Published in The Ploughshares Monitor Volume 35 Issue 2 Summer 2014
In February the Export Controls Bureau of Foreign Affairs, Development and Trade Canada (DFATD) posted without notice its latest report on the export of military goods from Canada. The report reveals details of arms exports to all recipient countries except the United States for the calendar years 2010 and 2011. It breaks no new ground, adding nothing to reverse a decline in Canadian arms export reporting standards that began in 2003. Nor are there surprises in the nature and destination of the military shipments that the report documents. During the two-year period, the majority of Canada’s exported arms were shipped to NATO members and other allies. But, as was also revealed by previous reports, military equipment valued at tens of millions of dollars was exported to countries posing significant risks, including risks that the equipment will be used in hostilities or to perpetrate human rights violations. These sales were permitted despite the close control called for by Canadian export guidelines.
Following the pattern
DFATD reported that the value of exported military goods from Canada totaled $408.5-million in 2010 and $634.5-million in 2011. Neither figure includes military exports to the United States, the value of which is generally accepted to exceed the reported total. (Indeed, Project Ploughshares estimates that military exports to the United States typically are worth more than double the exports to all other states combined.) Because of a unique arrangement between Canada and the United States, military equipment sold to U.S. recipients does not require authorization through export permits. As a consequence, Canadian export control officials are unable to monitor or document U.S. shipments.
The 2011 military export total was the largest reported for several years, but neither the 2011 nor the 2010 totals should be seen as exceptional. Figure 1 illustrates the trend in the government-reported annual total for arms exports over a 34-year period (1978-2011). For comparative purposes, the annual totals have been adjusted for inflation based on 2011 dollars. Although there was significant variation in reported totals during the period, recent totals are close to the $537-million annual average for the period. The 2010 and 2011 totals were, respectively, below and above the mean by similar amounts. The 2011 figure represents a significant climb from values reported from 2005 to 2007, but it is not far from the norm over the longer term.
The largest recipients of Canadian arms exports for the period also followed an established pattern. The ranking of Table 1 shows that the latest reported Canadian military exports had relatively few customers. The top 10 (of 98) received almost three-quarters of the two-year total. Similarly, the largest portion of the total shipment value involved established allies. Half of the top 10 are NATO member states, including the top two—the United Kingdom and the Netherlands. One-quarter of all exports during the period were shipped to the UK.
Table 1: Largest reported* recipients of Canadian military goods during 2010 and 2011
Less typically, four of the top 10 were states in the Global South: Saudi Arabia, Malaysia, South Africa, and Singapore. None are new customers and all have received substantial arms shipments from Canada in the past. Saudi Arabia has been the largest reported recipient of Canadian military goods in many of the years since 1991. While it is too early to declare whether the number of non-traditional recipient states in the latest top ranking indicates a trend, it should be noted that the federal government is making efforts to boost sales to markets in the Global South (Epps 2013a).
During the two years covered by the latest report, Canada maintained a practice of exporting military goods to countries at war and to states whose governments have a persistent record of human rights violations, despite both conditions being subject to “close control” under Canada’s export control guidelines. Table 2 documents the recipient states in 2010 or 2011 that fall into one or both categories and where Canadian arms shipments totalled more than $1-million over the two years. This list of states is similar to that for the previous three-year reported period, 2007 to 2009, with Algeria and Egypt the only exceptions. Although Canada supplied military goods to both countries during the latest period, the value in each case dropped below the $1-million total. For most other recipients, the average annual value of Canadian arms exports increased from the equivalent average for the three-year period of the previous government report (see Epps 2011). Overall, the data of the latest report suggests that Canada has done little to tighten restrictions on arms sales to problematic states.
Table 2: Recipients subject to close control under Canadian guidelines*
The last four government reports have used the same methodology, effectively lowering the bar for Canadian transparency norms for military exports. Prior to 2003, Canada’s reports were annual and more timely (typically published within 15 months, often within 12, of the end of the reported calendar year). Each differentiated among weapon systems, support systems, and parts and included descriptive comments. Since 2003, export statistics have not met these standards.
