Canada and United States Export Laws are Unique
Canada and United States export laws provide a number of advantages for businesses in both countries. In the first half of 2020 trade between the two countries was 245 billion dollars. The U.S and Canada have a very strong bilateral relationship and both nations participate in a number of international multilateral groups. Additionally, The U.S. has a more extensive defense arrangement with Canada than with any other nation.
Despite these advantages there are a number of legal considerations that must be dealt with before initiating an export between the two countries. This is especially the case when dealing with defense related items.
U.S./Canadian Defense Production Sharing Program
The unique relationship between the U.S. and Canada with regards to export law can be traced the U.S./Canadian Defense Production Sharing Program. This treaty was first enacted in 1956 to establish a cooperative agreement in defense research and development between the two countries. It was amended later in 1963.
The objectives of the treaty were to:
- Allow Canadian firms to perform research and development work that meets requirements of the U.S. armed forces.
- Utilize the mutual industrial, scientific, and technical resources of the two countries in the interest of mutual defense.
- To work towards the standardization and interchangeability of defense equipment between Canada and the U.S.
United States Export Laws
U.S. export law governing the export of items specifically designed or otherwise intended for military use are controlled by the International Traffic in Arms Regulation (ITAR). ITAR is administered by the Directorate of Defense Trade Controls (DDTC). Items that are ITAR controlled include defense goods, services, and associated technical data.
Items that have commercial and military applications are designated dual-use. These items are controlled by the Export Administration Regulations (EAR) which is administrated by the Bureau of Industry and Security (BIS).
Defense articles and services controlled by the ITAR are listed in the United States Munitions List (USML). Entities that manufacture, service, distribute, export or re-export these items must be registered with the DDTC. Furthermore these entities must exercise controls of their organization and facilities in accordance with specific guidelines. It is important to note that a deemed export extends to the transfer of information to non U.S. Persons.
Canada Controlled Goods Program
The Canadian Controlled Goods Program (CGP) under the Defense Production Act controls goods that have defense or national security importance. To conduct an export of these items the party must be a Canadian citizen, resident, or registered business. They must also be registered with the Controlled Goods Directorate and abide by all requirements of the Canadian regulations along with U.S. ITAR.
Canada Export Control List Group 2 – Munitions
Other Associated Categories on the CGP
As with U.S. export law, Canadian export control of military items has categories beyond the Munitions List. These include:
- Dual-Use List
- Nuclear Non-Proliferation List
- Nuclear-Related Dual-Use List
- Sections of Miscellaneous Goods and Technology
- Missile Technology Control Regime
- Chemical and Biological Weapons Non-Proliferation List
- Arm Trade Treaty Items
Important Note on U.S.-Origin Goods
Exporters should note that the exports of all goods and technology of U.S.-origin, as defined in Item 5400 on the ECL, regardless of their nature and destination, require permits.
Classification of Items on the CGP
Goods or technology identified in one Group or item of the ECL may also be identified in other Groups or items and each Group in the Guide must therefore be considered independently. To ensure compliance to Canadian law exporters should ensure that they have reviewed the Guide in sufficient detail to assure themselves that all relevant Groups and ECL items have been considered.
Requirements for Export Compliance
Several provisions have been made to ease the export of defense items between the two countries. One such exemption is the Canadian Exemption Provision (22 CFR §126.5) that eases the requirements of exports from the United States to Canada.
Although Canada and U.S. laws regarding the export of defense articles and services are similar, procedures, registrations, and reporting requirements must be met. These requirements vary depending on the direction of the export (U.S. to Canada or Canada to U.S.). Special considerations must be given if any reexports or retransfers of the product are to be expected.
Reaping the Benefits of U.S. Canadian Trade
The United States and Canada’s unique relationship among the worlds nations creates many opportunities for enterprises to expand their business horizons. Dealing with the details of complying with both nations requirements however can be discouraging. This is especially the case with the export of defense related items and services because of fines, penalties, and imprisonment for failures to comply. As a result, seeking expertise in export compliance can be of great value.
Navigating international import and export laws can be extremely challenging. When those products are defense related this can be even more the case. CVG Strategy export compliance experts have over a decade of experience in assisting businesses establish and maintain export compliance programs.
We can answer your export compliance questions to keep your organization in compliance to regulations. We can also provide essential training to ensure that your team is up to date on ever changing export law. Be sure to visit our ITAR store for badges, signs, and visitor guides to keep your facility secure.
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