Category Archives: ITAR

The ITAR is the united states guide to managing controlled items

Reading the Export Control List for Controlled Goods

The Canadian Export Control List contains restrictions on items that can be exported from or handled within Canada. This can include items as diverse munitions, lumber and peanut butter. It consists of eight groups and is organized in outline form. To determine if goods or technologies are subject to the list, you must start with the most general levels of the outline that pertain to the goods or technologies in question and work down the list. The Export Control List also contains cross references and notes that can affect whether or not an item is subject to any regulations.

The Control Export List is harmonized with the United States International Trade in Arms Regulations (ITAR). Of the eight groups, the Controlled Goods Directorate only regulates three; Group 2 – Munitions, Group 5 – Miscellaneous Goods and Technology (Item 5504 only) and Group 6 – Missiles and Rockets. Other groups are subject to different regulations.

The details of the list must be examined. Assume you have a World War II era military armoured vehicle built in 1944. A 50 calibre machine is mounted in the vehicle. It’s barrel is plugged so that it cannot be fired. You want to drive it in a Remembrance Day parade and you want to know if it is a controlled good. In looking at the list under Group 2, Munitions, we find:

2-6, Ground vehicles and components

Beneath 2-6 is 2-6.a, Ground vehicles and components therefor, specially designed or modified for military use.

Within that is 2-6.b, Other ground vehicles and components, as follows.

This breaks down to 2-6.b.1, 2-6.b.1.a and so forth. Each level gives specifications and exemptions. These specifications and exemptions must be analysed. There may also be notes that give further specifications or exemptions and cross references to other items. Consider this extract for 2-6, Ground vehicles and components, from the Control Export List:

—————————————————————————————————-

2-6. Ground vehicles and components, as follows:

N.B.:
For guidance and navigation equipment, see 2-11.

a. Ground vehicles and components therefor, specially designed or modified for
military use;

Technical Note:
For the purposes of 2-6.a. the term ground vehicles includes trailers.

b. Other ground vehicles and components, as follows:

1. Vehicles having all of the following:

a. Manufactured or fitted with materials or components to provide ballistic protection to level III (NIJ 0108.01, September 1985, or comparable national standard) or better;

b. A transmission to provide drive to both front and rear wheels simultaneously, including those vehicles having additional wheels for load bearing purposes whether driven or not;

c. Gross Vehicle Weight Rating (GVWR) greater than 4,500 kg; and

d. Designed or modified for off-road use;

2. Components having all of the following:

a. Specially designed for vehicles specified in 2-6.b.1.; and

b. Providing ballistic protection to level III (NIJ 0108.01, September 1985, or comparable national standard) or better.

N.B.:

See also 2-13.a.

Note 1:

2-6.a. includes:

a. Tanks and other military armed vehicles and military vehicles fitted with mountings for arms or equipment for mine laying or the launching of munitions specified by 2-4.;

b. Armoured vehicles;

c. Amphibious and deep water fording vehicles;

d. Recovery vehicles and vehicles for towing or transporting ammunition or weapon systems and associated load handling equipment.

Note 2:

Modification of a ground vehicle for military use specified by 2-6.a. entails a structural, electrical or mechanical change involving one or more components that are specially designed for military use. Such components include:

a. Pneumatic tyre casings of a kind specially designed to be bullet-proof;

b. Armoured protection of vital parts, (e.g., fuel tanks or vehicle cabs);

c. Special reinforcements or mountings for weapons;

d. Black-out lighting.

Note 3:

2-6. does not apply to civil vehicles designed or modified for transporting money or valuables.

Note 4:

2-6. does not apply to vehicles that meet all of the following:

a. Were manufactured before 1946;

b. Do not have items specified by the Group 2 – Munitions List and manufactured after 1945, except for reproductions of original components or accessories for the
vehicle; and

c. Do not incorporate weapons specified in 2-1., 2-2. or 2-4. unless they are inoperable and incapable of discharging a projectile.

