Thank you very much for inviting me to share our views on Canada's export control system.

We presently represent over 400 Canadian firms—over the last five years, we have represented, at times, nearly 1,000 firms—that produce technologies and services for the Canadian Armed Forces and authorized foreign customers.

First off, CADSI does not advocate on behalf of individual companies, their defence procurements or their export permits, and we are not privy to the details of company-specific business pursuits. I am not able to comment on any specific transactions. I'm here to give you an industry-wide view on Canada's export control system.

Accounting for over 50% of industry revenues, exports are critical to our industry. The Canadian market is too small to sustain it, and our firms produce products that are sought around the world. For these reasons, our companies need a timely, efficient, consistent and predictable export control system with clear rules.

Unfortunately, in recent years, Canada's export control system has not met these considerations. It's now a competitive disadvantage for an industry selling into a fiercely competitive and export-intensive global market.

We believe that it is possible to have a timely, efficient, consistent and predictable export control system that also keeps Canadian-made defence products out of the hands of adversaries or regimes that use these exports to abuse human rights. We used to have such a system, and we need to get it back on track.

The export permit is the last step in a long business process. The government needs to provide companies with more information and transparency upfront as to the countries and end-users it considers high risk. We need to know where there's a low probability of export permit approval.

I shared this very message when I spoke before this committee in 2017, to express industry's support for Bill C-47 and Canada's accession to the United Nations Arms Trade Treaty. Unfortunately, according to the annual report to Parliament on military exports, Global Affairs' record in meeting its own service standards for permit approvals has steadily declined since then.

In 2017, GAC met its standard for reviewing permits of group 2 items to Canada's closest partners 96% of the time. In 2019, this fell to just over 70%. GAC's own performance target is to meet the standard of 10 days for Canada's closest partners and 40 days for other destinations 90% of the time. There are examples of export permit applications that have languished in the department for more than 500 days without a decision.

We 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.

The inability to meet service standards is not attributable to Canada's accession to the UN ATT. The trend predates that. In addition, the new obligations of the UN ATT only apply to conventional weapons systems, of which Canada produces very few, nor has there been an increase in the number of defence export permit applications that could account for this problem. In fact, GAC received $13 million in budget 2017 to help implement the UN ATT.

This committee is looking at defence exports to Turkey. The 2019 temporary suspension of new export permits to this country is an example of the government's lack of transparency and poor communications with industry. The industry has been exporting to Turkey, a NATO ally, for decades. We learned of this suspension through the media, with no further information provided by the government until April 2020—six months later.

In addition, we were not told whether the suspension applied to all or some of the seven groups of controlled goods. We were not told whether it applied to all Turkish end-users or only those that posed a substantial risk, which is the legal test under the Export and Import Permits Act. Issuing a suspension is the government's prerogative, but there should also be an onus on government, the regulator, to explain exactly what those changes mean.

It's hard for companies to follow the rules when they're not told what the rules are or when the criteria are applied and not explained. I cannot emphasize how important government clarity and predictability are in this regard.

The last thing companies want is to be in violation of laws, regulations and export policies. It would be devastating to their reputations and their businesses. We need to return to a timely, efficient, consistent and predictable export control system with clear rules. Our industry depends upon it.

Thank you.

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