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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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