Key Issues in the Interaction of Canadian Defence Trade Controls with the US International Traffic in Arms Regulations

Transcription

1 Key Issues in the Interaction of Canadian Defence Trade Controls with the US International Traffic in Arms Regulations I.E. Canada Webinar: Introduction to the US ITAR John W. Boscariol September 10, 2015

2 1 Canada s Controlled Goods Program domestic industrial security program under Defence Production Act and its Controlled Goods Regulations administered by the Controlled Goods Directorate (CGD) (part of Public Works and Government Services Canada) background and history relationship with US ITAR and Canadian exemption

3 Integration of Canadian and US Defence Trade Controls 2 examples ITAR 126.5(b) Canadian exemption permanent and temporary exports of certain defence articles and technical data to Canadianregistered persons defined by reference to Canada s Defence Production Act Canada s ECL item 5504(i) controls export of US-origin goods or technology which have been determined under Parts 120 to 130 of Title 22 of the International Traffic in Arms Regulations of the Code of Federal Regulations (United States) as having substantial military applicability Canada s Export Permit Regulations paragraph 3(2)(c) requires that a US ITAR authorization be obtained for the export from Canada of defence-controlled US-origin goods, goods incorporating defencecontrolled US-origin goods, and goods manufactured in Canada using defence-controlled US-origin goods

4 What Is a Controlled Good? 3 defined in the Schedule to the Defence Production Act as: any US-origin good or technology that is a defense article as defined under the ITAR or a non-us origin good that is manufactured using technical data of United States origin, as defined under the ITAR if the technical data is a defense article, and goods and technology, regardless of origin, that are specifically listed in the Schedule (and refer to Groups 2, 5 and 6 of the Export Control List with amendments)

5 4 Key Differences Between Canada s CGP and US ITAR ITAR is an export control regime ITAR applies to deemed exports and deemed reexports ITAR focuses on 25 proscribed countries ITAR does not require registration or security screening for examination, possession or transfer of controlled goods within the United States

6 5 Interaction Between CGP, Export Controls, US ITAR domestic security regime (PWGSC - CGD) vs controls over international transfers (DFATD ECD and DDTC for US ITAR) exporting CGP items must apply to ECD for export permit and provide evidence of registration under CGP exporting most CGP items from Canada for end-use in the United States does not require a permit

7 6 Interaction Between CGP, Export Controls and US ITAR discovery of potential contraventions mandatory security breach report to CGD without delay (soon to be 3 days) voluntary disclosure available for ECD but informal others to notify CBSA, RCMP, DFATD Economic Law Section (sanctions), Canadian Nuclear Safety Commission necessary coordination with disclosures to US authorities

8 7 How Does Canada s Controlled Goods Program Work With ITAR ? problem: the final ITAR rule does not contain an explicit exemption for companies that are registered under and comply with CGP and Defence Production Act CGD Enhanced Security Strategy (October 1, 2011) August 2011 Exchange of Letters Between US DDTC and PWGSC DDTC has high regard for the CGP as a means to mitigate the risks of diversion

9 8 How Does Canada s Controlled Goods Program Work With ITAR ? what has DDTC policy section said (May 2012)? gives CGP the golden seal of approval no circumstances in which CGP screening will be insufficient for substantive contact screening endeavouring to put it in writing non-disclosure agreement (NDA) is not required if CGP-screened but has since retracted

10 9 How Does Canada s Controlled Goods Program Work With ITAR ? continuing ITAR/CGP challenges no guarantee yet that screening in accordance with ESS, CGP and Canadian law will meet the ITAR section requirements are US exporters/partners comfortable relying on section ? does this resolve human rights and privacy issues? practical issues remain highly sensitive area for employees continue education and explanation careful adherence to the CGP application and guidance

11 How Does Canada s Controlled Goods Program Work With ITAR ? 10 continuing ITAR/CGP challenges DDTC s suggested non-disclosure agreement (NDA) requires employees to comply with ITAR and certify that they have never acted for or provided information to countries, including Cuba, China, etc. October made in Canada NDA screening form to be signed by the security-assessed employee in Canada ( CGD states that for those CGP registrants accessing U.S. International Traffic in Arms Regulations (ITAR) goods, this acknowledgement may be used to meet the requirements of ITAR (c)(2)

12 11 How Does Canada s Controlled Goods Program Work With ITAR ? continuing ITAR/CGP challenges does not resolve anything for academic institutions broader issues: is ESS permitted under the DPA and Controlled Goods Regulations? is this consistent with Canadian constitutional (Charter) law

13 12 May 2, Proposed Amendments to Controlled Goods Regulations reflect and clarify current CGP practices implemented in Phase I of the Enhanced Security Strategy address the ESS Phase II activities that require regulatory authority in order to be implemented clarifying criteria for revocation and suspension of registrations and exemptions clarifying decisional criteria for reinstatement of a suspended registration or exemption specifying a time period where the Regulations currently state without delay eg, 3 days for security breach report

14 John W. Boscariol McCarthy Tétrault LLP International Trade and Investment Law Direct Line: LinkedIn: Twitter: