Canada

Canadian military goods suppliers up in arms over export permit delays under Liberals

OTTAWA — Back in October, Marin Tanase, the chief executive of Montreal-based Canadian Technology Systems, 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 the order still hadn’t left Canada and Tanase ultimately lost the US$200,000 order. 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. Tanase says he’s lost roughly US$500,000 in contracts over the past three years.

Mounting frustrations over the delays has led to calls for Foreign Affairs Minister François-Philippe Champagne to rectify the situation. Companies who spoke to the National Post link the delays with a push by the Liberal government in 2017 to place deeper scrutiny on Canadian arms deals, following reports that Canadian military equipment had been used by a Saudi-led coalition in a war that killed thousands of Yemeni civilians.

Canadian vendors argue most of their equipment is being exported to allied countries, and typically used for defence-related activities.

For Tanase, 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,” Tanase said. “Two years it took me to reach a contract.”

His company sells what are essentially remote-controlled guns used to disarm bombs with high precision and from a distance. He has sold the technology into 40 countries, typically to national anti-terrorist units or municipal bomb squads.

Another company, who spoke to the National Post on the condition of anonymity due to commercial sensitivity, said bureaucratic delays had lost them a contract for several pieces of equipment that range in price between US$50,000 to US$300,000.

According to public data, the number of export permits that have not met Ottawa’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.

A General Dynamics Land Systems Canada security guard watches over two LAVs in London, Ont., Nov. 1, 2017.. Morris Lamont/Postmedia/File

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.

Christyn Cianfarani, president and CEO of the Canadian Association of Defence and Security Industries (CADSI), hopes the Liberal government’s minority mandate might provide an opportunity to rectify the backlog. She has called on minister Champagne to make amends.

“With every change in government there is an opportunity for the bureaucracy to put forward new files that require their attention,” she said. “We’re in that moment where minister Champagne is new, but not new to the trade file.”

Cianfarani said complaints from member companies have been on the rise amid the permit delays. Some contracts worth tens of millions have been delayed; a smaller firm recently lost 10 per cent of its annual revenues due to permitting backlogs, the association said.

“When you’re a very small business, that can mean that you’re on the edge of maybe shutting your doors,” she said.

According to CADSI, only about five per cent of the Canadian armaments industry includes “sharp end” products like firearms and ammunition, while the vast majority sell more general products like protective gear or training simulators.

Moreover, most Canadian military goods, aside from the single LAV deal with Saudi Arabia, are exported to allied countries, Cianfarani said. Israel and the UK received the largest number of non-U.S. exports from Canada in 2018, at 15 per cent, followed by Germany (nine per cent) and France (eight per cent), according to public data.

It’s frustrating because you’re losing contracts and you’re losing opportunities

Conservative defence critic James Bezan called on Ottawa to address the delays.

“The Trudeau Liberals have a responsibility to provide Canadian companies with certainty and clear timelines for export permit approval, while ensuring that permits are only approved if they are consistent with Canada’s foreign and defence policies, including human rights.”

Officials at Global Affairs Canada did not respond to a request for comment after one week.

Industry insiders largely peg the delays to a 2016 report in the Globe and Mail that found that Canadian-made light armoured 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 report brought renewed attention to Canada’s weapons exports and prompted human rights groups to call on Prime Minster Justin Trudeau to reconsider the $15-billion LAV sale, which Ottawa has said is the largest advanced manufacturing export contract in Canada’s history. The LAVs are manufactured in London, Ont., by General Dynamics Land Systems.

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.

In a 2018 committee meeting, Freeland said Ottawa was “doing things differently, because we’re setting a higher standard,” by implementing the bill. 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.

Tanase at 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.

“If you ask questions they will not answer,” he said. “Their response is always ‘we don’t know,’ even if you are providing information to them on the day they ask for it.”

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