Case Study: Canada - CTS - The consequence of Export Licence Delays

Thanks to National Post:

Canadian Technology Systems company sells, according to the National Post, "what are essentially remote-controlled guns used to disarm bombs with high precision and from a distance". They "sold the technology into 40 countries, typically to national anti-terrorist units or municipal bomb squads".

What happened?

Back in October 2019, the CTS, applied for a federal permit to export his patented bomb-defusing equipment to the Kuwaiti government.

It was the final stage in a contract that took him two years to secure.

But by mid-January, 2020, the order still hadn’t left Canada and the company ultimately lost the US$200,000 order.

How did it happen?

His loss, he says, was the result of an increasingly backlogged export permitting process for Canadian-made military goods — including everything from firearms to night vision goggles to bullet-proof vests — that has caused delays across Canada’s $10-billion armaments industry and cost companies millions in voided contracts.

Why did it happen?

Canada is taking longer to approve weapons export permits following controversial arms deal with Saudi Arabia. A 2016 report in "the Globe and Mail" that found that Canadian-made light armored vehicles (LAVs) had been used by Saudi-backed forces in their fight against Houthi rebels in Yemen, where thousands of civilians had been massacred. The Canadian government is said to execute a deeper level of scrutiny on Canadian arms ever since.

Export Control meets Human Rights

In 2017, former foreign affairs minister Chrystia Freeland introduced Bill C-47, which sought to further stem the flow of arms to countries that breach human rights laws. The legislation received royal assent in December 2018, and came into force mid-2019. She said the added scrutiny toward controlled goods would “consider serious violations of human rights law, peace and security, and gender-based violence before authorizing export permits.”. It sought to “ensure — before authorizing the export of arms — a high level of confidence that the arms will not be used to commit human rights abuses,” according to the Global Affairs Canada website.

What is the business impact?

Canadian Technology Systems said he did not know what the root of the delays were, but said much of the problem is a lack of reciprocity from bureaucrats who oversee his files.. For CTS, the lost order means he is likely to miss out on successive contracts he was eyeing with the Qatar government, which is preparing to spend big on security when it hosts the upcoming 2022 FIFA World Cup. “It’s frustrating because you’re losing contracts and you’re losing opportunities,” the CEO told National Post. “Two years it took me to reach a contract.”

What does public data say?

According to public data, the number of export permits that have not met Canada's self-imposed deadline of 40 days increased in 2018 to 374 applications, up from 228 applications in 2017.

That marks a sharp rise from 65 missed application deadlines in 2016.

The delays meant that Global Affairs Canada, who oversees the reviews, missed deadlines on 14 per cent of applications in 2018, up from just two per cent in 2016.


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