—————————————————————————————————-

2-6 provides specifics as to what kind of vehicle is considered a controlled good. 2-6.b.1 states that all of the sub items (a thru d) must be true for a vehicle to be considered controlled. Obviously, there are civilian vehicles that have all wheel drive and are used off road that are not subject to the regulations unless they also provide ballistic protection and are heavier than 4,500 kg in weight.

2-6 cross-references other items in the list, 2-1 (Smooth-bore weapons with a calibre of less than 20 mm), 2-2 (Smooth-bore weapons with a calibre of 20 mm or more), 2-4 (Bombs, torpedoes, rockets, missiles, other explosive devices), 2-11 (Electronic equipment, “spacecraft” and components) and 2-13 (Armoured or protective equipment, constructions and components).

All of the notes and cross references must be examined as well as the main items. Specifications can list operating temperatures, tolerances and performance measures. An item may list a number of sub items with the phrase “all of the following”, in which case every sub item must apply for the parent item to be true. In other cases the item may state “any of the following”, in which case the parent item is true if any of the sub items are true.

When you walk through the list for the armoured vehicle you want to drive in the parade, you see that 2-6.a stipulates vehicles specifically designed for military use are controlled goods, but you don’t stop there.

2-6.b.1 shows four specifications, a, b, c, and d. All four must be true for 2-1.b.1 to be true. Let us assume that the armour plating on the vehicle does provide ballistic protection to level III (NIJ 0108.01, September 1985, or comparable national standard) or better. We also see that it has a transmission designed to work all of the wheels simultaneously, has a weight greater than 4,500 kilograms and is designed for off road access. All four specifications are true. The vehicle is still a candidate to be considered a controlled good. If we were examining a commercial SUV that did not have armour or weighed less than 4,500 kilograms 201.b.1 would be false.

2-6.b.2 pertains to components for a vehicle to support the four specifications in 2-6.b.1 and does not apply to the vehicle.

If we stopped here, it would seem that the vehicle is a controlled good and you will not be able to drive it in the parade. But, you don’t stop here and refer to the notes and cross references.

Note 1 states that tanks, armoured vehicles, amphibious vehicles, and recovery vehicles capable of towing ammunition are subject to the restrictions. That doesn’t help your case. Note 2 concerns modifying vehicles for military use. That does not apply here. Note 3 is an exemption for civilian vehicles that transport valuables, such as armoured cars. That does not apply either.

Note 4 states that the regulations do not apply to vehicles that meet three criteria; a) were manufactured before 1946, b) do not have items specified by the Group 2 – Munitions List and manufactured after 1945, except for reproductions of original components or accessories for the vehicle; and c) Do not incorporate weapons specified in 2-1., 2-2. or 2-4. unless they are inoperable and incapable of discharging a projectile.

The vehicle was built before 1946. The machine gun is an accessory to a vehicle and its barrel has been plugged so it cannot fire rounds. Because you researched all of the notes and cross references, you now know you can drive your vehicle in the parade.

If goods and technologies are of U.S. origin, the U.S. ITAR may also apply. It is organized into parts, sections and categories that cover not only restricted items but the regulations for possessing and exporting them. As with the Control Export List, the ITAR is in outline form with narrowing degrees of specifications that define when an item is or is not subject to the regulations. Part 121 is a list of goods similar to the Export Control List.

The ITAR applies when items are being imported to Canada from the U.S. or are of U.S. origin and are being exported from Canada to a third country. Goods and technologies not of U.S.  origin may be specified in the Canadian Export Control List but are not subject to the ITAR.

When American companies or universities export goods and technologies subject to the ITAR , they must ensure that the Canadian company or university receiving the goods or technology is registered with the Controlled Goods Directorate when they apply for an export license from the American government. The American government can approve the export as is or impose special conditions beyond what is stipulated in either the ITAR or the Export Control List. If additional restrictions are stipulated, the American organization can file an appeal, but the Canadian organization has no jurisdiction in the American process and must either accept the conditions or loose the contract.

