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New rules and regs for controlled goods

by Celeste Mackenzie

Those in Canada wishing to buy, sell and possess controlled goods - products specifically made or modified for strategic or military use - must now register with Canada's Controlled Goods Registration Program (CGRP). The program was created following the passing of Bill S-25, an amendment to the Defence Production Act. Under the program, Canadians exporting to the US are no longer required to comply with a time-consuming registration process that country imposed in April 1999.

Bill S-25, which brought about the Controlled Goods Regulations, was passed to satisfy US concerns about American military technology being sold to third parties. Normand Lebeau, manager of the Department of National Defence's (DND) Controlled Technology Access and Transfer (CTAT) office, says one such incident involved satellite technology transfer to China.

"About seven US companies legally obtained a licence to offer their different services to the Chinese who had been unsuccessful in launching a satellite. The US government did not realize that the combined results would be a successful launch, and this made Congress a bit nervous," he said.

Among other things, CTAT assists DND personnel, as well as private companies, to deal with Canadian and international controlled goods regulations. Under the new Canadian rules, the entire life cycle of controlled good are regulated, including sales to third parties and final disposal. US and Canadian lists of controlled goods contain the same items (but are categorized somewhat differently). The Canadian list can be found in the Act.

Registering with the program is fairly easy, says Lebeau, who notes pertinent forms can be printed from the Public Works and Government Services Canada website. Those who must register include all sub-manufacturers, as do companies interested in obtaining a request for proposal's technical data package, or those bidding for a controlled good. When bidding on a contract, a firm must also disclose any controlled goods it might include in a proposal. Non-compliance could result in very stiff fines or even prison sentences. "The penalty at the moment varies from a $2 million fine and up to 10 years in jail," Lebeau says.

Foreign firms incorporated in Canada are eligible to register unless their parent company is from a country against which Canada has relevant trade restrictions. Lebeau says nationals from countries facing restrictions are not disqualified automatically - risk potential is determined on an individual basis.

Registered companies must delegate a designated officer to oversee compliance with security regulations concerning record keeping, training, security plans, employee security checks, and reporting of security breaches.

Diane Guilmet-Harris, CGRP Counsel, notes that legislative and regulatory amendments concerning controlled goods are presently being evaluated in light of the September 11 terrorist attack. "The changes are in the works and are considered secret until published, which most likely won't be before the year is out," she says.


Celeste Mackenzie is an Ottawa-based freelance journalist.


 

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