EIPA is a criminal offence and could lead to prosecution.
The Canada Border Services Agency and the Royal Canadian Mounted Police are responsible for the enforcement of export controls and have been informed of this amendment.
Any individual permit applications that are received following this amendment to GEP 41 will be subject to the service standards published on the Global Affairs Canada website.
Export Controls Policy Division
Trade Controls Bureau
Foreign Affairs, Trade and Development Canada
125 Sussex Drive