Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Canada Takes North American Security Re Controlled Goods Very Seriously

On January 18, 2011, I co-chaired a program entitled "Perspectives on the Revised ITAR Provisions on Dual and Third Country Nationals" that was hosted by the Canadian Embassy in Washington and co-sponsored by the American Bar Association, Section of International Law, Export Controls & Economic Sanctions Committee and Canadian Bar Association, National Section of International Law, Export Controls, Controlled Goods & Sanctions Committee. The speakers were:

  • Minister Rona Ambrose, Canada's Minister of Public Works and Government Services;
  • Charles Shotwell, Director of Defense Trade Policy, Director of Defence Trade Controls, U.S. Department of State;
  • Dr. Jennifer Stewart, Chairwoman of the Foreign Procurement Group and Vice Chairwoman of the Defense MOU Attache Group; and
  • Simona Wambera, Director of the Controlled Goods Program, Public Works and Government Services Canada.

The message was clear - the Harper Government of Canada has been working very hard to solve the problem faced by dual and third party citizens in Canada as a result of the application of the International Trade in Arms Regulations (ITARs) in the United States and by U.S. defence companies buying from or selling to Canadian (and allied) countries. Under the soon to be old ITAR rules, an employee's loyalty to a country or company was assessed on the basis of nationality. But this is not the focus of today's blog article.

Canadian officials have been working to improve Canada's Controlled Goods Program because North American security is important to the Harper Government, Canadian businesses and Canadians. It is in the interests of Canadian businesses to ensure that Canada has a strong domestic industrial security program to regulate and control the examination, possession and transfer of controlled goods in Canada (I am not talking about exports of controlled goods). Canada developed such a program in 2001 when the Controlled Goods Program of the Controlled Goods Directorate (part of Canada's Department of Public Works and Government Services) was developed and implemented. Canada is about to enhance the Controlled Good Program, which means that Canadian businesses will see changes to their compliance obligations in the very near future.  They should be prepared for the changes that are coming.

Registration in the Controlled Goods Program is mandatory in Canada if a business will examine, possess or transfer controlled goods (a defined term in the Defence Production Act (Canada)). If a business commits an offence under the Defence Production Act and/or Controlled Goods Regulations, they are subject to a penalty - the maximum amount is $2,000,000 per day and/or imprisonment for a term not exceeding 10 years. These penalties are serious and real. In case you have not heard about the Controlled Goods Directorate's enforcement statistics, 29 cases have been referred to enforcement agencies (like the Royal Canadian Mounted Police) for further action.

The Controlled Goods Directorate will soon roll out its "Enhanced Security Strategy", which will be accompanied by new regulatory rules. Based on what I have learned, the "Enhanced Security Strategy" is a Canadian developed strategy that takes control of sensitive goods and technical data very seriously. The Canadian Government wants Canada to be a country in which businesses engaged in the manufacture of aerospace and defence products can thrive and prosper. There is no better country for this manufacturing base to be developed because Canada understands the importance of a secure supply chain.

Canada has developed the gold standard of controlled goods programs and, as previously mentioned, will be enhancing the security elements of that program. This will mean change for Canadian businesses. It will mean more work to keep the world a safe place. However, compliance with the Controlled Goods Program will make Canada more competitive in the aerospace and defence industries (and other industries which manufacture and deal in controlled goods) and Canada will hopefully attract like-minded businesses who would like to thrive within a security-focused environment. This should translate into Canadian jobs.

Canadian companies will have to spend money on compliance in order to make money is selling/buying/using controlled goods.  This is a win-win proposition.

For more information, please contact Cyndee Todgham Cherniak, LL.B., J.D., LL.M. who is a Canadian lawyer (with a U.S. law degree) affiliated with McMillan LLP in Canada. Cyndee is a vice-chair of the American Bar Association, Section of International Law, Export Controls & Economic Sanctions Committee. She practices in the area of export controls, controlled goods and economic sanctions laws in Canada. She is a designated officer under her firm's security plan and registration with the Controlled Goods Directorate.

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