Canada's Export Control List contains a list of a wide range of items that may have been created for general commercial use but that may also have a military application (the "Dual-Use List"). Exports of these items to countries other than the United States generally require an export permit. Category 5, Part 2 of the Dual-Use List is of particular importance for many companies as it captures many forms of encryption software, including hardware which uses encryption software and, in some cases, may even apply to the transfer or sharing of information. Due to the potentially broad application of Category 5, Part 2, many innocuous items created for general commercial use, but that may have a relatively small encryption element (such as cell phones, radios, cable modems, etc.), may require an export permit.
Although the items listed in Category 5, Part 2 of the Dual-Use List are very broad in scope, there are a number of specific exclusions that may apply to exclude an item from export control. One such exclusion is found in Note 3 of Category 5, Part 2 of the Dual-Use List (the "Cryptography Note") and applies to items that meet all of the following criteria:
a.the item is generally available to the public by being sold, without restriction, from stock at retail selling points by means of any of the following:
ii.mail order transactions;
iii.electronic transactions; or
iv.telephone call transactions;
b.the cryptographic functionality of the item cannot easily be changed by the user;
c.the item is designed for installation by the user without further substantial support by the supplier; and
d.when necessary, details of the items are accessible and will be provided upon request, to the appropriate authority in the exporter's country in order to ascertain compliance with conditions described in paragraphs (a) to (c) above.
The above "mass market" exemption is based upon the exemption as found in the Cryptography Note of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technology ("Wassenaar Arrangement"). The Wassenaar Arrangement is one of the four major multilateral export control regimes in which Canada has chosen to participate. Generally, measures with respect to the Wassenaar Arrangement are introduced in domestic law by each individual Participating State in accordance with national legislation and are implemented on the basis of national discretion. Therefore, the practical implementation of the Wassenaar Arrangement may vary from country to country.
The Export Controls Division of the Department of Foreign Affairs and International Trade ("DFAIT") has begun the process of gathering information to evaluate how the "mass market" exemption as found in the Cryptography Note is currently being interpreted by the Participating States of the Wassenaar Arrangement. As encryption technologies are central to Part 2 of Category 5, it is expected that such consultations could impact those companies whose products rely, in some degree, on encryption for the protection of sensitive information. This consultation process is seeking specific input from Canadian companies and individuals who:
1.have received a formal government ruling from a Wassenaar Arrangement Participating State in respect of an item assessed as complying with the provisions of the Cryptography Note; or
2.have supplemental information issued by a Wassenaar Arrangement Participating State export control authority clarifying any of the provisions of the Cryptography Note.
As Canada has a fairly restrictive interpretation of the application of the Cryptography Note, if exporters of encryption technology have received favourable rulings on the "mass market" exemption from other jurisdictions, they are encouraged to provide submissions to DFAIT. Submissions must be received no later than April 30, 2010. More information can be found at: www.international.gc.ca/controls-controles/about-a_propos/expor/Wassenaar_crypto.aspx?lang=eng.