I would also like to introduce Robert Brookfield, who is here with us. He is the director general of the trade law bureau. He, with his team, has been integral in helping us to prepare Bill C-47 and to provide advice on Canada's Export and Import Permits Act.
Richard has provided a helpful overview of the Arms Trade Treaty and its positive impact on the development of international norms around effective export controls. I will speak to Bill C-47 and how it will support Canada's accession to the Arms Trade Treaty and strengthen Canada's existing export control program for military, dual-use, and strategic goods and technology.
From a trade controls perspective, Canada's accession to the ATT will cement our leadership role in the global effort to universalize best practices for effective export controls. Canada has played a consistent role in the establishment of international norms to support the effective control of conventional weapons and related goods and technology since the establishment of the Wassenaar arrangement in the aftermath of the Cold War, as well as the subsequent establishment of other key multilateral export control and non-proliferation regimes.
Joining the Arms Trade Treaty community will provide Canada with new opportunities to continue this important work alongside our closest allies and partners, including the U.S. as a signatory to the treaty, and all our other NATO partners who are already states parties.
Turning to specific provisions of Bill C-47, I'd like to highlight two key provisions that are key to our accession to the Arms Trade Treaty.
At present, Canada meets 26 of 28 specific commitments contained in the treaty. The two elements of Bill C-47 address these last two commitments that we do not meet: first, to formalize and make explicit Canada's export permit considerations to ensure that they are consistent with article 7 of the treaty; and second, to regulate arms brokering in accordance with article 10 of the treaty.
Let me first speak to the ATT assessment considerations.
Article 7 of the ATT requires each state party to consider a number of specific risks with respect to the items proposed for export, before authorizing the export to take place. Canada's current export permit considerations are consistent with all these elements as outlined in the ATT, but are established as a matter of policy, not law. In drafting Bill C-47, existing Canadian law and practices were examined, including with respect to other Canadian regulatory programs, as well as the approach taken by our allies who are already members of the ATT. The critical element was the need to create a legally binding obligation for the minister to take the ATT assessment considerations into account in deciding whether to issue an export permit.
The conclusion was that this obligation would be most effectively implemented through regulation. This is consistent with the practices of our common law allies regarding ATT implementation. It is also consistent with Canadian domestic practice. Most notably, Canadian economic sanctions are implemented via regulation established under specific statutes, a design that allows new sanctions to be put in place more efficiently than would be possible through legislative change.
That is a key point, as the advantage of regulation is the ability to accommodate evolving threats and new international norms more quickly than would be possible through changes to legislation. This was a lesson learned in the years following 9/11, when the nexus of terrorism and organized crime were clearly identified as tangible threats to both Canadian and international security. Parliament incorporated these elements into Canada's Export and Import Permits Act, but it took four years to do so.
As Richard pointed out, one of the benefits of the Arms Trade Treaty is that it has advanced international norms regarding our understanding of the link between conflict and serious acts of violence towards women and girls. We should anticipate that our understanding of conflict and instability will continue to evolve, as will the use of technology with respect to conventional weapons and weapons of mass destruction. Establishing export permit considerations in regulation will ensure that Canada's assessment of the risks related to military exports will also continue to evolve.
The new regulation will be consistent with the specific risks identified in article 7 of the treaty. It's critical to Canada's full implementation of the treaty, which in turn is key to Canada's leadership in the effective implementation of a multilateral, rules-based system. Canada's practice with respect to international treaty law is to fully implement all obligations before we accede, and we fully expect and encourage other states to follow this example.
Should Parliament pass this bill, the Minister of Foreign Affairs will move expeditiously with the regulatory process, beginning with prepublication of all new regulations associated with Bill C-47, including the export permit assessment considerations.
Canadians will have an opportunity to provide input into the regulation, as will parliamentarians. Parliament will also have an opportunity to provide oversight via the Standing Joint Committee for the Scrutiny of Regulations.
Let me turn quickly to brokering controls, which is the second element that we are required to change in order to become compliant with the treaty's obligations.
Article 10 of the ATT requires each state to “regulate brokering taking place under its jurisdiction”. Bill C-47 will establish new Canadian brokering regulations, first by defining arms “brokering” as arranging or negotiating the movement of listed goods or technology from one foreign country to another foreign country.
The bill will also establish that Canada's brokering regulations will cover any person in Canada, as well as Canadian citizens, permanent residents, and Canadian-registered organizations abroad. These provisions are consistent with the practices of Canada's allies and close partners and will support the full implementation of the ATT's brokering controls.
A number of provisions in the bill are also included simply to add the word “organizations” to the existing provisions in the Export and Import Permits Act. This is because arms brokering activities typically may be carried out by a wider variety of entities than were covered by the existing definition of “person” in the EIPA. Brokering transactions will be subject to the same considerations as our export applications.
Brokering regulations will strengthen Canada's export control system by controlling the movement of listed items outside of Canada, thereby reducing the risk associated with illicit trafficking of arms and military equipment by unscrupulous actors who might seek to operate in jurisdictions with limited domestic oversight. Establishing arms brokering controls places Canada in good company with like-minded nations.
Additional provisions in Bill C-47 will also support strengthening Canada's export controls: notably, modernizing the penalty for a summary conviction of an offence under the EIPA by increasing the fine of $25,000, which was established in 1991, to $250,000.
Additionally, the bill will create a statutory requirement and a statutory tabling date for the annual report to Parliament on military exports. Canada led the international community in 1991 in establishing public reporting of military exports, and we will continue to set an effective international example by formalizing the delivery of this report through Bill C-47.
Before I conclude, I would like to take a moment to address an issue that was raised during the debate in the House of Commons, specifically, the permit-free transfer of most controlled goods to the United States.
Canada's defence relationship with the United States is our most important bilateral relationship. Both of our countries have benefited from a shared North American defence industrial base for decades. This was formally established through the defence production sharing agreement in 1957.
This DPSA and other bilateral agreements continue to serve Canadian interests, supporting a robust defence industry of over 63,000 jobs and contributing upwards of $6.7 billion annually to GDP. The defence manufacturing base supports wages that are approximately 60% above that of the rest of the manufacturing sector, and innovation-relevant occupations account for over 30% of the defence industry's direct employment. These valuable jobs are spread all across Canada.
This industrial activity is directly supported by the ease of access to the U.S. market by Canadian industry. Increasingly, and just as in other sectors, cross-border supply chains require the efficient movement of parts and components in both directions. This is particularly important for small and medium-sized enterprises, which make up the majority of Canadian defence and security firms. Canada is currently the only country that is afforded a licence exemption under the U.S. international traffic in arms regulations, and Canadian regulations reciprocally allow for permit-free movement of most controlled items to the United States.
Accession to the Arms Trade Treaty does not require Canada to amend this practice. This reciprocal permit, or licence-free movement, is entirely consistent with the provisions of the treaty, which does not specify how states parties should organize their export control systems, nor does it rule out expedited processes to assess and authorize exports to certain countries.
Most of our allies and partners have similar systems in place to support their defence relationships while also meeting their ATT obligations. As one example, the Benelux countries—Belgium, the Netherlands, and Luxembourg—all of whom are ATT states parties, have permit-free movement of controlled items between them.
The Arms Trade Treaty is designed to ensure that states parties are able to establish and maintain tailored export control systems that meet their individual defence needs, while also supporting international efforts to combat the illicit trade in conventional arms.
Again, thank you very much for the opportunity to appear today. My colleagues and I would be pleased to answer your questions.