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.

In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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