Introduction

On 27 September 2020, Canada’s embassy in Ankara, Turkey circulated a “flash report” within the Government of Canada highlighting a “major escalation” in what is known as the Nagorno-Karabakh conflict. The disputed territory was the subject of a war between Armenia and Azerbaijan in the wake of the Soviet Union’s dissolution, which a 1994 ceasefire did not resolve. In its description of recent events, the embassy’s flash report noted discussions on social media regarding the possible use of Turkish Bayraktar TB2 drones by the Azerbaijani side.[1] By 29 September 2020, allegations were being reported in the media that Canadian-made imaging and targeting systems—“sensors” manufactured by L3Harris Wescam—were being used on the drones (unmanned aerial vehicles, UAVs).[2] These concerns echoed those raised in a September 2020 report published by Project Ploughshares, which claimed that the same technology had been “used extensively by Turkey” in its recent military operations in Syria, Iraq and Libya.[3]

On 5 October 2020, Canada’s then Minister of Foreign Affairs, François-Philippe Champagne, issued a statement indicating that, upon learning of the allegations in relation to Nagorno-Karabakh, he had “immediately directed Global Affairs Canada to investigate these claims.” The minister indicated that the “relevant” arms export permits to Turkey were suspended.[4]

The House of Commons Standing Committee on Foreign Affairs and International Development (the Committee) held two meetings in October 2020 on the situation in Nagorno-Karabakh, including one with officials from Global Affairs Canada. In those meetings, the Committee sought to better understand the origins of the conflict, the process by which arms export permits to Turkey were approved, and the nature and timing of those exports. However, with officials citing the need to respect “commercial confidentiality,” the Committee received only limited information.[5]

Given the importance of this issue, the Committee decided to undertake a study on Canada’s arms export permit system, with a particular focus on permits involving Turkey.[6] In addition to reviewing the documents it ordered Global Affairs Canada to produce,[7] the Committee heard from academics, civil society organizations, and industry representatives, and received additional testimony from Global Affairs Canada.

In the course of the Committee’s study, current Minister of Foreign Affairs Marc Garneau released a report summarizing the Government of Canada’s review of arms export permits to Turkey, “which found credible evidence that Canadian technology exported to Turkey was used in Nagorno-Karabakh.”[8] That use was determined to be inconsistent with Canadian foreign policy and the end-use assurances that had been provided by the Government of Turkey. The findings, published on 12 April 2021, led the Minister to cancel the permits that had been suspended in the fall of 2020.[9]

Concerns about export permits to Turkey, however, had emerged previously. In October 2019, the Government of Canada temporarily suspended the issuance of all new permits for the export of controlled goods and technology to Turkey in light of its military actions in northeastern Syria.[10] Notice to Exporters Serial No. 992, issued on 16 April 2020, then advised that—from that date until further notice—permit applications to Turkey would be reviewed on a case-by-case basis against Arms Trade Treaty criteria, with a presumption of denial for Group 2 (military) items on Canada’s Export Control List, unless exceptional circumstances were found to exist, including in relation to North Atlantic Treaty Organization (NATO) cooperation programs. Exporters issued permits prior to 11 October 2019 could continue to export items to Turkey during the period of a permit’s validity.[11]

Even though 29 export permits to Turkey have now been cancelled,[12] a development that was welcomed by many witnesses, the Committee believes this case offers important lessons. The report begins with background on Canada’s export controls system for military goods and technology. It then summarizes witness perspectives on the overall challenges facing that system, before addressing specific concerns that were raised about how risk was assessed in the case of the export permits to Turkey. Following the Committee’s recommendations in relation to those issues, the Committee puts forward its findings on measures intended to prevent the transfer of military goods and technology to unauthorized users or for unauthorized end uses—i.e., diversion.

Canada’s Export Controls Regime

The Export Control List, Permit Applications and Approvals

The primary means by which Canada controls the export of military goods and technology is the Export and Import Permits Act (EIPA).[13] Under section 3(1), the Governor in Council—that is, the Governor General acting on the advice of Cabinet—may establish and update an Export Control List (ECL).[14] The current ECL schedule lists nine groups of regulated items.[15] Relevant to the subject matter of this report are dual‑use goods (Group 1),[16] munitions (Group 2),[17] and goods controlled under the international Arms Trade Treaty (Group 9).[18] Items that fall under Groups 2 and 9 are commonly referred to as “military goods and technology,” a term used throughout this report.[19] Canadian individuals or companies wishing to export such goods and technology must first apply for an export permit.[20]

The process for assessing those permits was strengthened through An Act to amend the Export and Imports permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments), legislation that was introduced by the government in April 2017, amended by the Committee in March 2018,[21] and received Royal Assent on 13 December 2018.[22] The related regulations entered into force on 1 September 2019, enabling Canada to become a state party to the Arms Trade Treaty (ATT) on 17 September 2019.[23] The objective of the ATT, adopted by the United Nations General Assembly on 2 April 2013, is two‑fold:

