Foreign Affairs Committee on Oct. 17th, 2017

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

With regard to an earlier exchange with Mr. O'Toole, the core element in this agreement is the brokerage. That's what I've observed, at least in listening to you. That leads me to a question.

Are all industries in Canada affected by the new regulations that will occur? Could you name the industries? As far as I can see, every industry in Canada—trade industry, export industry—is going to be affected by this new set of regulations that is set at the minister's discretion. I'm concerned, to be honest with you, that there will be a cost associated with implementing these new rules and regulations. Have you figured out those costs at all in suggesting that the minister go forward with the changes and suggesting that the minister should sign the agreement?

My question is twofold. Are all industries in Canada going to be affected by this, all the brokers basically? What are the costs associated with that for the private sector, as well as for the government?

[Wendy Gilmour]

In terms of the industries or sectors that are affected, in Canada all Canadian industries that are in the business of exporting controlled goods are already subject to the Export and Import Permits Act and have been since 1947 or before. They are very familiar with our program. They may want us to issue decisions more quickly, which we try to do, but we have an active and ongoing productive dialogue with Canadian industry over the implementation of export permits.

Brokering permits are something new. Brokering regulations, as outlined in Bill C-47, will cover not just those in Canada but will cover Canadian citizens, permanent residents, and organizations registered in Canada that are resident and operating from overseas. In the course of our consultations on the development of the bill and our engagement on brokering activities, we have tried to engage as many Canadians as possible. This includes going out to all of our posts abroad to engage with their resident Canadian communities to determine who may be covered by the brokering regulations.

We don't have a perfect idea at this point, so part of the intent through the establishment of the regulations is to consult with the affected communities further to make sure that their perspective is taken into account in establishing the regulatory regime to make it as predictable and as transparent as possible.

With respect to the costs of implementing the brokering system, the government in its decision to strengthen our export control regime and to accede to the Arms Trade Treaty identified $13 million over five years in budget 2017, on which Parliament has voted, to Global Affairs Canada.

We will make best use of those resources by implementing the brokering regulations in a way that has minimum impact on legitimate business, but obviously creates a regime in which businesses that are not legitimate could be identified and brought into compliance with the act, as Parliament would adopt it.

Thank you very much.

[The Chair, Liberal, Bob Nault]

Now we'll go to Mr. Sidhu.

There are 15 minutes left, colleagues. We'll try to get three more colleagues on the list, so let's stick to five minutes each.

Mr. Sidhu.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

I'm all about Bill C-47 today. Could you speak a little more about the impact on the Canadian economy of trading with other nations, good or bad? I need to know a little more.

[Wendy Gilmour]

Canada is an export-driven economy. Trade is extremely important overall to the Canadian economy. The defence and security sector is a particular sector that is export driven. Approximately 60% of the revenue of the defence and security sector in Canada is derived from exports.

As I mentioned earlier, that is about $6.4 billion in annual revenue per year in a sector that is spread across Canada, with hundreds of firms represented in every region, every province of Canada.

Having an effective export control regime supports the defence and security industry because their exports.... As with many industries these days, their supply chains are global. They are operating in many different jurisdictions. Therefore, Canada's regime supports their ability to access legitimate trade opportunities, and when they're operating in jurisdictions that have similar export control regimes, they know that we have a consistent approach.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Now, 130 countries have signed ATT and the U.S.A. hasn't. You don't have to answer this question if it's not in your jurisdiction, but I'm wondering about the kind of impact there will be, going forward, with the U.S.A. not being on board. Do you see them coming on board, and do you see any negative or positive impacts if they don't?

[Richard Arbeiter]

I would simply clarify that the U.S. did indeed sign the ATT. They did not ratify the ATT, but they did sign, as did all other members of NATO and the G7. That would include Japan. Just to be absolutely clear, they did sign on to the ATT.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

[Wendy Gilmour]

I would just say that the U.S. has an export permit and export control system that is very comprehensive and already includes all of the elements in the treaty. They have an active brokering regime. They assess their export permits for considerations that are similar to ours and to those of other members of NATO. They also participate in each of the four multilateral export control regimes alongside Canada and all of our NATO partners and close allies.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Sidhu.

Ms. Laverdière, you may go ahead.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

I'd like to stay on the same topic.

You mentioned that the Americans had a very rigorous control system. I'm going to pick up on the Nigeria example I brought up earlier. Canada does not export arms to Nigeria, but the Trump administration reversed the Obama administration's decision, such that arms exports to Nigeria are now permitted.

Consequently, certain items produced in Canada have ended up in Nigeria by way of the United States, without any direct control on Canada's part. That was reported in the media two or three weeks ago. Canada has a policy of considering the end-user. How can we do that, however, when we are dealing with the United States, especially given the relaxing of rules that seems to be happening under the Trump administration?

[Wendy Gilmour]

Thank you very much for the question. It's actually a good segue back to respond to your question on the risk management frameworks, if I may.

