Vol. 146, No. 17 — August 15, 2012

Registration

SOR/2012-160 July 31, 2012

EXPORT AND IMPORT PERMITS ACT

General Export Permit No. 45 — Cryptography for the Development or Production of a Product

The Minister of Foreign Affairs, pursuant to subsection 7(1.1) (see footnote a) of the Export and Import Permits Act (see footnote b), issues the annexed General Export Permit No. 45 — Cryptography for the Development or Production of a Product.

Ottawa, July 27, 2012

JOHN BAIRD
Minister of Foreign Affairs

GENERAL EXPORT PERMIT NO. 45 — CRYPTOGRAPHY FOR THE DEVELOPMENT OR PRODUCTION OF A PRODUCT

INTERPRETATION

1. (1) The following definitions apply in this Permit.

“controlled” means controlled in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of any corporation or otherwise. (contrôle)

“designated country” means Argentina, Australia, Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom or the United States. (pays désigné)

“entity” means a body corporate, trust, partnership, fund, an unincorporated association or organization. (entité)

“Export Controls Division” means the Export Controls Division of the Department of Foreign Affairs and International Trade. (Direction des contrôles à l’exportation)

“government of a foreign country” includes

  • (a) the government of any political subdivision of a foreign country;

  • (b) any agent or agency of a government of a foreign country or its political subdivisions; and

  • (c) any entity controlled by a government of a foreign country or its political subdivisions. (gouvernement étranger)

“Guide” has the same meaning as in section 1 of the Export Control List. (guide)

“ineligible destination” means Afghanistan, Belarus, Burma (Myanmar), Côte d’Ivoire, Cuba, Democratic People’s Republic of Korea, Eritrea, Guinea, Iran, Iraq, Lebanon, Liberia, Libya, Pakistan, Sierra Leone, Syria, Sudan or Zimbabwe. (destination inadmissible)

(2) In this Permit, “development”, “information security”, “production”, “software” and “use” have the same meaning as in the Guide under the heading “Definitions of Terms Used in Groups 1 and 2”.

GENERAL

2. Subject to sections 4 and 5 any resident of Canada may, under this Permit, export or transfer from Canada to a designated country

  • (a) any good referred to in item 1-5.A.2. of the Guide, other than a good that is referred to in item
    • (i) 1-5.A.2.a.2.,

    • (ii) 1-5.A.2.a.4., or

    • (iii) 1-5.A.2.a.9.;
  • (b) any good referred to in item 1-5.B.2. of the Guide, other than a good that
    • (i) is used in the development or production of a good referred to in any of subparagraphs (a)(i) to (iii) or (b)(ii), or

    • (ii) is specially designed to evaluate and validate the information security functions of a good referred to in any of subparagraphs (a)(i) to (iii) or (c)(i) to (iii);
  • (c) any good referred to in item 1-5.D.2. of the Guide, other than software that
    • (i) is used in the development, production or use of a good referred to in any of subparagraphs (a)(i) to (iii) or (c)(ii) or (iii),

    • (ii) has the characteristics of a good referred to in any of subparagraphs (a)(i) to (iii) or that performs or simulates the functions of any of those goods,

    • (iii) certifies software referred to in subparagraph (ii); and

    • (iv) is specially designed or modified to support technology used in the development, production or use of a good referred to in any of subparagraphs (a)(i) to (iii), (b)(i) or (ii) or (c)(i) to (iii).
  • (d) any technology referred to in item 1-5.E.2. of the Guide, other than a technology that is used in the development, production or use of a good referred to in any of subparagraphs (a)(i) to (iii), (b)(i) or (ii) or (c)(i) to (iii).

3. Subject to sections 4 and 5, a good or technology that may be exported or transferred under section 2 may be exported or transferred by a resident of Canada under this Permit to any country, other than a country that is an ineligible destination, if the export or transfer is made to a consignee that is controlled by

  • (a) a resident of Canada;

  • (b) an individual, other than an individual acting on behalf of a foreign country, who ordinarily resides in a designated country; or

  • (c) an entity, other than the government of a foreign country, that has its head office in a designated country.

4. (1) This Permit does not authorize export or transfer to

  • (a) a country that is an ineligible destination;

  • (b) a country that is listed in the Area Control List;

  • (c) a country in respect of which there is an order or regulation made under section 4 of the Special Economic Measures Act or section 2 of the United Nations Act; or

  • (d) a government of a foreign country.

(2) This Permit does not authorize the export or transfer of a good or technology that

  • (a) is intended for any use other than the development or production of a product;

  • (b) is used in the development or production of a product that is being developed for, or under contract with, the Government of Canada;

  • (c) is used in the development or production of a product that is intended for the exclusive use of a government of a foreign country; or

  • (d) is also referred to in any item of the Guide other than the items referred to in section 2, unless the export or transfer of the goods or technology is also authorized by another export permit issued under subsection 7(1.1) of the Export and Import Permits Act.