• Establish the highest possible common international standards for regulating or improving the regulation of the international trade in conventional arms; and
• Prevent and eradicate the illicit trade in conventional arms and prevent their diversion.[24]

The ATT has 110 states parties.[25]

Canada’s implementing legislation added new section 7.3(1) to the Export and Import Permits Act, setting out requirements the Minister of Foreign Affairs must consider when deciding whether to issue an export permit “in respect of arms, ammunition, implements or munitions of war.”[26] These criteria, which are aligned with the assessment criteria in the ATT, are whether the goods or technology in a permit application:

• a) would contribute to peace and security or undermine it; and
• b) could be used to commit or facilitate
  • 1) a serious violation of international humanitarian law,
  • 2) a serious violation of international human rights law,
  • 3) an act constituting an offence under international conventions or protocols relating to terrorism to which Canada is a party,
  • 4) an act constituting an offence under international conventions or protocols relating to trans national organized crime to which Canada is a party, or
  • 5) serious acts of gender-based violence or serious acts of violence against women and children.[27]

Canada’s implementing legislation also added section 7.4 to the statute, requiring that the minister not issue a permit if, “after considering available mitigating measures, he or she determines that there is a substantial risk that the export or the brokering of the goods or technology specified in the application for the permit would result in any of the negative consequences referred to in subsection 7.3(1).”[28]

Global Affairs Canada officials described how the assessment criteria are applied. Military and strategic items heading to “low-risk” destinations—e.g., like-minded countries that participate in the same multilateral export control regimes as Canada—are assessed against the risk criteria and can be issued “at the officials level.” When there are concerns or the destination is not deemed “low-risk,”[29] the application is sent for consultations involving experts within Global Affairs Canada and its missions abroad, the Department of National Defence, “and, as necessary, other government departments and agencies.” If no concerns are raised through those consultations, and following “additional management approvals,” the permit application is submitted to the Minister of Foreign Affairs “in a weekly report for his review and consideration.”[30] If, on the other hand, concerns are raised,

the application will be sent to an interdepartmental committee of senior officials for review. If the committee recommends issuing the permit, the application is sent to the minister for his final review and approval. If there is no consensus, or if the committee of experts recommends denial of the permit, the application is submitted to the minister for his final decision.[31]

The minister is also empowered “to suspend, amend or cancel any issued permits in light of any evidence that the items exported are being or will be used in a manner that is not aligned with Canada’s foreign policy, defence and security interests.”[32]

A System Under Strain

The Committee was informed that the Canadian defence and security industry employs roughly 60,000 people,[33] that more than 50% of its revenues derive from exports, and that the Canadian market is too small on its own to sustain it.[34] In addition to outlining the industry’s importance to Canada’s economy and its defence industrial base, industry representatives all highlighted concerns about the permitting system’s transparency, timeliness, and predictability. The Committee heard that the department’s own service standards for reviewing Group 2 (military) items are not being met, even for low-risk destinations. According to Christyn Cianfarani, President and Chief Executive Officer, Canadian Association of Defence and Security Industries,

[w]e estimate that these delays and uncertainties have cost our members hundreds of millions of dollars in lost contracts and business opportunities. Furthermore, industry's inability to tell its customers, typically other nation states, when they will receive their goods is damaging Canada's reputation as a reliable trading and security partner.[35]

In addition to lengthy processing times, Mike Mueller, Interim President and Chief Executive Officer, Aerospace Industries Association of Canada, suggested there is a lack of clarity regarding the Government of Canada’s risk parameters. Exporters, he said, “are looking for some assurances of where they can and cannot export.”[36] That sentiment was echoed by Mark Agnew, Vice-President, Policy and International, Canadian Chamber of Commerce, who suggested that, “Communicating earlier regarding a particular export and destination country would be very beneficial and allow companies to focus on the contracts that are most likely to have government support.” Such a system, he proposed, could be supplemented by written guidance that would help exporters “in evaluating potential bids, including not only understanding how rules are applied on a country basis but also how assessment criteria are being applied during the evaluation process so that companies can know what considerations they need to proactively address.”[37] Mr. Mueller also suggested that industry wants to see “a system that offers businesses more detailed information in terms of the progression of the application.”[38]

An Elusive Balance

These “systemic” issues,[39] as described by industry, may reflect—in part—the complexities involved in assessing and mitigating risk. According to government officials, their role involves a balancing of Canada’s foreign policy interests. Bruce Christie, Associate Assistant Deputy Minister, Trade Policy and Negotiations, Global Affairs Canada, commented that Canada’s “export controls are not meant to unnecessarily hinder international trade but rather to ensure that controlled items are exported in a manner that is consistent with our values and interests.”[40] Nevertheless, Mr. Christie also noted that the “introduction of a more rigorous assessment framework,” as part of Canada’s accession to the ATT in 2019, has led to delays in the processing of permit applications. He observed:

These delays have been noticed by industry, which has been very vocal in expressing its desire for a more transparent, timely and predictable system. We are now considering how we can streamline our assessment process while maintaining the level of rigour that is required under the law and that Canadians have come to expect.[41]