As with any regulatory program, we have relatively limited resources for the number of permits and applications we have to assess. The government makes decisions on export permits based on broad assessments of the likelihood of risks being realized in certain jurisdictions. We also have to keep in mind that the nature of the Canadian defence and security industry is that in Canada, we primarily manufacture parts and components. We are integrated into global supply chains of other major prime contractors, which we call “original equipment manufacturers”, all over the world.

Take NATO as an example. Some of you have referred to the export controls website. We outline there that we have certain countries that by policy we consider “open policy” countries. We assess those countries based on their export control regimes and their approach to how they assess their exports. The Canadian part or component going to a NATO country, for example, has a different level of scrutiny attached to it than a Canadian export that would be going directly to, for example, a country at risk or in conflict, such as in Africa or elsewhere.

Similarly, with our exports to the United States, we have assessed the risks that could be posed by particular exports to the U.S.—to NATO, to Australia, to Japan, and others—and we've assessed those risks as fairly low given the nature of their export regimes and the requirement for onward permits from those jurisdictions to then go to third countries.

[Richard Arbeiter]

I'm going to make a few comments in English, if you don't mind.

We co-operate with the United States in all of the four export control regimes. We share objectives about preventing the acquisition of these arms by terrorists, organized crime, or those who are engaged in armed conflict. These are discussions that we have multilaterally and bilaterally on a regular basis. We'll continue to do so, and in the areas of concern certainly expect to continue that kind of close co-operation with the U.S. to prevent the acquisition of these weapons by either terrorist groups or organized crime or armed conflict groups.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Or, hopefully, governments that abuse human rights too.

How will this bill and the treaty impact cases such as that of the Streit Group, a Canadian company that sold arms to South Sudan and Libya, in violation of various sanction regimes? Will the bill and the treaty cover that?

[Wendy Gilmour]

As I mentioned earlier to your colleague, I cannot speak about any specific Canadian company or specific case. I can speak about the elements of Bill C-47 and the establishment of a brokering regime, which would create the requirement for any Canadian citizen, permanent resident, or organization registered in Canada to apply for a permit in order to arrange or negotiate the movement of a controlled item from a foreign country to another foreign country. The regulations will provide further precision on how we define certain types of transactions if there are certain things that we would wish to exclude.

For example, we very likely will apply general brokering permits to certain types of transactions. The principle being that we can apply the very valuable resources that are afforded to us by government for the administration of the program, we want to focus on the highest-risk transactions and not use the resources to assess transactions that are likely to be of low risk. What will be critical in assessing any particular case is to look at the person or covered organization that is the directing mind: those responsible for the transaction.

Organizations and companies that are not registered in Canada will not be covered by Canadian law. That would be an extraterritorial reach that would be inappropriate, or at least not consistent with how Canadian law is usually applied.

[The Chair, Liberal, Bob Nault]

Thank you.

We'll go to Mr. Saini, please.

[Raj Saini, Liberal, Kitchener Centre, ON]

Thank you, Mr. Chair.

I hate going back to the past, but Mr. O'Toole raised a question and said we were overplaying our concerns. Being a pharmacist, I want to allay some of his concerns through you.

During the negotiations of 2012-13, there were certain key red lines in the U.S. negotiations. Some of the red lines were as follows:

The Second Amendment to the Constitution must be upheld.

There will be no restrictions on civilian possession or trade of firearms otherwise permitted by law or protected by the U.S. Constitution.

There will be no dilution or diminishing of of sovereign control over issues involving the private acquisition, ownership, or possession of firearms, which must remain matters of domestic law.

Senator John Kerry made a comment, as follows:

This treaty reaffirms the sovereign right of each country to decide for itself, consistent with its own constitutional and legal requirements, how to deal with the conventional arms that are exclusively used within its borders.

On top of that, if you look at the Arms Trade Treaty in article 2, which goes with the scope, you'll see that it says, “This Treaty shall apply to all conventional arms within the following categories”. One of the principles is as follows: “Non-intervention in matters which are essentially within the domestic jurisdiction of any State in accordance with Article 2 (7) of the Charter of the United Nations”.

Just out of curiosity, is that enough information to satisfy that domestic arms regulations in this country will not be affected?

[Richard Arbeiter]

I won't comment on U.S. interpretation, but certainly our interpretation is that there is no impact on domestic gun ownership issues here in Canada.

[Raj Saini, Liberal, Kitchener Centre, ON]

If there was a concern but Canada did sign...or not sign but conformed to the treaty in 2013.... If there was a concern at that time, why would they have signed? I don't understand.

[Wendy Gilmour]

The U.S., do you mean?

[Richard Arbeiter]

The U.S....?

[Raj Saini, Liberal, Kitchener Centre, ON]

Canada.

[Richard Arbeiter]

We did not sign—

[Raj Saini, Liberal, Kitchener Centre, ON]

Not sign, but you agreed to the principles of the treaty, or voted for it.