A 1950s-vintage military jet engine sent to the USA for overhaul is impounded by Customs. A US company is barred from supplying its subsidiary with hardware for a civilian earth observation satellite. Delivery of US-built turboprop aircraft for a privately operated training programme is held up pending an export licence.
What do these events have in common? They are the illogical consequences of recent changes in US export controls which have ended years of defence industrial co-operation with Canada.
The tightening of International Trade in Arms Regulations (ITARs) to prevent US technology falling into Chinese hands has had the unfortunate effect of severing a special relationship Canada's industry has enjoyed since the 1950s, when it was made a virtual extension of its US counterpart.
Since that time, Canadian firms - many of them subsidiaries of US companies - have enjoyed unrestricted access to US technology and the US marketplace under agreements which created a single North American defence industrial base. Last year, according to industry ministry estimates, Canadian firms exported almost C$1 billion in defence equipment to the USA, making it by far the biggest market for the country's admittedly small defence industry.
Earlier this year, that cosy situation changed dramatically, when Congress forced changes to US export controls intended to prevent technology being transferred to China illegally or inadvertently. Canada lost its special status. Now US firms need an export licence to transfer technical data to Canadian companies, even their own subsidiaries.
That is how an aged British-built engine for a Bolivian air force Lockheed T-33 being upgraded in Canada came to be impounded by US Customs, how Orbital Sciences came to be barred from supplying its Canadian subsidiary with the spacecraft for the country's Radarsat-2 and how Raytheon came to need a licence to deliver T-6 Texan trainers for Bombardier's NATO Flying Training in Canada programme.
The potentially devastating effect of the new US export controls was the talking point at the Aerospace North America show in Vancouver last week. Frustrated by licence delays and denials, the Canadian Government announced plans to buy both the Radarsat-2 spacecraft and launch from Europe.
This is likely to intensify opposition to the new export controls across the border, where US industry has been fighting the changes because it fears that obtaining a licence will take too long, and impatient customers will turn to European suppliers. US manufacturers have already lost over $500 million in business, because of cancelled or stalled commercial satellite sales and launches, and could lose up to $8 billion over the next five years, industry associations estimate.
Firms on both sides of the border accept that national security is the legitimate concern of the US Government, and most seem prepared to live with the tighter export controls if they are applied fairly and managed efficiently. US officials visiting Vancouver were forced to defend the changes vigorously against charges of protectionism, but US industry's efforts to prevent the new rules harming competition would seem to suggest that it stands to lose as much, if not far more, if they become a barrier to trade.
While the tighter export controls are targeted at China, the revised ITARs will make doing business with the USA more difficult not only for Canadian industry, but for those in other NATO nations which previously enjoyed access to US technology and markets. Most will have to bring their export controls in line with the USA's, as Canada is doing. But some of the USA's restrictions may be hard to live with, as Canada is finding.
In the age of coalition warfare, it seems illogical and ill-considered that the USA should erect barriers to the transfer of technology and skills that will help its allies ensure the interoperability of their forces when they are called upon to help the USA police the world's trouble spots. The answer is a multi-lateral framework for export controls within which all barriers to free trade can be removed. But that requires logical thinking.
Source: Flight International
