On June 30, 2016, the Government of Canada announced plans to modify Canada’s export control system to comply with the Arms Trade Treaty (ATT). The proposed changes include new regulations on arms brokering, a formalization of the assessment criteria for export permits in a manner that requires balancing potentially conflicting interests, and increased transparency in reporting. Canada’s failure to implement the ATT in 2014, alongside the majority of its NATO partners, has complicated the federal government’s review of potentially controversial transactions such as the recent sale of light armoured vehicles (LAVs) to Saudi Arabia. The changes will take effect within the next year since the Government intends to formally become a state party to the ATT by June 2017.


The ATT is a binding international agreement governing conventional arms transfers. It is the first attempt since the Second World War to impose legal restrictions on conventional arms transfers. The ATT entered into force on December 24, 2014. All members of the North Atlantic Treaty Organization and the Group of Seven are signatories or state parties except for Canada.

Prime Minister Justin Trudeau made a campaign promise to join the ATT and has directed Minister of Foreign Affairs Stéphane Dion to formally commit Canada to the ATT. Canada must pass legislation and regulations to implement the treaty obligations before it can become a state party. Canada’s export control system already complies with most ATT provisions. The government plans to specify new export assessment criteria required by the ATT and introduce new brokering regulations to comply with the treaty. The government has stated that it will consult closely with industry and civil society as it develops these changes. The previous federal government declined to sign the ATT out of concerns that it would interfere with private gun ownership.

Assessment Criteria

Article 7 of the ATT governs export assessment criteria. Article 7 establishes that exporting states must make a risk assessment, consider mitigation measures, and apply an “overriding risk” test before approving an arms export. These three steps are outlined below:

  1. The exporting state must assess whether the export of conventional arms would contribute to or undermine peace and security. It must also assess whether the arms could be used to commit or facilitate serious violations of international humanitarian law, serious violations of international human rights law, terrorist acts, or transnational organized crime.
  2. The exporting state must consider whether it could mitigate these risks by confidence-building measures or joint programs with the importing state.
  3. The exporting state must not authorize the export if it determines that there is an “overriding risk” of any of the negative consequences after the assessment and mitigation phases.

The government plans to enact the Article 7 factors and assessment process into Canadian law. Minister Dion has stated that the government will amend the Export and Import Permits Act (R.S.C., 1985, c. E-19) to include the Article 7 criteria. The amendments will legally obligate the Minister of Foreign Affairs to take the Article 7 factors into account when making an export permit decision.

Canada’s current export control policy actually has a stricter test than Article 7 of the ATT. Canada’s export assessment criteria are set out in a 1986 Cabinet policy. The policy states that Canada will “closely control” arms exports to countries with a persistent record of serious human rights violations unless there is “no reasonable risk” that the arms would be used against the country’s civilian population. The “no reasonable risk” test creates a presumption of caution that is stricter than the ATT’s “overriding risk” test.

However, the ATT risk factors are broader in scope than Canada’s current policy guidelines, which have been the source of recent controversy regarding a sale of light armoured armoured vehicles (LAV’s) to Saudi Arabia. The 1986 guidelines only consider serious human rights violations against a country’s own population, but the ATT criteria consider violations of international humanitarian and human rights law both inside and outside of an importing state’s borders. The ATT also mandates consideration of risks from terrorism and transnational organized crime as well as human rights concerns.

Minister Dion has indicated that the government will be developing a clear policy on the overriding risk test in Article 7. The government’s approach to the overriding risk test will be of interest to industry. The ATT negotiators did not clarify the meaning of “overriding risk” and the term lacks a precise meaning in international law. What is clear, however, is that in applying the test, governments will be required to balance potentially conflicting interests such as promoting international peace and security, combatting terrorism and organized crime, and constraining abuses of humanitarian law and human rights. This balancing requirement will be critical in the review of future transactions such as the Saudi LAV sale, where regional security, antiterrorism and human rights interact in a highly complex setting.


Article 10 of the ATT obligates states to regulate conventional arms brokering. Regulatory measures may include a broker registration system or individual authorization of brokering. Still, the ATT does not define brokering and it leaves specific measures entirely to the discretion of state parties. Brokering may include the following activities:

  • Finding business opportunities for a party;
  • Connecting parties;
  • Facilitating agreements or contracts;
  • Assisting with documentation; and
  • Assisting with payments.

The government does not know how many brokers there are in Canada or where they operate. It has stated that it will be consulting with industry and civil society as it prepares the regulations.

The brokering regulations could affect the Canadian Commercial Corporation (CCC). The CCC is a Crown corporation that acts as an intermediary between the Canadian defence industry and foreign governments who often prefer to deal directly with governments in defence matters. The CCC’s activity could fall within the definition of brokering, although the government has not yet stated whether brokering regulations will cover the CCC.

It is also uncertain whether Canada’s regulations will apply extraterritorially to Canadian citizens living or working overseas. Canada is traditionally wary of enacting extraterritorial legislation. However, Canada has increasingly applied economic sanctions extraterritorially to the activities of Canadian nationals and companies overseas, and the United Nations has suggested that brokering regulation would be more effective if it applies extraterritorially.

Transparency Measures

The government also plans to make reporting of arms exports more transparent. The ATT does not mandate these measures. Instead, they are a response to public concern that the export control system lacks transparency. The government has signalled that it intends to increase transparency without jeopardizing the confidentiality of arms transactions. This suggests that Canada does not plan to name the companies and transactions behind major arms exports each year, as Sweden does. The government plans to work closely with industry to identify which types of information can be safely released.


The government plans to consult closely with industry partners over the next year as it develops the legislative amendments, regulations, and policy changes. Companies in the defence industry would be well advised to engage with the government and closely follow the development of the proposed changes. The changes could bring greater certainty but also will likely impose new compliance demands on industry. The changes to the export assessment criteria will be the first modification to Canada’s export control policy since 1986 and are particularly noteworthy. Legal counsel should be involved in the conversation about the proposed changes to help determine how they will impact a company’s operations.