Controlled Goods
Jan 15, 2014

The federal government says it is on track with a package of proposed amendments to the Defence Production Act (DPA) and, by extension, the Controlled Goods Regulations (CGRs). As outlined by Public Works and Government Services Canada (PWGSC) in its initial announcement in November, the scope of products and technology subject to the CGRs would be significantly changed – including the removal of more than half of the goods and technologies currently regulated but not subject to the United States’ International Traffic in Arms Regulations (ITAR).

The proposed changes are designed to assuage U.S. concerns about Canada’s handling of goods and technologies deemed to be “sensitive” or subject to ITAR. While it permitted the transfer of various ITAR-controlled items to Canada from the US without a licence, the US has had issues with what it has seen as security threats by other countries’ citizens working for Canadian countries.

Responding to a series of formal complaints and legal challenges, the State Department’s Directorate of Defense Trade Controls (DDTC) promulgated long-awaited ITAR amendments in May 2011. Among other things, those changes were designed to eliminate nationality-based screening and forestall further discrimination lawsuits.

At the same time, Canada implemented an Enhanced Security Strategy that included more rigorous screening of individuals in Canada who had access to controlled goods and technologies. However, that has proved overly burdensome for some companies, especially where the two regimes intersect. There have been cases where goods that were no longer subject to U.S. regulation were still being controlled in Canada, and vice versa.

PWGSC wants to include the identification of two streams in a new Schedule to the Defence Production Act. One would include all ITAR-subject goods and technologies imported from the United States, while the other stream would include all other items deemed to have strategic significance or national security implications, regardless of the original source country. There are no new items added to the amended Schedule.

Of the more than 240 responses to the draft, two-thirds were from the small business community, including sole entrepreneurs. “Comments were also received from major Canadian manufacturers and aerospace, security and defence industry associations,” PWGSC told FrontLine.

The department plans to post a summary report on the feedback by the end of February, setting the setting the stage for the publication of a Canada Gazette notice in May or June, and a followup confirmation six months later. “We are still on track for the updated Schedule to come into effect by the fall of 2014, if not sooner,” a spokesman confirmed.

PWGSC says its plan would reduce the administrative load on Canadian companies and individuals while supporting the global competitiveness of Canadian industries “by better allowing them to operate on a level footing with their foreign competitors, with no compromise to national security.”

The Department also expects the amended schedules would provide a “well-defined” domestic Controlled Goods List that supports domestic security needs and international obligations while eliminating overlap among departments that might regulate the same goods or services for their own reasons.

Ken Pole is a Contributing Editor at FrontLine Defence.
The summary report will be available at
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