Mr. Christie subsequently acknowledged that it “has become increasingly challenging for us to balance Canadian export interests in military goods and technologies, as well as continuing to apply a rigorous risk-assessment framework using the criteria laid out in the Arms Trade Treaty […].”[42]

Michael Byers, Professor, Department of Political Science, University of British Columbia, suggested that this balancing act is made all the more difficult by a structural problem related to Global Affairs Canada’s mandate. He observed that the department has been given responsibility for “those two important tasks—promoting arms exports, and protecting human rights and international peace and security.” Consequently, in his view, “they end up making decisions that don’t fulfill either task fully, and they fail, in particular, as far as my main concern goes in the fulsome application of the Arms Trade Treaty.”[43]

Others do not see the balancing of these competing goals as the government’s primary responsibility. Peggy Mason, former Ambassador and President, Rideau Institute on International Affairs, argued that, while Canada does not have “an international legal obligation to export arms,” it does have “an international legal obligation to export those arms in accordance with the obligations under the Arms Trade Treaty.”[44] She also said that those obligations “have to be applied fully in respect of all prospective recipient countries.”[45] Referencing section 7.4 of the Export and Import Permits Act, which stipulates that the Minister shall not issue a permit where there is a “substantial risk” of certain negative consequences that cannot be mitigated, Ms. Mason later reiterated to the Committee in writing that,

other considerations, such as the broader impact on a trading relationship of a decision to refuse an export permit, are not relevant to the assessment of substantial risk. And if a substantial risk is found that cannot be satisfactorily mitigated, then the permit shall be denied whatever the trade implications.[46]

Assessing Substantial Risk: Canada’s Export Permits to Turkey

A Narrow Conception of Risk

In addition to the comments that were made about the overall operation and orientation of Canada’s system for controlling the export of military goods and technology, witnesses considered the risk assessment that appears to have informed decision-making in the case of export permits to Turkey. As will be outlined below, some testimony the Committee heard suggested that the larger regional context in which Turkey is a key diplomatic and military actor—and the volatility created by that region’s many active and unresolved conflicts—should have received greater consideration, including with respect to Turkey’s increasingly assertive foreign policy.

The documents provided to the Committee suggest that Global Affairs Canada officials—when providing advice to the minister on export permit applications for Turkey—attached importance to Canada’s relationship with Turkey, both bilaterally and in the NATO context, and to the situation in Syria. On the latter issue, different conclusions were reached about Turkey’s role and behaviour in different phases of the Syria conflict. While Turkey’s incursion against Kurdish forces in northeastern Syria was seen as a destabilizing move and led to the October 2019 decision to suspend all new export permits for controlled goods,[47] Turkey’s military operation against Russian- and Assad regime-backed forces in Idlib—northwestern Syria—months later was seen as supporting Turkey’s legitimate security concerns and helping to forestall a humanitarian crisis.

The 2 September 2020 memorandum for action is the first instance where Turkey’s role in situations beyond its own borders and the Syria conflict is detailed.[48] Global Affairs Canada noted that, since the minister’s approval—as recommended—of the Wescam permits for Turkey in May 2020,[49]

Turkey has continued its military engagement in Syria, Iraq and Libya. It also took a strong public stance in favour of Azerbaijan during the recent fighting with Armenia, and adopted a confrontational approach on eastern Mediterranean drilling (with drones escorting drilling vessels) that has fueled tensions with Egypt, France and Greece—all of which could increase the risk of the drones being used in conflict.[50]

Nevertheless, Global Affairs Canada indicated to Minister Champagne that there had been “no indications” that Turkey had violated the assurances it provided to the minister regarding the terms of the arms exports already approved. Those were conveyed during Minister Champagne’s 13 April 2020 call with Turkey’s Minister of Foreign Affairs, who “provided assurances that these items would be used and are required for Turkey’s defensive activities in Idlib.”[51] Global Affairs Canada recommended that another redacted number of applications be approved.[52]

Reflecting on what transpired, Professor Michael Byers observed that officials are “looking at circumstances in a very narrow temporal and geographic scope.” He continued:

A narrow sliver of northern Syria is the focus of granting an exemption to a suspension of licences when these drones could operate for half a day, and can fly thousands of kilometres. A drone that's on a mission protecting civilians in northern Syria might then be diverted by the operators to fulfill a different mission just 100 kilometres away in northern Iraq. They are looking at narrow geographic and temporal scope; thinking about these drones, and their operations, and these targeting systems in terms of a month, or maybe a year; and not realizing that the operators or the assistants will be operating them for a decade or more.[53]

A NATO Partner and a Unilateral Actor

Turkey was described by Global Affairs Canada as “an important bilateral and strategic partner of Canada and … a valued NATO partner.”[54] Others saw a more nuanced picture. Reflecting on Turkey’s military posture, Chris Kilford—who served in the Canadian Armed Forces for 36 years and spent three years as Canadian defence attaché to Turkey with cross-accreditation to Azerbaijan—said he could not think “of any armed forces anywhere in the world that is currently involved in so many armed conflicts, either directly or indirectly, other than Russia.”[55] Christian Leuprecht, Professor, Department of Political Science, Royal Military College of Canada, observed that “Turkey is undertaking a revisionist and hegemonic foreign policy which, at some times, coincides with our interests and NATO’s interests, but, at other times, does the opposite.” He added that “Turkey often acts in a much more sovereign and unilateral fashion than most other NATO member countries.”[56]

James Fergusson, Professor, Centre for Defence and Security Studies, Department of Political Studies, University of Manitoba, suggested that there have been concerns for several years about Turkey on the part of NATO allies and European Union countries. According to Professor Fergusson:

The difficulty for all concerned is Turkey’s status as a key geostrategic member of the alliance, the implications of coordinated allied military and dual-use export controls on Turkish membership, and in particular its importance relative to NATO deterrence activities on the southern flank and in the Black Sea. It also has implications for peace and stability in south Europe and the Aegean Sea.[57]

The challenge where Turkey is concerned, according to Professor Fergusson, is the “clash” between the legal in-area commitments of NATO allies, such as the article 3 requirement in NATO’s foundational treaty regarding mutual aid and maintenance of allied capacity to resist armed attack, and out-of-area interests that are national in nature. In that regard, he observed, “Turkey has distinctly different interests in the Middle East that are not entirely shared by the rest of the alliance.”[58]

A Missed Warning Sign from Libya?

From the perspective of Project Ploughshares, the risks involved with arms exports to Turkey should have been apparent, particularly in light of Turkey’s involvement in Libya. Kelsey Gallagher, Researcher, Project Ploughshares, drew the Committee’s attention to the December 2019 report of the United Nations Panel of Experts on Libya. In its summary of that conflict, which covers events from 5 September 2018 to 20 October 2019, the panel found that “Jordan, Turkey and the United Arab Emirates routinely and sometimes blatantly supplied weapons, employing little effort to disguise the source.”[59] The Bayraktar TB2 is listed as one of the unmanned combat aerial vehicles (UCAVs) used in Libya.[60] The panel indicated that it had written to Turkey and Libya’s Government of National Accord “requesting further information regarding the transfer to Libya of Bayraktar TB2 UCAVs in non-compliance with paragraph 9 of resolution 1970 (2011), but received no response.”[61] The paragraph in question pertains to the arms embargo on Libya, requiring all UN member states to prevent the direct or indirect supply of arms and related material to Libya.[62] Referring to the Panel of Experts report, Mr. Gallagher asserted that the Bayraktar TB2 “is invariably equipped with Canadian-made Wescam sensors.” He believes “[t]hese findings alone should have made clear the substantial risk associated with these arms exports.”[63]

The Government of Canada’s April 2021 report on export permits to Turkey describes the UN Panel of Experts report as “possessing a high degree of credibility.” Turkey and Libya’s Government of National Accord reached a security and military cooperation agreement on 27 November 2019. The government’s report notes that,

[t]he Panel of Experts identified numerous instances in which Turkey supplied Bayraktar TB2 UAVs to the GNA during the period between May and December 2019, prior to Turkey’s military intervention. The report noted that by November 2019, Turkey supplied at least 13 Bayraktar TB2 UAVs to the GNA, but likely more. Open-source assessments suggest that Turkey was likely operating the UAVs for the GNA, given the complexity of the system. However, the Panel of Experts’ report does not provide sufficient evidence to determine whether UAVs supplied to the GNA during this period were equipped with Wescam sensors.[64]

Nevertheless, another section of the same report observes that “Canadian sensors are listed as the exclusive sensor technology for Baykar’s UAVs as per its catalogue.”[65]

Among the concerns the Committee heard about Canada’s risk assessment system is that it is reactive,[66] and overly focused on direct evidence of use[67] rather than the “prospect” of risk.[68] The Government of Canada’s April 2021 report indicates that Minister Champagne was informed in early October 2020 “of reports that Turkish-made Bayraktar TB2 UAVs—most likely equipped with Canadian sensors—may have been used in combat operations in Nagorno-Karabakh, Libya and linked to alleged violations of international humanitarian law in Syria.”[69] Mr. Christie told the Committee that, while the government’s review determined that “there may have been credible evidence” that the Canadian sensors integrated in Turkish UAVs were used in Libya, “prior to that we had no evidence that any Canadian military exports, or any technology exports, were being used for offensive purposes in Libya or in violation of our Arms Trade Treaty criteria.”[70]

Professor Michael Byers believes that, “Even though the government did not have proof that Wescam equipment was being used in Libya, there was certainly, within the expert community, no doubt whatsoever that we were implicated there.” In his view, “That should have been enough to stop the issuing of further arms export permits to Turkey.”[71]

A Conflict Thought to be Frozen

When monitoring conflict dynamics, an incident or development that can be later understood as one of the rungs of an escalatory ladder may appear, at the time it is being analyzed, as not having changed a situation in its fundamentals. On the other hand, connections between incidents and actors can be missed, as can the addition of more combustible elements.

Mr. Christie described the Nagorno-Karabakh conflict from Global Affairs Canada’s perspective as having been largely “dormant” before the fighting “erupted rather quickly” on 25 September 2020.[72] Sandra McCardell, Assistant Deputy Minister, Europe, Arctic, Middle East and Maghreb, Global Affairs Canada, characterized the July 2020 border clashes between Armenian and Azerbaijani forces as taking place “against a backdrop of rising and falling tensions between Armenia and Azerbaijan over the Nagorno-Karabakh region, which have lasted for many years.” She told the Committee that, while the “flare-up” in July 2020 was concerning, it “did not at that time appear to be taking on what we would see down the road, a few months later, as a very significant outbreak of violence and conflict between the two sides.”[73]

Other testimony emphasized the unsettled nature of the Nagorno-Karabakh conflict, alongside Turkey’s known and growing support for Azerbaijan. Christopher Waters, Professor, Faculty of Law, University of Windsor, who has worked in and on the South Caucasus since 1998, observed that the Nagorno-Karabakh conflict was “never frozen.” In his assessment,

[i]t was a simmering one that frequently boiled over, and, in most years, left scores of casualties. It was also a conflict with long-standing Turkish support for Azerbaijan. The Turkish state has proven itself intransigent in terms of any real desire to repair the relationship with Armenia, and meanwhile, the relationship with Azerbaijan has only been strengthened in recent years for cultural and strategic reasons. Turkey trains officers of the Azeri armed forces; it supplies weapons to Azerbaijan and it holds military joint exercises with Azerbaijan.[74]

Turkey’s arms sales to Azerbaijan, Professor Waters later noted, “increased sixfold the year prior to the conflict.”[75]

The complexity of the risk factors involved in this situation—described as a “tinderbox” by Professor Waters—were apparent in his responses to questions about how the trends and indicators mentioned above should have been interpreted. Professor Waters acknowledged “there have been so many flare-ups of that conflict over time that … it was difficult to say that this was going to be the one where Azerbaijan would make its major offensive.”[76] Nevertheless, he also expressed his view that “any deep reading of the intelligence would have revealed—including because of Azeri arms sales and joint exercises—that there was a build-up of forces and that Turkey was behind this.”[77] Bessma Momani, Professor, University of Waterloo, noted Azerbaijan’s acquisition of modern weapon systems over the 10 to 15-year period preceding the conflict, which was enabled by the country’s oil wealth. “Those who are watching the region thought that indeed they were going to try to take back this region,” she said.[78]

Reflecting on the role that Turkey played, Pierre Jolicoeur, Professor, Department of Political Science, Royal Military College of Canada, commented that, while Turkey has long been Azerbaijan’s ally, its support was more limited in the past, including its involvement in organizing an embargo around Armenia in the early 1990s. According to Professor Jolicoeur, the new factor in the 2020 iteration of the Nagorno-Karabakh conflict was Turkey’s “more intense involvement.”[79]

As was noted earlier, the Government of Canada relies on expertise and intelligence from Global Affairs Canada and its network abroad as well as other government departments when assessing risk. However, witnesses noted that Canada does not have a diplomatic presence on the ground in the South Caucasus. The Canadian embassy in Moscow, Russia is responsible for Armenia, and the Canadian embassy in Ankara, Turkey for Azerbaijan. Professor Leuprecht argued that, “if we're going to engage in these types of exports into high-risk areas and regions, we need to make sure that we also have our own representation on the ground.”[80] In the view of Professor Waters, “the absence of local intelligence should make us even more vigilant in assessing regional partnerships and the likelihood of armed sales or transfers.”[81]

The testimony of some witnesses suggested that the export of military goods and technology to countries connected to such complex regions of the world should be subject to a careful risk assessment, or even treated with something akin to the precautionary principle. Professor Byers remarked that, given the high stakes involved in the Caucasus and the Middle East, “perhaps our first goal should be to avoid adding fuel to the fire.”[82]

While keeping in mind that every conflict situation is very complex, having a Canadian diplomatic presence on the ground makes it easier to collect information, giving a more complete picture of what is happening. In the case of the Nagorno-Karabakh conflict, the Committee notes that Canada has no diplomatic presence in the region, in either Yerevan or Baku, despite the government’s commitment to engage in the region, and that this could have affected the quality of information available for properly assessing the situation on the ground.

A Game-Changing Capability

Testimony suggested that advanced drone technology inherently involves risks. Professor Momani sees drones as being a “game-changer” in modern warfare.[83] Drones can, she observed, be used “to effectively mimic what air power can do at a fraction of the cost.”[84]

While the Government of Canada relied on assurances that the targeting and acquisition systems being exported by a Canadian company for incorporation on Turkish-made drones would be used for defensive purposes, Professor Leuprecht indicated that assessing drone technology “is highly challenging because it can be dual use for surveillance and humanitarian purposes, or for conflict purposes.” In his view, “That’s why the maximum strategic assessment is absolutely essential.”[85]

Testimony also suggested that, given their range and targeting capabilities, the Bayraktar TB2 drones that Turkey provided to Azerbaijan had an impact on the conflict over Nagorno-Karabakh. Chris Kilford described the drones as follows:

The Bayraktar TB2 drones can loiter overhead for up to 25 hours. They have surveillance capabilities on board, but they also have four weapons hard points. That means that once they identify a target, they can also launch a rocket or a missile against that target. It’s a total package.[86]

In Professor Leuprecht’s view, it is incumbent on the system to be asking “harder questions about the export of technology that might have those sorts of implications and that run counter to Canadian and NATO interests.”[87]

The Committee’s View

Canada’s current system of export controls for military goods and technology seems to be occupying a middle ground where it is seen by civil society as being too permissive[88] and by industry as too cumbersome. Both perspectives appear to be found in the case of export permits to Turkey, where a lengthy assessment process within government was involved, but the technology in question—the Wescam sensors—was still approved for export despite the risk factors detailed above by the Committee’s witnesses.

Different options were put forward to the Committee for how the system could be both strengthened and made more transparent and efficient. These can be summarized as follows:

• Pursuit of meaningful and regular consultations and engagement with civil society and industry representatives;
• Enhancements to the clarity and predictability of the permitting and risk assessment systems that could help industry to avoid unrealistic or problematic endeavours;[89]
• Investment of greater diplomatic and expert resources toward ensuring a deeper understanding within government of the countries and regions affected by—as well as the military goods and technologies implicated in—Canada’s arms export policy; and
• Ministerial instruction to government departments that Canada’s obligations under international law should be the foremost consideration driving decision-making on the approval of permit applications,[90] and that those obligations should be applied universally and unconditionally.[91]

Specific proposals were also brought forward to address the many—and, according to some, conflicting—roles that have been given to Global Affairs Canada. As noted, the department is tasked both with advancing Canada’s commercial and diplomatic interests and with imposing restrictions on the export of military goods and technology through the assessment of risk.[92]

Project Ploughshares wants to see ongoing parliamentary scrutiny through “the establishment of a subcommittee to monitor compliance with arms export controls.”[93] Referring to the parliamentary notifications that are required in the Netherlands,[94] Jean‑Christophe Boucher, Assistant Professor, University of Calgary, suggested that Canada could establish “a list of countries where there needs to be an extra level of authorization and notification to Parliament that we are exporting weapons to these countries.” In his opinion, such a practice would enhance transparency.[95] In contrast to the reporting that is done in the Netherlands, Professor Boucher said that the annual report produced by Global Affairs Canada “does not really allow for an exhaustive analysis of what is being sold and where it is being sold.”[96]

Peggy Mason is calling “for an independent expert agency to impartially administer our arms exports in full accordance with Canadian and international law.”[97] Doing so, Ms. Mason acknowledged, would be “groundbreaking” on Canada’s part.[98] In the interim, she is advocating for consultations to be held “on the creation of an arm’s-length advisory panel of experts,” which was announced by the Government of Canada in April 2020,[99] and for the mandating of “an independent expert legal opinion on compliance with Canada’s international legal obligations as an integral part of the current global affairs export permit application process.”[100] Christyn Cianfarani provided a different perspective, seeing in the absence of other national models of an arms-length agency or panel an indication “that goods and services of this nature are instruments of foreign policy and fall under the consideration of governments themselves.” In her view, “The government cannot shift its legal responsibility for permit approvals to some external body.”[101]

The Committee endorses the need for greater transparency and predictability in relation to Canada’s arms export policy, including with respect to the application of the risk assessment parameters that underpin it. The Committee recognizes the importance of Canada’s defence export industry to its defence industrial base and innovative capacity. Nevertheless, the Committee also believes that exports involving volatile regions of the world and emerging military technologies should be approached with a default toward hesitance, without the need for there to be incontrovertible—or overwhelming—evidence of misuse. There is, in other words, no balancing in the Committee’s mind between commercial and diplomatic interests and the assessment of risk, as determined by the legal obligations Canada has undertaken. While Canada’s commercial interests should rightly be promoted abroad, in any instances of conflict between those interests and the probability of risk, the course of action dictated by the risk assessment must prevail.

The Committee is not prepared, at this time, to recommend the creation of a new, independent agency given the likely time and costs involved, the potential for another agency to replicate some of the same concerns identified in this report, and the fundamental connection between export controls and Canada’s international relations. While the Committee is of the view that the resources devoted to the management of Canada’s arms export policy should be enhanced through regularized consultations with industry and independent experts, it is also mindful that the responsibility for upholding Canada’s obligations and interests, and the intelligence necessary to inform decision-making, are found within the governmental system.

