Overview of the Arms Trade Treaty regulatory implementation package

Background

Canada will become a State Party to the UN Arms Trade Treaty (ATT) on September 17, 2019. As per Canada’s practice for all international treaties, Canada will be fully compliant with all its obligations upon accession to the ATT.  

To ensure full compliance with the ATT, the Government of Canada therefore introduced Bill C-47, which amends the Export and Import Permits Act (EIPA) to establish controls on brokering of military items and to incorporate directly into Canadian law the assessment criteria laid out in the ATT, along with other amendments to further strengthen Canada’s export controls. Bill C-47 received Royal Assent on December 13, 2018.

Global Affairs Canada (GAC) subsequently consulted Canadians on the accompanying regulatory framework and then drafted a package of six regulations to fully implement Canada’s obligations under the ATT. These regulations were pre-published in the Canada Gazette, Part I, for 30 days from March 16 to April 15, 2019. Global Affairs Canada carefully reviewed all submissions received during this public consultation period and amended the regulations accordingly.

Below is a summary of the changes that will be made to Canada’s export controls program once Bill C-47 and its related regulations enter into force on September 1, 2019.

Brokering

Legislation: Bill C-47

Bill C-47 amends the EIPA to establish controls over brokering by:

Definition of “broker”

The amended EIPA defines “brokering” as “arranging or negotiating a transaction that relates to the movement of goods or technology included in a Brokering Control List from a foreign country to another foreign country.” Here are a few interpretive notes on that definition:

Legal prohibition

The amended legislation will prohibit unauthorized brokering by any legal or natural person or organization in Canada. Canada’s brokering controls will also apply abroad for:

This means that Canada is making unauthorized brokering a criminal offence and that brokering obligations apply extraterritorially as well as domestically.

Brokering regulations

Bill C-47 authorizes the Government of Canada to make regulations to control brokering. Four regulations will create the framework for controlling brokering.

  1. Brokering Control List (BCL):This regulation lists all items for which a brokering permit is required. It will include all items listed in Group 2 (Munitions List) and Group 9 (ATT items) of the Export Control List (ECL), as well as any other ECL item—including dual-use items—that is likely to be used to produce or develop a weapon of mass destruction. The scope of the proposed BCL is comparable to and informed by the existing brokering controls of Canada’s allies.
  2. Brokering Permit Regulations (BPR): This regulation sets out the information that an applicant (meaning a person or organization) must submit in their application for an individual brokering permit. This includes the applicant’s name and contact details; information about the seller, buyer and any other agents or brokers involved; and information on the goods to be brokered, including on their proposed end use. Applicants for brokering permits will be able to use Export Controls On-Line (EXCOL), the same dedicated website used for export permits.
  3. Regulations Specifying Activities that Do Not Constitute Brokering (“Exclusions”): This regulation specifies activities that, while technically falling under the EIPA’s definition of “brokering,” will be excluded from the new controls. Two exclusions are proposed:
    • (1) transfers between affiliates of a corporation, and,
    • (2) Canadians who are directed by their non-Canadian employer to undertake brokering activities, so long as they do not control the employer. The first exclusion ensures that transnational operations within a company can continue without impediment, while the second exclusion ensures that individual Canadians are not placed at a disadvantage in the global labour marketplace. However, these exclusions do not apply to the movement of full-systems conventional weapons, as laid out in Group 9 of the Export Control List (see the Order Amending the Export Control List below).
  4. General Brokering Permit (“GBP”) No. 1: This regulation creates a General Permit that can be used to broker in pre-defined, lower-risk circumstances. This GBP authorizes brokering to certain low-risk destinations, provided that the end use is in that destination and that the broker follows the requirements set out in the GBP. In response to feedback received during pre-publication of this regulation in Canada Gazette, Part I,it was amended to also allow for brokering when the item is destined for end-use by the Government of Canada. Brokers making use of this General Permit must:
    • (a) notify Global Affairs Canada that they plan to use the GBP, and
    • (b) subsequently report on the items and transactions for which they used the permit. The main advantage of the General Brokering Permit is that prospective brokers do not need to submit an individual application prior to the brokering activity or activities.

Transparency and reporting

During the debates on Bill C-47 and ATT accession, a number of parliamentarians and civil society and academic stakeholders asked for increased transparency in reporting on controlled exports to the United States. At the same time, industry stakeholders noted that the permit-free movement of most controlled items between Canada and the United States is vital to the preservation of Canada’s defence, security and aerospace industry. Canada has benefited greatly from its privileged defence relationship with the United States, and it is important not to undermine this arrangement. In response to this discussion, the Government of Canada committed to looking at ways to increase transparency that would not require individual permits for the export of controlled items to the United States. Two additional regulations were developed to this end.

Reporting regulations

  1. Order Amending the Export Control List (Arms Trade Treaty): This regulatory amendment creates a new Group in the Export Control List (Group 9) that lists all items that fall under the reporting scope of the ATT and states that a permit is required to export these items to all destinations, including the United States. These items are the full-system conventional arms defined in Article 2(1) of the ATT as battle tanks; armoured combat vehicles; large-calibre artillery systems; combat aircraft; attack helicopters; warships; missiles and missile launchers; and small arms and light weapons. Article 13 of the ATT confirms that States Parties may use UN reporting standards in their ATT reports. With respect to small arms and light weapons, this means “man-portable weapons made or modified to military specifications for use as lethal instruments of war.” In keeping with the UN’s reporting parameters for the United Nations Register of Conventional Arms (known as UNROCA), Canada reports to the United Nations on the exports of small arms and light weapons destined for police and/or military end use.
  2. General Export Permit No. 47—Export of Arms Trade Treaty Items to the United States: This regulation allows Canadians to use a General Export Permit (GEP) instead of having to apply for individual export permits when exporting Group 9 (ATT) items to the United States. It also authorizes the export of other non-restricted and restricted firearms and ammunition (controlled under Export Control List items 2-1, 2-2.b., and 2-3) to the United States, formalizing the existing system of not requiring an individual permit. The GEP requires for Group 9 (ATT) items that exporters notify the Government of Canada that they plan to use the GEP and report twice a year on any permanent exports (i.e. items that would not be returned to Canada within two years). There are no reporting requirement for the non-ATT items captured under this GEP, or for temporary exports. The reporting requirements under this GEP give the Government of Canada accurate data on exports of ATT items to the United States in a way that does not create unmanageable burdens on exporters. As a result, Canada is now able to report on all its exports of full-system conventional arms, as required by Article 13 of the ATT.

Enforcement

The RCMP and the Canada Border Services Agency are responsible for the enforcement of the EIPA, with the RCMP being the enforcement authority for the regulations on brokering. Failure to comply with the EIPA and its associated regulations can lead to prosecution. Bill C-47 amended the EIPA to increase the maximum monetary fine for all offences punishable on summary conviction from $25,000 to $250,000.

Further information

Should you have additional questions about Canada’s new brokering or reporting regulations, please contact the Export Controls Policy Division at expctrlpol@international.gc.ca.

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