Exporters — Stay up to date on rules for controlled goods

Canadian exporters of certain “controlled goods” should assess their compliance with Canada’s export requirements. Generally, exporters who transfer certain controlled goods from Canada must follow regular updates to these requirements to determine, for example, whether they need to register under the federal Controlled Goods Program and, where applicable, apply for an export permit. Exporters should regularly evaluate whether they are complying with the Controlled Goods Program’s requirements and ensure they are prepared for any government inquiries. Increasingly, the government has been scrutinizing exporters to ensure they are meeting the Canadian Controlled Goods Program requirements.

Export controls continue to evolve and remain a key component of today’s trade environment. The latest additions to the Export Control List includes specific maritime equipment, aviation technology and certain human and animal pathogens and toxins.  In addition, Canada has updated the export permit process in respect to military and strategic goods and technology, and certain forest products. These changes are effective from July 1, 2023. To ensure they are complying with these requirements, exporters should monitor these and any other significant updates and implement necessary changes to their operations.

Export controls are compliance measures implemented by the Canadian government to regulate certain goods, components, and technology (i.e., “controlled goods”) that have military or national security significance. Individuals and companies that examine, possess, or transfer controlled goods in Canada are mandated to register (unless excluded or exempted) in the Controlled Goods Program. Additionally, an export permit is required for exporting controlled goods from Canada.

Controlled items (i.e., military, dual-use and strategic goods and all U.S origin goods and technology that are subject to export controls) are listed in the Export Control list, which is administered under section 3 of the Export and Import Permits Act.

Global Affairs Canada regularly updates “A Guide to Canada’s Export Control List”, to reflect the latest additions and deletions to the Export Control List. The latest changes included in the revised guide, which are effective from July 1, 2023, are in line with multilateral export control regimes, bilateral agreements, and specific unilateral controls that Canada has assented to as of January 1, 2023.

According to Global Affairs Canada’s summary of these changes, the government has added controls for the following goods, as reflected on the Export Control list:

• Rim-drive propulsion systems — Permanent magnetic electric propulsion motors specially designed for submersible vehicles, having a power output exceeding 0.1 MW (under Group 1, Category 8).
• Certain technology for gas turbine engines designed for supersonic aircraft (under Group 1, Category 9), including:
  • Propulsion inlet systems
  • Propulsion exhaust systems
  • Reheat systems
  • Active thermal management systems to condition fluids used to lubricate or cool engine rotor supports
  • Oil-free engine rotor supports
  • Systems to remove heat from compression system core gas path flow.
• Certain human and animal pathogens and toxins (under Group 7, Category 13).

Global Affairs also notes that cholera toxin (under Group 7, Category 13) is no longer controlled.

Earlier this year, Canada updated its Export Permits Regulations to harmonize these rules with current permit application procedures. In particular, the government revised the Export Controls Online System (NEXCOL) to request more detail and clarity under its information requirements. These regulations were updated to:

• Include a comprehensive list of information requirements that permit applicants must provide for the export of strategic and military goods and technology (Section 3) and certain forest products (Section 4)
• Add a notice that, for an export permit application for strategic and military goods and technology, the Global Affairs Canada’s Trade and Export Controls Bureau may request supplementary documentation
• Require applicants (and any co-signees) to provide their email address, as well as a fax number (if applicable), in line with information requirement in the NEXCOL portal
• Amend the process for exports by mail or courier service by requiring all exporters to submit their permits along with any support documentation required at a Canada Border Services Agency (CBSA) office.

These regulations were published in the Canada Gazette on June 21, 2023.

For more information, contact your KPMG adviser or one of the following trade and customs professionals:

Angelos Xilinas
(604)-691-3479
axilinas@kpmg.ca

Kenneth Jordan
(416)-476-2257
kejordan@kpmg.ca

Tyra Bermudez
(604)-646-6446
tyrabermudez@kpmg.ca

Victor Kimanga
(778)-370-7503
vkimanga@kpmg.ca