Canada: Announced Overhaul of U.S. Export Control Regime Likely to Impact Canadian Businesses

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on International Trade & Investment, September 2010

On August 31, 2010, President Obama announced that the U.S. government is in the process of making significant changes to its system for the control of exports from the United States. Some of these changes may be significant for Canadian companies, particularly those that import goods from the U.S. whether for domestic consumption or as an input into goods that are subsequently exported from Canada. While these changes are yet to be implemented, Canadian companies would be well advised to closely monitor any developments and consider the potential impact on their operations.

Existing U.S. Export and Re-Export Controls

The U.S., like Canada, maintains a system of export control. Certain goods and technology require a permit in order to be legally exported. These rules are for the purpose of controlling the movement of military goods, "dual use" items (items that could have both military and civilian applications) and materials for use in nuclear proliferation, among other sensitive goods and technologies. These rules can be complicated. For instance, items subject to export controls may fall under one of two lists, each of which is administered by different bodies within the U.S. government – the Munitions List (USML) administered by the U.S. Department of State or the Commerce Control List (CCL) administered by the U.S. Commerce Department – and the requirements imposed on exporters may differ depending on which list the item falls under. As the U.S. government notes, this has resulted in, among other things, ambiguity in jurisdiction, delays in issuance of licences, disparate licensing requirements and redundancies, etc.

U.S. export controls can impact Canadian companies in several different ways. First, these controls limit the ability of Canadians to import certain items and may require them to obtain export permits from the relevant U.S. department. Second, U.S. export controls also place restrictions on the export from Canada of certain items that incorporate items of U.S. origin, including: (i) items produced or originated from the U.S.; (ii) items that contain a specified percentage of U.S.-controlled content; and (iii) items based on certain U.S.-origin technology or software intended for shipment to specified destinations.

Proposed Overhaul of U.S. Export Regime

The reform of the U.S. export control system announced by the U.S. government is intended to streamline and simplify the process of export controls to allow U.S. exporters (and consequently Canadian importers and re-exporters) to know exactly what can and cannot be exported and where the products can and cannot go. While the proposed overhaul of the U.S. export controls covers a range of areas – including a change in the licensing policies, the creation of an entity to co-ordinate enforcement efforts and the transition to a single IT (information technology) system to administer all export controls – of particular interest to Canadian companies is the plan to revamp the lists of controlled items.

The U.S. government proposes to restructure both the USML and CCL as "positive" lists that classify and control items based on objective technical criteria and specific characteristics. Currently, the lists use criteria that are considered to be open-ended, subjective, and broad. The U.S. government also intends to create a "bright line" between the two control lists, so that it is clear which agency has jurisdiction over a particular item. Ultimately, the U.S. government intends to collapse the two lists into a single controls list, much like the single Export Controls List (and Guide to Export Controls) used by Canada.

In addition, the plan provides for the creation of a 'tiered' classification system for the items on the control lists. The top tier would be for items that are of critical military or intelligence advantage to the U.S. and are available almost exclusively from within the U.S., as well as weapons of mass destruction. A second tier would be for items of substantial military or intelligence advantage and are available almost exclusively from within the U.S. Finally, a third tier would be reserved for items that provide a significant advantage but are available more widely.

The U.S. government claims this process will lead to the de-control of many items currently subject to export controls. It is expected that certain items currently covered by the USML will be subject to less stringent controls. Moreover, controlled items will be subject to different licensing requirements depending on the tier in which they are classified. Items in the highest tier would generally be subject to the requirement of a licence for export to all destinations (presumably including to Canada). Items in the second tier would be eligible to be exported to U.S. "allies" and most multilateral partners under a licence exemption or general authorization. Presumably, items in this tier would not require a permit for the export to Canada. Items in the lowest tier would generally not require a licence.

The U.S. has stated that one of the purposes of the announced reform is to focus controls on certain items. To that end, the announcement notes that "new controls [will be] imposed on the re-export of those items" not subject to a licence requirement. While many of the details are yet to be finalized, U.S. government officials suggest that this may include, among other things, more frequent end-use checks, and a new requirement for markings on items subject to re-export control.


The U.S. government has announced a significant overhaul of the U.S. export controls regime. Once implemented, Canadian companies importing goods from the U.S. may face revamped U.S. export permit requirements and Canadian companies wishing to re-export U.S.-origin goods may be subject to stricter U.S. controls. It is therefore important for Canadian companies importing goods from the U.S. to keep track of the status of the proposed changes to U.S. export controls.

In addition, the proposed changes to the U.S. export control system may trigger a review by the Canadian government of its own export control requirements. For instance, currently, all goods and technology of U.S. origin that are not otherwise controlled by Canadian export controls, that do not involve a substantial change in value, form or use, may be exported from Canada under a general export permit (General Export Permit No. 12), subject to certain destination restrictions contained in that general export permit. (Goods exported under General Export Permit No. 12 cannot be exported to Iran, Syria, Cuba, the Democratic People's Republic of Korea or any country on Canada's Area Control List). Depending on the changes to U.S. export controls, this exemption may need to be modified. In addition, the Canadian government may consider raising with the U.S. government whether Canada would be included as a "permitted" destination for exports of goods, not only under the proposed "second tier", but also, subject to necessary restrictions, under the "first tier". Finally, the Canadian government may consider that an overall review of the Canadian Export Controls List is necessary in order to ensure alignment with the revised U.S. export controls.

Blakes will provide updates as the U.S. government finalizes and implements these changes to its export control regime.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions