NEWS RELEASES

June 16, 2000 (6:45 p.m. EDT) No. 154

AGREEMENT WITH U.S. ON DEFENCE TRADE CONTROLS AND

NEW LEGISLATIVE FRAMEWORK

Foreign Affairs Minister Lloyd Axworthy announced today, jointly with U.S. Secretary of State Madeleine Albright, agreement on a co-ordinated package of national regulatory and legislative measures to strengthen defence trade controls of both Canada and the United States.

Mr. Axworthy and Minister of Public Works and Government Services Alfonso Gagliano also announced the tabling in the Senate this week of legislation amending the Defence Production Act, establishing a strengthened transfer and access control system for certain controlled goods and technology.

"Canada and the U.S. have a shared commitment to maintain a strong, integrated North American defence industrial base to help fulfil our defence and security responsibilities, and to maintain a secure North American perimeter for defence export controls," said Mr. Axworthy. "We believe that this legislation, together with the agreement concluded today, represent an important step toward advancing mutual global security objectives."

The amendments to the Defence Production Act, which is administered by the Minister of Public Works and Government Services (PWGSC), will enable the expansion of the current industrial security regime to effectively control access to, and the transfer of, defence-related goods and technology, as set out in Canada's Export Control List (ECL). Persons requiring access to such goods must register with PWGSC or qualify for an exemption from registration as set out in the regulations. New penalties have been established for violations, with fines up to $2 million and prison terms up to 10 years, or both.

"I am pleased that Public Works and Government Services, through its Canadian and International Industrial Security Program, can play an important role in supporting this initiative," said Mr. Gagliano. "Strengthening this program will also contribute toward ensuring the competitiveness of the Canadian defence, aerospace and satellite industries in all regions of the country."

Under the agreement concluded today, the U.S. will revise its defence trade control regulations to reinstate most of the pre-April 1999 Canadian Exemptions, allowing for licence-free transfer of most U.S.-origin unclassified defence goods and technology to Canadian citizens including Canadian dual-nationals and permanent residents.

On April 12, 1999, the U.S. State Department amended the International Traffic in Arms Regulations (ITAR) and removed many of the preferential elements in the Canadian Exemptions contained in ITAR Part 126.5. The amendments reduced the scope of the Canadian Exemptions by imposing licensing requirements on a broad range of goods and technology that had been, before April, licence-free. In addition, the U.S. narrowed the definition of a Canadian citizen and ruled that Canadians with dual citizenship could no longer take advantage of the Canadian Exemptions. These new amendments and the stricter interpretation of a Canadian citizen have significantly and adversely affected access to U.S. goods and technology, thereby affecting the competitiveness of Canada's defence, aerospace and satellite sectors.

On October 8, 1999, a Canada-U.S. agreement-in-principle was announced recognizing a shared commitment by both governments to protect against illegal re-transfers of controlled goods and technology from North America and to maintain a strong, integrated North American defence industrial base. The U.S. provided assurance that it was prepared to reinstate many of the Canadian Exemptions, and enhance others, in tandem with Canada harmonizing its ECL with the U.S. Munitions List (USML), strengthening controls on USML items within Canada and introducing appropriate legal sanctions for infractions.

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The Joint Statement on Defence Export Controls is attached.

For further information, media representatives may contact:

Debora Brown

Office of the Minister of Foreign Affairs

(613) 995-1851

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

Éric Tétreault

Office of the Minister of Public Works and Government Services

(819) 997-5421

Charles Slowey

Media Relations Office

Public Works and Government Services Canada

(819) 956-2310

This document is also available on the Department of Foreign Affairs and International Trade's Internet site: http://www.dfait-maeci-gc.ca

JOINT STATEMENT ON DEFENCE EXPORT CONTROLS

Since WWII, our two nations have shared a commitment to maintaining a strong, integrated North American defence industrial base, to help fulfill our defence and security responsibilities to NATO and NORAD and for the common defence of our national territories. We also share an equally strong commitment to maintaining a secure North American perimeter for defence export controls in order to protect against illegal re-transfers of controlled defence goods and technology.

The October 1999 agreement-in-principle announced on the occasion of the meeting between President Clinton and Prime Minister Chrétien identified steps both countries agreed to take to advance these key objectives. We have now reached agreement on a co-ordinated package of national regulatory and legislative measures, to strengthen our respective defence trade control regimes, practices and enforcement, and thus ensure the control of defence technologies that both our nations need to protect.

As part of this agreement, Canada has put forward new legislation, and will put forward new regulatory provisions, that will strengthen Canadian defence export controls. As a result of those changes, Canada's Export Control List will control the same defence goods and technology as identified in the U.S. Munitions List.

The United States, concurrent with Canadian legislative and regulatory changes, intends to revise its defence trade control regulations to reinstate most of the pre-April 1999 Canadian exemption, allowing for licence-free transfer for most U.S.-origin unclassified defence goods and technology to Canada. The United States confirms its intent to expand the exemption to allow for licence-free access to such U.S.-origin exports by Canadian citizens, including Canadian dual-nationals, and Canadian permanent residents. The United States also intends to expand the prior exemption to permit the export without licence of certain additional defence goods and technical data.

As part of this process, the United States and Canada will meet at least annually, and as necessary, in a consultative group to review their export control systems, including addressing changes to the International Traffic in Arms Regulations (ITAR) and the Export Permits Regulations. Our two governments plan to undertake a full assessment in the last quarter of 2000 of the progress made in implementing and enforcing our respective legislative and regulatory changes. Further, depending on the outcome of early consultations with the U.S. Congress, we will actively explore opportunities for expanding the list of defence goods and technology that are subject to the ITAR exemption, and to facilitate co-operation in research, development, and production of defence goods and technology, taking full account of responsible business practices in this field and relevant non-proliferation policies and practices.

Our two governments are committed to implement and enforce our respective new national steps fully and vigorously. We are committed to co-operate fully to ensure that our respective industries have a full understanding of the new legislative and regulatory changes and the operation of our respective export controls. In this way, Canada and the United States will protect our mutual security interests to the maximum extent possible within the context of robust defence industrial co-operation.