Canada: Canada's Arm's Trade Treaty Legislation Will Create Brokering Rules And Change The Export And Import Permits Act

Last Updated: July 24 2017
Article by Cyndee Todgham Cherniak

On April 13, 2017, the Minister of Foreign Affairs introduced Bill C-47 "An Act to amend the Export and Import Permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments)".  Since then, Bill C-47 has not moved past first reading in Canada's House of Commons. So, there is an uncertain amount of time before Bill C-47 will become law.

On June 30, 2016, Global Affairs Canada announced plans to accede to the United Nations Arms Trade Treaty ("ATT").  The Government of Canada announced that it would enhance Canada's export controls laws to regulate arm's brokering and add measures to formalize assessment criteria in the ATT.  Bill C-47 adds arm's brokering to the Export and Import Permits Act and makes additional amendments.

Brokering Rules

New provisions in Bill C-47 enable Canada to establish a list of goods and technology called the "Brokering Control List".  The Brokering Control List will be established by the Governor in Council (Cabinet) by way of regulation promulgated pursuant to the Export and Import Permits Act. This means that the Governor in Council may amend the Brokering Control List from time to time without going back to Parliament or the Senate. The Brokering Control List may include any article that is included on the Export Control List, the brokering of which the Governor in Council considers it necessary to control.

The Brokering Control List may contain conditions, which may differ from the conditions in the Export Control List.  The conditions may be based on approvals, classifications or determinations by specified persons (e.g., the Minister of Defense) or specified government entities (e.g., Global Affairs) or foreign entities (e.g., the United Nations).

What is Brokering?

When/if Bill C-47 is passed, the term "broker" will be defined in the Export and Import Permits Act.  Bill C-47 adds the following definition of "broker":

"to arrange or negotiate a transaction that relates to the movement of goods or technology included in the Brokering Control List from a foreign country to another foreign country, including a transaction referred to in subsection (1.1) [a transaction of brokering]."

Subsection (1.1) clarifies that:

"for the purpose of the definition "‍broker‍", a transaction that relates to the movement of goods or technology includes a transaction that relates to its acquisition or disposition, and a transaction that relates to the movement of technology also includes a transaction that relates to the disclosure of its contents."

This definition of brokering is clear to relate to transactions outside of Canada.


There are 4 "brokering" prohibitions in Bill C-47:

  1. General Prohibition: No person or organization shall broker, or attempt to broker, except under the authority of and in accordance with a brokering permit issued under the Export and Import Permits Act;
  2. No Transfers/Unauthorized Use of Brokering Permits: No person or organization that is authorized under a permit issued under this Act to export or transfer goods or technology, to import goods or to broker shall transfer the permit to, or allow it to be used by, a person or organization that is not so authorized;
  3. No False or Misleading Statements: No person or organization shall knowingly furnish any false or misleading information or knowingly make any misrepresentation in any application for a permit, import allocation, export allocation, certificate or other authorization under this Act or for the purpose of procuring its issue or grant or in connection with any subsequent use of the permit, import allocation, export allocation, certificate or other authorization or the exportation, importation, brokering, transfer or disposition of goods or technology to which it relates; and
  4. No Aiding or Abetting:  No person or organization shall knowingly induce, aid or abet any person or organization to contravene any of the provisions of this Act or of the regulations.

Brokering Permits

Bill C-47 grants the Minister of Foreign Affairs the authority to issue a brokering permit to any person or organization.  The person or organization must apply for the brokering permit.  The brokering permit will specify the goods or technology covered by the brokering permit and may contain conditions. In other words, the brokering permits will be very specific.

The Export and Import Permits Act contemplates regulations setting out factors that the Minister will consider in granting brokering permits (and, thereby, implement the ATT requirements into Canadian law).  The Minister must, in respect of any brokering permit application, consider whether the goods or technology specified in the permit application "may be used for a purpose prejudicial to (a) the safety or interests of the State by being used to do anything referred to in paragraphs 3(1)(a) of the Security of Information Act; or (b) peace, security or stability in any region of the world or within a country."

Paragraphs 3(1)(a) of the Security of Information Act:

3(1) For the purposes of this Act, a purpose is prejudicial to the safety or interests of the State if a person:

(a) commits, in Canada, an offence against the laws of Canada or a province that is punishable by a maximum term of imprisonment of two years or more in order to advance a political, religious or ideological purpose, objective or cause or to benefit a foreign entity or terrorist group;

(b) commits, inside or outside Canada, a terrorist activity;

(c) causes or aggravates an urgent and critical situation in Canada that

(i) endangers the lives, health or safety of Canadians, or

(ii) threatens the ability of the Government of Canada to preserve the sovereignty, security or territorial integrity of Canada;

(d) interferes with a service, facility, system or computer program, whether public or private, or its operation, in a manner that has significant adverse impact on the health, safety, security or economic or financial well-being of the people of Canada or the functioning of any government in Canada;

(e) endangers, outside Canada, any person by reason of that person's relationship with Canada or a province or the fact that the person is doing business with or on behalf of the Government of Canada or of a province;

(f) damages property outside Canada because a person or entity with an interest in the property or occupying the property has a relationship with Canada or a province or is doing business with or on behalf of the Government of Canada or of a province;

(g) impairs or threatens the military capability of the Canadian Forces, or any part of the Canadian Forces;

(h) interferes with the design, development or production of any weapon or defence equipment of, or intended for, the Canadian Forces, including any hardware, software or system that is part of or associated with any such weapon or defence equipment;

(i) impairs or threatens the capabilities of the Government of Canada in relation to security and intelligence;

(j) adversely affects the stability of the Canadian economy, the financial system or any financial market in Canada without reasonable economic or financial justification;

(k) impairs or threatens the capability of a government in Canada, or of the Bank of Canada, to protect against, or respond to, economic or financial threats or instability;

(l) impairs or threatens the capability of the Government of Canada to conduct diplomatic or consular relations, or conduct and manage international negotiations;

(m) contrary to a treaty to which Canada is a party, develops or uses anything that is intended or has the capability to cause death or serious bodily injury to a significant number of people by means of

(i) toxic or poisonous chemicals or their precursors,

(ii) a microbial or other biological agent, or a toxin, including a disease organism,

(iii) radiation or radioactivity, or

(iv) an explosion; or

(n) does or omits to do anything that is directed towards or in preparation of the undertaking of an activity mentioned in any of paragraphs (a) to (m)."

The Minister has the authority to issue retroactive brokering permits.

Obligations on Brokering Permit Holders

Every person or organization who is issued a brokering permit will have certain obligations to maintain records and allow inspection of those records.  The records must be maintained for six years after the end of the year in which they relate or other period to be established by regulation or authorization.


The penalty for engaging in a prohibited brokering activity upon summary conviction is $250,000 or imprisonment for a term up to one year or both.  The penalty upon indictment is a fine to be determined by the Court or a term of imprisonment up to 10 years or both.

Bill C-47 permits the court to consider certain factors when imposing a penalty, such as the nature and value of the goods or technology to which the offence relates

Additional Changes to Export and Import Permits Act

There are a number of changes to the Export and Import Permits Act incorporated into Bill C-47.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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