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New Export and Technology Transfer Controls Coming into Force Shortly

Canada’s new version of “A Guide to Canada’s Export Control List” (the “Guide”)  will come into effect on July 1, 2023. Among the key changes are new controls for marine equipment, aerospace and propulsion technology, and human and animal pathogens and toxins.

Along with economic sanctions and other national security and foreign policy measures, export and technology transfer controls have become a key area of compliance and enforcement risk for companies doing business abroad, especially in light of recent geopolitical developments and crises involving Russia, China and other state actors.

Export and Technology Transfer Controls

Canada’s export controls, including its export permit regime, are established and administered under the Export and Import Permits Act and its regulations. The Guide is published by Global Affairs Canada (“GAC”) and is incorporated by reference into the Export Control List (“ECL”) established under the Export and Import Permits Act. The Guide is a key resource for exporters and those engaged in technology transfers as it identifies specific goods and technologies that are controlled for export from Canada to other countries. These controls apply regardless of their means of delivery, including, for example, via shipment of goods, electronic transfer or transmission of information, server upload, download or access from abroad, and provision of technical or consulting services.

Listed goods and technologies are categorized into the following groups in the Guide: dual-use, munitions, nuclear and nuclear-related dual use, miscellaneous goods and technology (which includes all US-origin goods and technology, forest items, agricultural and food products, apparel goods, and certain military and strategic goods and technologies), missile technology, chemical and biological weapons, and items controlled under the United Nations Arms Trade Treaty.

Subject to certain exemptions, no goods or technology included on the ECL may be transferred from Canada without first applying for and obtaining an export permit or satisfying the terms and conditions of a general export permit.

The Guide is routinely updated to ensure continued compliance with Canada's multilateral commitments under various multilateral export control and non-proliferation regimes, including the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime, and the Australia Group. The ECL was amended on June 3, 2021, to set out that any subsequent annual updates to the common control lists would be incorporated into the ECL without the need for a regulatory amendment. These latest changes to the Guide bring into effect commitments Canada has made under these various multilateral export control regimes up to December 31, 2022. Accordingly, it is referred to as the “January 2023” edition of the Guide.

Summary of Key Changes to the Export Control List

The updated Guide is available on the GAC’s website. Further, a summary of the more significant changes that come into effect on July 1, 2023 has been published on the Export and Import Controls website.

Specifically, new controls that will be added to Group 1 of the Guide, the Dual-Use List, include:

  • Category 8, Marine - adds a control for rim-driven propulsion systems as follows – Permanent magnet electric propulsion motors specially designed for submersible vehicles, having a power output exceeding 0.1 MW. includes rim-driven propulsion systems (see Systems, Equipment and Components, 1-8.A.2.o.4); and
  • Category 9, Aerospace and Propulsion - adds controls for certain technology for gas turbine engines designed for supersonic aircraft, specifically: “Technology”, not specified in 1-9.E.3.a., 1-9.E.3.h., or 1-9.E.3.i., “required” for the “development” of any of the following components or systems, specially designed for aero gas turbine engines to enable “aircraft” to cruise at Mach 1 or greater for more than 30 minutes:
    • Propulsion inlet systems;
    • Propulsion exhaust systems;
    • ‘Reheat systems’;
    • ‘Active thermal management systems’ to condition fluids used to lubricate or cool ‘engine rotor supports’;
    • Oil-free ‘engine rotor supports’; or
    • Systems to remove heat from ‘compression system’ core gas path flow.

(see Technology, 1-9.E.3.k)

Items to be added under Group 7 of the Guide, the Chemical and Biological Weapons Non-Proliferation List, include:

  • Category 13, Materials – adds controls for brevetoxins (see Materials, Human and Animal Pathogens and Toxins, 7-13.1.d.19); and
  • Category 13, Materials – adds controls for palytoxin (see Materials, Human and Animal Pathogens and Toxins, 7-13.1.d.22)

Items that will be removed from Group 7 of the Guide and thus de-controlled include:

  • Category 13, Materials - Controls for choleratoxin (see Materials, Human and Animal Pathogens and Toxins, 7-13.1.d.12)

Canadian companies should be reviewing the new Guide to ensure ongoing compliance with updated export controls, particularly if these changes noted above could impact their exports or technology transfers.

Additionally, they should be confirming that their internal classification systems for the goods and technologies they deal with are up to date and correspond with the new Guide. Companies should also be sure to provide proper training to individuals responsible for facilitating shipments and should confirm that any third parties they deal with are properly informed and operate in compliance with the applicable export control laws.

The team at McCarthy Tétrault continues to monitor and provide strategic advice regarding new export and technology transfer controls as they are developed and implemented.



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