Canada: Exporters Subject To Increasing Trade Control Scrutiny

Last Updated: March 7 2012
Article by John W. Boscariol

Most Read Contributor in Canada, September 2018

Canada's customs authority, the Canada Border Services Agency (CBSA), continues to exercise its broad authority under the Customs Act and the Export and Import Permits Act to engage in numerous searches, detentions, seizures, ascertained forfeitures, investigations and other enforcement activities to ensure that exports from Canada are in full compliance with Canadian legislation. Exporters must comply with significant, and at times complex, regulatory requirements, including controls over the transfer of goods and technology identified on the Export Control List (ECL), economic sanctions measures imposed under the Special Economic Measures Act (SEMA) and the United Nations Act (UNA), and CBSA export reporting obligations.

Continued reports of U.S. authorities' dissatisfaction with Canadian enforcement of export controls appear to be at least part of the reason for increasingly aggressive CBSA enforcement in this area.1 Historically, Canada does not have an as extensive enforcement record as that of the United States regarding export controls and economic sanctions. However, Canadian officials point to a "continuum of successes" recently, in addition to prosecutions and convictions, in addressing export violations — these include detentions and seizures which delay and disrupt shipments and can result in lost contracts.2

Critical Areas for Exporters

Areas in which Canadian exporters are facing significant compliance and enforcement challenges include the following:

(i) dealings with "designated persons" – regardless of the destination country, exporters should be routinely screening all involved parties against the lists of companies, organizations and individuals established under the numerous SEMA and UNA sanctions regulations, the Freezing Assets of Corrupt Foreign Officials Act,3 as well as the Criminal Code provisions regarding dealings with terrorist entities; Canadian exporters are prohibited from engaging in dealings with these listed parties;
(ii) information security items – Canada's ECL controls over goods, software and technology designed or modified to perform encryption or to work with such items are more cumbersome than their U.S. counterparts; often, exporters first discover that their products are subject to control when they are detained or seized by CBSA and the delays in responding to the enforcement action and obtaining a permit result in costly commercial disruption and lost sales;4
(iii) "catch-all" controls – pursuant to a "catch-all" provision in the ECL, exports of all goods and technology are prohibited without a permit if "their properties and any information made known to the exporter ... would lead a reasonable person to suspect that they will be used" in connection with chemical, biological or nuclear weapons and their delivery systems or missiles (WMDs) or used in any WMD facility;5 accordingly, exporters must exercise due diligence to ensure that their uncontrolled goods and technology are not destined for a WMD facility;
(iv) Iran – the supply of any goods and related technology to Iran for use in the petrochemical, oil or natural gas industry or for nuclear-related purposes is prohibited under SEMA and UNA regulations which also contain an extensive list of other prohibited items;6 Canada's recent imposition of a financial services ban can also significantly complicate matters for exporters to Iran;7 further, no U.S.-origin goods or technology can be transferred to Iran without an export permit which can only be obtained in limited circumstances;8 exporters should be aware that CBSA is also closely scrutinizing exports to locations that are commonly used for transhipment to Iran, including the United Arab Emirates, Malaysia and Hong Kong;
(v) Syria – there is a ban on the export to Syria of any goods or technology identified on the ECL as well as any goods or technical data for use in the monitoring of telecommunications;9 as is the case with transfers to Iran, all U.S.-origin goods and technology is prohibited from being transferred to Syria without a permit which can only be obtained in very limited circumstances;
(vi) Cuba – Canada does not restrict exports or transfers to Cuba unless the goods or technology are of U.S.-origin or otherwise controlled on the ECL in which case a permit must first be obtained; however, pursuant to an Order issued under the Foreign Extraterritorial Measures Act,10 companies and individuals are prohibited from complying with the extraterritorial U.S. trade embargo of Cuba and are required to advise the Canadian Attorney General forthwith of any communications related to the U.S. trade embargo received from a person in a position to influence their policies in Canada; failure to comply with the Order is punishable with criminal penalties; and
(vii) Belarus and Burma – Canada's sanctions against Belarus and Burma are more aggressive than those imposed by other countries, including those of the United States and the European Union; they prohibit the export or transfer of all goods and technology to Belarus and Burma and permits are available in only very limited circumstances, i.e., for humanitarian purposes.11

In addition to the ECL product and technology-specific controls and the sanctions against the countries already mentioned above, exporters should be aware that Canada also currently imposes trade restrictions of varying degrees on activities involving Côte d'Ivoire, the Democratic Republic of the Congo, Egypt, Eritrea, Guinea, Iraq, Lebanon, Liberia, Libya, North Korea, Pakistan, Sierra Leone, Somalia, Sudan, Tunisia and Zimbabwe.

