Thursday, September 16, 2010

Announced Overhaul of U.S. Export Control Regime Likely to Impact Canadian Businesses

(Mondaq – Cliff Sosnow et al., Blake, Cassels & Graydon LLP)

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.

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. Read more here.