The Committee believes that, first, a strengthened and more transparent risk assessment process should be put in place, given time to work, and evaluated. While it believes that Parliament has an important and continuing role to play in that regard, the Committee reiterates to the Government of Canada that parliamentary scrutiny of these matters requires full access to the information the Committee needs—when requested—to conduct its work, in keeping with the rights and privileges of parliamentary committees.

Recommendation 1

That the foremost consideration informing the Government of Canada’s arms export policy, including the assessment of risk, should be Canada’s domestic and international legal obligations, and that those obligations should be applied universally and consistently in all decisions about permit applications.

Recommendation 2

That the Government of Canada ensure that it has access to all necessary expertise, knowledge and information, including diplomatic, in relation to all countries, regions, and military goods, technologies, systems and subsystems implicated by export permit applications that are under review. In any cases where such information, knowledge or expertise does not exist, export permits should not proceed.

Recommendation 3

That the Government of Canada pursue regular and meaningful consultations with industry, civil society and independent experts regarding Canada’s arms export policy.

Recommendation 4

That, in any cases where civil society and independent experts have raised credible concerns about the misuse of Canadian technology with respect to the arms export permits regime, the Government of Canada take immediate action to understand and investigate those concerns. Should an investigation reveal that there is substantial risk that such an export permit is not compliant with domestic and international legal obligations, that – as in the case at hand – the permit be suspended and/or cancelled.

Recommendation 5

That the Government of Canada implement a system that would allow companies seeking permits for the export of military goods and technology to know the status of their application.

Recommendation 6

That the Government of Canada explore the most effective means of clarifying the destinations and military goods and technology that are typically considered to be low-risk, and those that are typically considered to be higher risk and therefore likely to involve a lengthy review process within government and/or a high likelihood of permit denial.

Diversion

As with risk assessment, the Committee heard different perspectives on the issue of diversion, which the ATT does not define but calls on states parties to prevent.[102] According to Global Affairs Canada, the Export and Import Permits Act “is intended to regulate the movement of controlled goods and technology from Canada.” The department explained that it “does not have the legal authority to control the re-export of Canadian-made strategic goods and technology from one foreign country to another foreign country,” but that it does have the authority to request assurances from consignees “that the controlled good or technology will not be ‘re-exported’ to a foreign country.”[103]

Canada has imposed requirements on permit applicants in relation to end-use assurances through policy[104] and regulation.[105] The Export and Import Permits Act prohibits diversion in relation to Canada’s Area Control List and Automatic Firearms Country Control List,[106] the transfer of permits to unauthorized persons,[107] and the submission—knowingly—of false or misleading information, or misrepresentations, in permit applications.[108] However, the broader risk of diversion on the part of end-users is not included explicitly in the Act’s risk assessment criteria for permit applications.[109]

The Meaning and Consequences of Diversion in the Case of Export Permits to Turkey

Some witnesses argued that the UN panel of expert’s 2019 report on Libya should have served as a warning sign of the risk of diversion involving permits to Turkey. Kelsey Gallagher suggested that, after witnessing Turkey’s “brazen behaviour in Libya, it should have come as no surprise to Global Affairs Canada that the same Canadian weapons would also be found illicitly fuelling the war in Nagorno-Karabakh.” He characterized “Turkey's provision of Wescam sensors to its allies” as a “textbook example of diversion, which is the illicit transfer of weapons systems to unauthorized users.”[110]

In the documents provided to the Committee, Global Affairs Canada officials confirmed that, “None of the permits issued to Wescam for items destined to Turkey from January 1, 2016 to September 27, 2020 indicate an end use in Libya, Azerbaijan or Armenia.”[111] Bruce Christie told the Committee that, further to the end-user and end-use assurances that were attached to the permit applications, officials “have been engaged with [their] Turkish counterparts to confirm that the Canadian sensors or cameras that were being exported to Turkey were being used for defensive and humanitarian purposes, but were not being used in the Nagorno-Karabakh conflict.”[112] Turkey did not provide any information to assist with that determination.[113]

The Canadian government’s April 2021 report on export permits to Turkey stated that the “department is not in a position to confirm the diversion of Canadian military goods and technology exported to Turkey,” but that “the Turkish Government’s actions could be interpreted as being inconsistent with end-use assurances provided to the Government of Canada in March 2020.” The end-use assurances in question, the report clarified, were letters from the Vice President of Turkey’s Presidency of Defense Industries that contained “assurances that Wescam’s sensors ‘are not diverted, re‑exported or transferred to any third party for any reason’.”[114]

Regarding the actions of the Turkish company, Baykar, the Government of Canada’s report concluded that, “based on the information available to the department, Baykar has not violated any of its end-use assurances.”[115] That conclusion is based on two factors: that the company was the official “consignee”[116] of the Wescam sensors and incorporated those sensors into a finished product—the TB2 UAVs—for use by other customers. The report suggests that direct responsibility for delivering the TB2s to the Azerbaijani Armed Forces rests with the Turkish Armed Forces and not with the consignee—i.e., the company Baykar. The report asserts that “Baykar cannot be held accountable for the actions of the Turkish Government in relation to Nagorno-Karabakh, Syria, Libya or elsewhere.” The report observes that Baykar did not divert Wescam sensors—as imported—to an unauthorized destination or end-user; the company incorporated the sensors into its TB2 UAVs, “precisely as indicated by Baykar.” According to the department, following that process, the TB2 is considered “a new good.”[117] Furthermore, Global Affairs Canada states that, because Canada does not export complete UAV systems to Turkey, “the continued export of Canadian sensors for use on UAVs is not inconsistent with Article 11 of the ATT” (on the prevention of diversion).[118]