OTHER CONDITIONS

5. A person who exports or transfers under this Permit must

  • (a) provide the following information in writing to the Export Controls Division before making their first export or transfer in a calendar year under this Permit:
    • (i) their name, address, telephone number and any facsimile number and electronic mail address,

    • (ii) if the person that exports or transfers is a corporation, the business number assigned to the corporation by the Minister of National Revenue and the name of a contact person and their address, telephone number and any facsimile number and electronic mail address, and

    • (iii) a description of the product whose production or development will be facilitated by the export or transfer;
  • (b) insert the term “GEP-45” or “LGE-45” in the appropriate field of the form prescribed under the Customs Act if the good exported is required to be reported under that Act;

  • (c) provide to the Export Controls Division, within 15 days after receipt of its request, the records referred to in paragraph (e) in respect of any export or transfer made during the period specified in the request;

  • (d) provide to the Export Controls Division, before January 31, the records referred to in subparagraphs (e)(ii) and (iii) in respect of any export or transfer made during the previous calendar year; and

  • (e) retain the following records for a period of six years after the year in which any export or transfer is made:
    • (i) the item number of the Guide which describes the good or technology,

    • (ii) the name and any version number used to identify the good or technology,

    • (iii) a description of the product whose development or production is facilitated by the export or transfer, including the name and any version number used to identify the product,

    • (iv) the estimated value of the export or transfer and, in the case of a good or technology that can be quantified, the quantity of the export or transfer,

    • (v) the following information in respect of the good or technology:
      • (A) their cryptographic algorithms and the key sizes employed,

      • (B) the function performed by the cryptographic algorithms, and

      • (C) a description of how the keys are generated and managed,
    • (vi) the date of the export or transfer, if it is known to the person who exports or transfers, and

    • (vii) the name, address, telephone number and any facsimile number and electronic mail address of the consignee.

COMING INTO FORCE

6. This Permit comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

1. Background

Subsection 7(1.1) of the Export and Import Permits Act (EIPA) authorizes the Minister of Foreign Affairs to issue generally to all residents of Canada a general permit to export or transfer goods or technology subject to such terms and conditions as described in the permit.

2. Issue

As a result of Canada’s status of a participating state in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (the “Wassenaar Arrangement”), certain cryptographic goods and technology are subject to export permit requirements implemented under the EIPA.

In representations made to Foreign Affairs and International Trade Canada (the “Department”), cryptographic industry stakeholders have indicated that Canada’s major trading partners, which are also participating states in the Wassenaar Arrangement, have administratively streamlined processes for the export/ transfer of certain controlled cryptographic goods and technology. These stakeholders have further indicated that in order to maintain a level playing field compared to their competitors, the Government of Canada should introduce similar administratively streamlined processes.

3. Objectives

The objective of General Export Permit No. 45 — Cryptography for Development or Production of a Product (GEP 45) is to provide a streamlined process of export and transfer for certain controlled goods and technology.

4. Description

GEPs are used to facilitate trade in defined circumstances. Such permits do not require an individual application to be made to the Department. The relevant GEP must, however, be cited on the Export Declaration form that is provided to the Canada Border Services Agency at the time of export.

GEP 45 authorizes, subject to certain terms and conditions, the export or transfer of most goods and technology listed in Export Control List (ECL) items 1-5.A.2., 1-5.B.2., 1-5.D.2. and 1-5.E.2. to certain consignees when destined for use in the development or production of a product. These consignees include consignees located in a designated country, excluding those operating on behalf of a foreign government, and consignees, excluding those located in ineligible destinations, that are subject to control by a resident of Canada and certain individuals/entities that ordinarily reside in or are located in a designated country. The selection of eligible goods and technology, destinations and consignees, along with the terms and conditions imposed on the use of the GEP, ensures that this streamlined process does not represent a strategic risk.

5. Consultation

The Department consulted with various stakeholders within Canada’s cryptographic exporting industry during the drafting of this GEP. All comments received were taken into consideration, and generally focused on two specific areas: certain definitions and modification of the notification and reporting requirements.

In response, the Department has added and amended certain definitions, where appropriate. The Department, however, did not remove the notification requirement, nor did it extend its duration, nor did it modify the information required regarding records retention. These requirements are necessary in order for the Department to ensure that it continues to meet its interdepartmental commitments to the export control community.

Consultations have been held with the various Government of Canada organizations associated with the export or transfer of cryptographic goods and technology from Canada, all of which support the GEP implementation.

6. Small business lens

The promulgation of GEP 45 is not expected to result in any increase in the administrative burden for small businesses within Canada.

7. Rationale

The administration of Canada’s export control regime aims to balance national and international security concerns associated with the export/transfer of strategic and military goods and technology while maintaining Canada’s interests as a trading nation. The introduction of this streamlined export/transfer process for lower-risk transactions allows the Government of Canada to provide residents of Canada with a mechanism to compete more efficiently in the global marketplace while maintaining a robust system of export controls.

The promulgation of GEP 45 will simplify the process for authorizing exports/transfers of eligible goods and technology to eligible consignees and destinations as identified in the permit. The introduction of this GEP will reduce the overall regulatory burden associated with export controls for the Canadian cryptographic industry.

8. Implementation, enforcement and service standards

Exports of goods and technology listed in the ECL must be authorized by export permits to all destinations except where otherwise stated in each ECL item. There are certain conditions associated with GEP 45, and exporters must comply with those conditions in order to use the GEP. It is a condition of GEP 45 that it be cited by exporters on the Export Declaration form, or other export reporting documentation that is required to be submitted to the Canada Border Services Agency, with every export shipment. Non-compliance with conditions of the GEP can lead to prosecution under the relevant provisions of the EIPA.

The Canada Border Services Agency and the Royal Canadian Mounted Police are responsible for the enforcement of export controls.

9. Contact

Blair Hynes
Acting Deputy Director
Export Controls Division
Trade Controls and Technical Barriers Bureau
Foreign Affairs and International Trade Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-996-0558
Fax: 613-996-9933
Email: Blair.Hynes@international.gc.ca

Footnote a
S.C. 2004, c. 15, s. 56

Footnote b
R.S., c. E-19