Quite apart from omitting previously published data, recent reports have included information that misrepresents and obfuscates the record. In Table 5 of the 2010-11 report (Exports of Military Goods and Technology by Destination and Export Control List [ECL] Item), many figures are “double-counted” by repeating identical values across two or more ECL categories. The repetition occurs because, as the report explains, “a single export permit may be classified under several ECL Item numbers.” Rather than assign proportional values to each ECL category (as presumably was done in the past), the full value of the export is assigned to all applicable ECL categories.
So, for example, Table 2 of the report reveals that the total value of all ECL Group 2 (military goods) categories exported to New Zealand in 2010 was $5,325,847. Figures in Table 5 indicate that in the same year Canada exported goods valued at $3,286,833 in each of six Group 2 subcategories (2-2, 2-5, 2-6, 2-11, 2-21, and 2-22), worth a total of $19,720,998. When the value of goods reported for another seven Group 2 subcategories are included, the New Zealand Group 2 subcategory total of Table 5 is more than five times the reported Group 2 total of Table 2. For the majority of recipients listed in recent reports there is no correlation between the values reported in Tables 2 and 5. Most Table 5 statistics are, therefore, worthless and misleading for anyone who has not verified Table 5 values against those of Table 2.
Like earlier versions, the latest report suggests that there is little to gain from efforts to compare—let alone verify—data with other sources. It notes that “a meaningful comparison” of its data with information from other sources, notably Statistics Canada and the Canadian Commercial Corporation, is “extremely difficult.” Much of the difficulty lies in significant differences among the sources in how and when they report weapons exports. Still, it is possible to make useful comparisons in specific instances.
In principle, comparing two reports on the same topic generated by the same government department should be straightforward. Yet, although the report notes that “the internationally accepted standard for statistics on worldwide military trade is the … United Nations Register of Conventional Arms,” there are marked discrepancies between the data reported by DFATD to the UN Register and seemingly comparable data that DFATD also provided in recent export reports.
Perhaps the most telling example is found by comparing information about shipments of armoured vehicles to Saudi Arabia, as reported to the UN Register and in export reports. Figure 2 juxtaposes the two datasets for the 20-year period 1992 to 2011. There is generally a match in the volume and trends for the first decade. Since 2002 the connection has been less clear. Indeed, in some recent years there appears to be no correlation whatsoever.
In 2005, for instance, DFATD reported to the UN Register that 222 armoured vehicles were transferred by Canada to Saudi Arabia. Yet for the same calendar year DFATD reported the value of “ground vehicles and components” (the category in which armoured vehicles are placed) exported to Saudi Arabia as less than $1-million. (Canadian light armoured vehicles sold to Saudi Arabia are typically worth at least $1-million apiece and often substantially more.)
The reporting mismatch may be due in part to counting differences. Export values may include the value of parts that are not reported to the UN, for example. Nevertheless, the fact that such major discrepancies can be found in data originating in the same department does not inspire confidence in the accuracy of government transparency and reporting procedures.
The licence-export gap
The latest report reveals an enormous gap between the value of arms exports authorized by the government and the value of exports actually made. Canadian companies wishing to export military goods to (non-U.S.) states must apply, and receive authorization, for export permits from the Export Controls Bureau, typically in advance of final contract agreements.
Rarely reported information released to Parliament in 2012 revealed that over the six-year period 2006 to 2011 the value of military goods approved for export far exceeded the value of exports (see Figure 3). Information from the export reports indicates that (non-U.S.) military exports totalled $2.8-billion over the six years. However, the report to Parliament stated that (non-U.S.) military export permits worth $31.5-billion were authorized during the same period (Epps 2012). The difference between approval and shipment values is more than tenfold.
For 2011, the difference is even greater; the value of authorized export permits was more than 18 times the value of goods exported ($11.7-billion versus $634-million). The value of military goods approved for Saudi Arabia totalled $4.0-billion in 2011, while exported arms were reportedly worth $65- million (a ratio of 62:1).