ITAR and Controlled Goods Restrictions on Canadian Dual Nationals is Lifted

Before 2011, Canadian businesses and universities dealing with ITAR related controlled goods and technologies, referred to as “defense articles” by the U.S., had a serious problem. Employees, researchers, students and others who held dual nationality with specific U.S. restricted countries were not allowed to access these items and had to be removed from projects dealing with them. These countries are listed in ITAR §126.1 and include “…Belarus, Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela. This policy also applies to countries with respect to which the United States maintains an arms embargo (e.g., Burma, China, and the Republic of the Sudan)…”

One of the provisions of the controlled goods regulations is that Canadian firms and universities dealing with ITAR items and technologies are required to follow all of the ITAR specifications and any associated export licenses. In this case, it wasn’t that the U.S. government was just forbidding the shipment of their defense articles to restricted countries. They were prohibiting any citizen of these countries from possessing defense articles, including persons holding dual nationality with Canada and one of the restricted countries. This caused outrage among dual national employees and was seen both as a discriminatory insult and a threat to their career paths by excluding them from important projects. Some barred employees sued their employers, claiming violations of the Charter of Rights and Freedoms. This left Canadian employers in a difficult position. If they violated the ITAR restrictions and allowed dual nationals of restricted countries access, they faced losing the controlled goods or technologies. If they removed these individuals from the projects, they risked legal action.

The Government of Canada was long aware of this problem and had been in negotiations with the United States to find a solution. In 2011, the two parties reached an agreement. A new section was added to the ITAR, §126.18, effective May of 2011. It states, in part, “…nationality does not, in and of itself, prohibit access to defense articles…” This stipulates that the ability to examine, possess or transfer controlled goods is based solely on a person’s security assessment and removes the former restrictions on dual nationals, news that was enthusiastically received by both dual national employees and employers alike.

But, of course, there’s no free lunch. The new access comes with the price of increased diligence in security assessments conducted by designated officials.

According to ITAR §126.18, a foreign [Canadian] business that receives a defense article “…must have effective procedures to prevent diversion to destinations, entities or for purposes other than those authorized by the applicable export license or other authorization (e.g. written approval or exemption) in order to comply with the applicable provisions of the Arms Export Control Act and the ITAR.” This is accomplished by “A security clearance approved by the host nation government for its employees.” or “…a process to screen its employees and to have executed a Non-Disclosure Agreement that provides assurances that the employee will not transfer any defense articles [controlled goods] to persons or entities unless specifically authorized by the consignee or end-user.”

The Americans continue to be concerned about dual nationals of restricted counties. In making a security assessment, the designated official must consider “substantive contact” with any such country with respect to “”…travel to such countries, recent or continuing contact with agents, brokers and nationals of such countries, continued demonstrated allegiance to such countries, maintenance of business relationships with persons from such countries, maintenance of residence in such countries, receiving a salary or other continuing monetary compensation from such countries, or acts otherwise indicating a risk of diversion.” Substantive contact does not forbid the possession of ITAR regulated controlled goods, but a designated official must take these factors into account in conducting a security assessment and may return a negative assessment or place restrictions on a positive one because of the findings. ITAR §126.18 goes on to state, “… an employee who has substantive contacts with persons from countries listed in §126.1(a) shall be presumed to be a risk of diversion…”

As the “…host nation government for its employees…” the Canadian Controlled Goods Directorate has made changes to the regulations in the form of an Enhanced Security Strategy. As the directorate states, this was “developed in consultation with Canadian industry and other government stakeholders. The ESS is a more robust approach to meeting domestic industrial security needs and will be implemented through a phased-in approach over three years beginning October 1, 2011.” This effects applications for registration, security assessment applications for owners, authorized individuals, designated officials, officers, directors and employee as well as security assessment applications for temporary workers. These forms are more detailed in the data retrieved. There are enhanced consideration of foreign contacts, the use of a risk matrix assessment procedure and the requirement to conduct a criminal background check on all applicants whether they report criminal activity or not. These new rules apply to every applicant, not just those holding dual nationality.

Enhanced security requires more work on the part of a designated official and more expense for criminal background checks, but it allows dual nationals of restricted countries access to controlled goods and establishes a more secure environment to protect controlled goods in Canada.