On April 23, 2014, Canada issued an Order Amending the Export Control List (the "Order") pursuant to the Export and Import Permits Act. These amendments came into force with immediate effect on May 22, 2014. The amendments correct, clarify or remove certain existing controls and add some new items to the Export Control List (ECL). This alert will briefly discuss the Order in the context of the export control regime in Canada and will outline the various considerations for exporters.
The ECL provides product-specific restrictions on foreign exports. Typically, goods and technologies are controlled where a) they could be detrimental to the security of Canada should they fall into the wrong hands, b) where Canada has decided it has an interest in tracking such goods for strategic, economic or other reasons, or c) where Canada incurs control obligations under various multilateral export control regimes.
The ECL is periodically revised to reflect changes to Canada's international agreements and the evolving nature of strategic goods or technologies. The latest Order is in accordance with Canada's commitment to four multilateral export control regimes: the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime and the Australia Group. As a signatory to these conventions, Canada implements changes to the ECL on the basis of lists negotiated with other signatories.
The Order lists over 250 amendments that fall under nearly all of the taxonomic headings in the ECL. In some cases, export controls have been clarified, relaxed or deleted entirely, which could reduce the administrative burden on some exporters. Specific changes include the decontrol of certain types of cryptographic hardware components used in mass market products. Other potentially relevant amendments consist of clarifications made to the controls applicable to certain telecommunications technologies.
A summary list of the amendments has been published by the Export Controls Division of the Department of Foreign Affairs, Trade and Development (DFATD), and the entire ECL is published in the Guide to Canada's Export Controls. Please note that at the time of publication of this alert, the DFATD website had not yet updated to the most recent (2012) version of the Guide.
As a result of these changes, Canadian-resident businesses that export (including intangible exports or transfers by way of electronic media) goods, software or technology should review the amendments to ensure they are compliant. The amendments may also be relevant to businesses contemplating the acquisition of a Canadian exporter, since the changes could result in new compliance risks and opportunities.
It is a common misconception that goods and technologies are listed on the ECL because they are "dangerous" in the sense that they have obvious military or criminal uses. Exporters should not assume that they are exempt because their products have no obvious nefarious application. If goods are listed, a permit is required to export them beyond Canadian or U.S. borders. Export permits are granted and managed by DFATD, and the Minister has very broad discretion to grant or refuse permits and to impose terms and conditions on permit holders.
Canadian companies who fail to comply with the new amendments may be subject to seizure of their goods, an investigation by the Canada Border Services Agency and penalties including fines and even imprisonment, for corporate officers or directors who "direct, authorize, assent, acquiesce in or participate in" the commission of an offence under the Act.
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