Canada's Export Control List contains a list of a wide range
of items that may have been created for general commercial use but
that may also have a military application (the "Dual-Use
List"). Exports of these items to countries other than the
United States generally require an export permit. Category 5, Part
2 of the Dual-Use List is of particular importance for many
companies as it captures many forms of encryption software,
including hardware which uses encryption software and, in some
cases, may even apply to the transfer or sharing of information.
Due to the potentially broad application of Category 5, Part 2,
many innocuous items created for general commercial use, but that
may have a relatively small encryption element (such as cell
phones, radios, cable modems, etc.), may require an export
permit.
Although the items listed in Category 5, Part 2 of the Dual-Use
List are very broad in scope, there are a number of specific
exclusions that may apply to exclude an item from export control.
One such exclusion is found in Note 3 of Category 5, Part 2 of the
Dual-Use List (the "Cryptography Note") and applies to
items that meet all of the following criteria:
- a. the item is generally available to
the public by being sold, without restriction, from stock at retail
selling points by means of any of the following:
-
- over-the-counter-transactions;
- mail order transactions;
- electronic transactions; or
- telephone call transactions;
- b. the cryptographic functionality of
the item cannot easily be changed by the user;
c. the item is designed for installation by the user without further substantial support by the supplier; and
d. when necessary, details of the items are accessible and will be provided upon request, to the appropriate authority in the exporter's country in order to ascertain compliance with conditions described in paragraphs (a) to (c) above.
The above "mass market" exemption is based upon the
exemption as found in the Cryptography Note of the Wassenaar
Arrangement on Export Controls for Conventional Arms and Dual Use
Goods and Technology ("Wassenaar Arrangement"). The
Wassenaar Arrangement is one of the four major multilateral export
control regimes in which Canada has chosen to participate.
Generally, measures with respect to the Wassenaar Arrangement are
introduced in domestic law by each individual Participating State
in accordance with national legislation and are implemented on the
basis of national discretion. Therefore, the practical
implementation of the Wassenaar Arrangement may vary from country
to country.
The Export Controls Division of the Department of Foreign Affairs
and International Trade ("DFAIT") has begun the process
of gathering information to evaluate how the "mass
market" exemption as found in the Cryptography Note is
currently being interpreted by the Participating States of the
Wassenaar Arrangement. As encryption technologies are central to
Part 2 of Category 5, it is expected that such consultations could
impact those companies whose products rely, in some degree, on
encryption for the protection of sensitive information. This
consultation process is seeking specific input from Canadian
companies and individuals who:
- have received a formal government ruling from a Wassenaar
Arrangement Participating State in respect of an item assessed as
complying with the provisions of the Cryptography Note; or
- have supplemental information issued by a Wassenaar Arrangement Participating State export control authority clarifying any of the provisions of the Cryptography Note.
As Canada has a fairly restrictive interpretation of the
application of the Cryptography Note, if exporters of encryption
technology have received favourable rulings on the "mass
market" exemption from other jurisdictions, they are
encouraged to provide submissions to DFAIT. Submissions must be
received no later than April 30, 2010. More information can be
found at: www.international.gc.ca/controls-controles/about-a_propos/expor/Wassenaar_crypto.aspx?lang=eng
.
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.