According to Kelsey Gallagher, the department’s explanation,

could certainly be viewed as a loophole. We see this with other Canadian products, namely Pratt & Whitney Canada engines. The end-user is viewed as the company that's putting it into an airplane; therefore, the end-user would be viewed as Switzerland, which has a stellar human rights record. That plane is then turned around and provided to a serial human rights abuser.[119]

In Mr. Gallagher’s view, this is an issue “that should be addressed.”[120]

Professor Byers is of the opinion that the government’s conclusions on diversion in this case are an example of how the legislation is being interpreted “very narrowly.” He said,

they're telling you that there is not a diversion when we're talking about these Wescam targeting systems for drones, because they regard the Wescam targeting system as simply a component and not the weapon system itself. That's a very narrow interpretation when, in fact, the targeting system is the eyes of the machine. It is the central component in making these drones operative and effective, but they are trying to tell you that, no, they're not actually the weapon system. They are just a part like a widget on a larger machine.[121]

Beyond the permits that were cancelled in April 2021, Global Affairs Canada has determined there is no “substantial risk” that the export of Canadian military goods and technology to Turkey will violate the Arms Trade Treaty provisions that have been incorporated in the Export and Import Permits Act. The report states:

Although there are concerns and risks related to certain aspects of Turkey’s assertive foreign policy, the assessment and decision-making process for pending and future Group 2 permit applications destined to Turkey should continue on a case-by-case basis, as outlined in the April 2020 Notice to Exporters.[122]

Minister Garneau’s announcement of his decision to cancel the relevant permits to Turkey also indicated that a dialogue will be initiated “to build mutual confidence and greater cooperation on export permits to ensure consistency with end-use assurances before any further permits for military goods and technology (Group 2) are issued.”[123]

Post-shipment Verification

Kelsey Gallagher told the Committee that Canada’s export control regime could be strengthened by the addition of a post-shipment verification process, pointing to Germany and Switzerland as potential models.[124]

A reference document provided to the Committee by the Stockholm International Peace Research Institute (SIPRI) elaborates on several existing post-shipment verification processes, including those developed by the United States and Switzerland. Most of the guidelines that have been developed internationally, SIPRI notes, “emphasize the fact that on-site inspections must be agreed on by both the exporting state and the importing state or end user, and specify that they should be used to inform future export licensing decisions.”[125] The SIPRI document also observes that only a few exporting countries “have developed and implemented comprehensive post-shipment measures that include the possibility of conducting on-site inspections,” and attributes their limited adoption to “issues related to national sovereignty, jurisdiction, and trust among exporters and importers.”[126]

On the role industry could play in a post-shipment verification process, Yan Cimon, Professor of Strategy, Université Laval, cautioned the Committee about the complexity of having one company “go beyond the other company's boundaries,” and even more so when the product is in the hands of government agencies. He observed that service contracts are one way to introduce some supervision of end uses after shipments have been made.[127]

The Committee’s View

The Committee believes that what transpired with the Canadian sensors exported for use on Turkish drones suggests the need for improvements in how Canada’s end-use assurances are managed and conceived. The Committee’s conclusion is based on its understanding that Canada did not intend—and indeed, would not have authorized—the sensors in question to end up on the battlefields of Libya and Nagorno-Karabakh.

The Committee is also of the view that, notwithstanding the complexities and sensitivities involved,[128] some form of post-shipment verification system could increase public confidence in Canada’s arms export control regime, particularly in cases where concerns have been raised about a recipient’s human rights record or foreign policy orientation. That is particularly so if Canada is going to continue to be a significant exporter of military goods and technology and one that exports to destinations beyond its closest allies. Canada, when designing such a verification system, could look to Germany, Switzerland and the United States for inspiration, as well as to a reference document provided to the Committee by the Stockholm International Peace Research Institute. Such a system could also provide valuable information as part of the government’s ongoing assessment of risks, enabling a more proactive approach.

Recommendation 7

That the Government of Canada examine how stricter controls could be included in the end-use assurance documents attached to components and subsystems that are exported from Canada and later incorporated in finished military products and systems, with the goal of preventing transfers to any high-risk destinations without prior approval from Canada.

Recommendation 8

That the Government of Canada explore options for an effective and feasible post-shipment verification system that could be applied to military goods and technology being exported to destinations not determined to be low-risk. Prioritization could reflect the volume and type of military goods and technology being exported to such destinations, and any diversion concerns that have been identified.