Mitigating Risk

Failure to comply with these requirements exposes exporters to significant financial and operational costs arising from penalty assessments as well as delayed, detained or cancelled export shipments. In many cases, there can also be disasterous reputational consequences for the company as a whole.

In order to mitigate risk, exporters should be in a position to demonstrate effective due diligence by designing and implementing a robust trade controls compliance strategy. An exporter's internal compliance program should include measures such as:

  • a clearly articulated and readily accessible written manual that is regularly reviewed and updated;
  • appointing senior officer(s) responsible for the implementation and enforcement of the policies and procedures;
  • education and training of frontline sales and other employees and executives;
  • procedures for reporting potential violations internally and externally (e.g., voluntary disclosure) and for providing protection against retaliation;
  • internal disciplinary procedures for violations;
  • destination and party screening, including the screening of customers, suppliers, freight forwarders and other involved service providers or agents;
  • end-use screening, including written certification from customers; and
  • regular reviewing, testing and enhancement of processes and procedures to ensure full compliance.

There is no "one-size-fits-all" compliance program as these measures will differ depending on the size of the company, the nature of the exporter's goods, services and technology, and its markets, customers and end-users, among other factors. However, as exporters face increasing CBSA scrutiny of their shipments, it is important to pay careful attention to trade control obligations in order to minimize non-compliance risk and avoid the financial and reputational costs associated with CBSA enforcement and delayed or cancelled orders.

John is Co-Chair of the American Bar Association SIL Export Controls and Economic Sanctions Committee and Co-Chair of the Export Committee of the Canadian Association of Importers and Exporters. He is also a partner at McCarthy Tétrault LLP where he leads the International Trade & Investment Law Group.


1 See, for example, "Fronts in Canada set up to ship banned goods abroad: secret cable", The Globe and Mail, November 23, 2011.

2 October 31, 2011 Testimony of Geoff Leckey, CBSA Director General, Intelligence and Targeting, before the Standing Senate Committee on National Security and Defence.

3 See the Freezing Assets of Corrupt Foreign Officials (Tunisia and Egypt) Regulations, SOR/2011-316.

4 In an effort to level the playing field for Canadian exporters, the Export Controls Division of Foreign Affairs and International Trade Canada (ECD) has made available several types of "multidestination" export permits (MEPs) for cryptographic items. Although they still require exporters to apply to EDC and meet reporting and other conditions depending on the applicable MEP, they may be obtained without having to specify consignees in the application. This avoids having to apply for individual export permits for different consignees. ECD has made seven such MEPs available with varying terms and conditions (see "Export Permits for Cryptographic Items")

5 ECL Item 5505. See ECD Notice: "Export Controls over Goods and Technology for Certain Uses" (March 2011, Serial No. 176). This does not apply if the goods or technology are intended for end use in, and the final consignee (and any intermediate consignee) is located in, one of 29 listed allied countries.

6 Special Economic Measures (Iran) Regulations, SOR/2010-165 and Regulations Implementing United Nations Resolutions on Iran, SOR/2007-44.

7 Effective November 21, 2011.

8 Export Control List item 5400 controls all U.S.-origin goods and technology for export or transfer from Canada. General Export Permit No.12, allows for the shipment of goods to any destination other than Belarus, Burma, North Korea, Cuba, Syria, and Iran.

9 Special Economic Measures (Syria) Regulations, SOR/2011-114.

10 Foreign Extraterritorial Measures (United States) Order, 1992, SOR/92-584.

11 Belarus and Burma, along with North Korea, are listed on Canada's Area Control List, SOR/81-543. Burma is also subject to SEMA sanctions under the Special Economic Measures (Burma) Regulations, SOR/2007-285.

* To be published in the upcoming Year-In-Review edition of The International Lawyer journal, a publication of the American Bar Association.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
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