Some portion of the gap can be attributed to contract cancellations, amendments, or delays. But, it may well be that exporters are failing to secure all or significant parts of contracts for which they must seek permits before bidding. It appears that, in fact, the main restraining factor for Canadian arms exporters is a highly competitive global arms market, not federal regulations.
The record points to a policy of Canadian authorization of military exports that is more enthusiastic than cautious. The government is clearly approving significantly larger volumes of military goods to a broader group of nations than are documented in reports on arms exports. From the data released to parliament, we know that Canadian officials approved military exports to 11 countries during 2010 and 2011 that do not appear in the export report. The large value of the export permits approved for Saudi Arabia, and for Afghanistan, Egypt, Israel, and several other states suggests less restraint and poorer assessment of risks than is warranted by the security and human rights conditions in these states.
Meeting emerging global standards
The entry into force of the global Arms Trade Treaty (ATT), expected as early as the end of 2014, will usher in a new international framework to improve national standards across the globe for the control of weapons transfers. Canada has not yet signed the treaty. However, because most of its allies and military trade partners (including all other NATO members) have signed, Canada will still need to adapt to these new standards. It could begin by making serious efforts to improve the transparency of its reports on the export of military goods.
Improvements should include:
- Timely annual reports. Recent multiple-year reports by Canada have included data up to four years old. States parties to the ATT will be obligated to report annually by May 31 on arms exports for the previous calendar year. Canada should adopt the schedule that will soon become the international norm.
- U.S. data. Information on the largest consumer of Canadian military goods is a fundamental transparency requirement. Government officials should devise an authorization process to ensure that all Canadian companies shipping military goods to the United States provide the necessary export information.
- Removal of all double- or multiple-counted data from the report. Since government officials were able to disaggregate export data in the past, it should not be an impossible task for officials to determine values that align across report tables. In particular, to avoid the current misrepresentation, the values of Group 2 subcategories should add up to the total value reported for arms shipments to each recipient state.
- Export permit and export data. Currently, the report is confined to export data, that is, information on military goods that have been transferred to recipient countries. This data is important for assessing the volume and impact of actual arms transfers. Data on export authorizations (export permits), while gathered by DFATD, is only made public when there are explicit requests in Parliament. Export permit data more clearly reveals government policy on export recipients of Canadian weapons and could offer the opportunity to review arms exports before they occur. Some ATT signatory states have already committed to reporting both permit and export data. By reporting both Canada could help to establish an international norm.
- More information on actual transfers. Canadian reports should return to, and improve upon, earlier standards by providing basic information on weapons systems, parts, and components, as well as descriptive comments. The comments should be sufficiently detailed to allow independent assessments of the rigour with which Canada is applying national export controls.
An example of the last point in the latest report reveals that Canada exported ammunition valued at $1-million to Brazil in 2010, but does not clearly indicate that none of this ammunition would be used by the Brazilian police. Under government guidelines arms should not be transferred to the Brazilian police, who are accused of persistent violations of human rights.
It is possible for the government to publish data on the type, number, value, and end-user of exported military goods and services without jeopardizing commercial confidentiality. The increased detail would allow Canadians to build confidence in government export control standards.
Canada will need to do more than improve arms export transparency to implement the provisions of the ATT (Epps 2013b). But improved transparency will be central to promoting global implementation of the treaty and improved international transparency norms will emerge from national and regional examples. At this early point in the treaty process, Canada could make an important global contribution by improving its reporting standards.
Epps, Kenneth. 2013a. Canada’s push into new arms markets. The Ploughshares Monitor, Autumn, pp. 3-7.
—–. 2013b. Additions and amendments: An overview of what Canada would need to do to meet the terms of the Arms Trade Treaty. The Ploughshares Monitor, pp. 14-15.
—–. 2012. Neither clear nor transparent. The Ploughshares Monitor, Summer, pp. 6-11.
—–. 2011. Gaps and omissions. The Ploughshares Monitor, Summer, pp. 6-11.
Foreign Affairs, Trade and Development Canada. 2014. Report on Exports of Military Goods from Canada 2010-2011. February 4.
Figure 1 Source: DFATD
Figure 2 Source: DFATD
Figure 3 Source: DFATD