The Ploughshares Monitor September 1995 Volume 16 Issue 3
The good news is that global arms exports to the Third World were down in 1994. The other news is that Canada is swimming against the tide. Ploughshares researcher Ken Epps reports on the latest Canadian arms trade figures.
Bucking a global downward trend, Canadian arms sales to the Third World jumped more than 40 per cent in 1994 to reach an all-time high the latest government records show. While other weapons suppliers experienced a drop in Third World shipments, during 1994 Canada was able to boost military sales to its largest Third World buyer, significantly increase sales to several Pacific Rim countries, and improve on 1993 sales to about three-quarters of its developing country customers. Beyond the official trade, the year also saw new orders for (and subsequent shipment of) equipment for Third World military end-use that did not appear in the government report because the shipments did not require export permits. Meanwhile, the 1994 record of Canadian arms sales to human rights violators or countries in conflict did not improve, and Canadian weapons continued to reach repressive regimes and embattled governments in spite of government guidelines designed to restrict such shipments. In sum, during a period when Canada was also increasing resources and personnel for peacekeeping missions, the 1994 arms export figures paint a sorry picture of the first full year of the current government’s export controls.
Since 1991 Canadian arms export figures have been published in the “Export of Military Goods from Canada Annual Report,” produced by the Export Controls Division of the Department of Foreign Affairs. Each report provides statistics on Canadian arms shipments to all countries except the United States, documenting by country the value of shipments of equipment in each of the categories defined by the Export Control List as well as the total of all shipments. Military exports to the United States are not reported because shipment records are not compiled by the government; in spite of the status of the United States as by far Canada’s largest military customer (with estimates of US sales typically at least double those of all other sales combined), arms shipments to the US do not require export permits under the terms of the US-Canada Defence Production Sharing Arrangements. Without the export permit process government officials must rely on voluntary reporting for trade statistics and recently even this information has not been gathered as a result of department cutbacks.
This year’s military trade report, released in July, compares 1994 figures with those for the previous year. It shows that non-US sales of Canadian military goods totalled $497.4 million in 1994, up 48 per cent from the 1993 total of $335.9 million. A significant part of the increase was due to Canadian military contractors regaining some of the ground lost on arms sales to European customers over the past decade (see September 1994 Ploughshares Monitor). Military shipments to Europe increased from $83.4 million in 1993 to $128.8 million in 1994, a rise of 54.5 per cent. Nonetheless, they were still far short of the 1987 European sales peak of $432.9 million (in constant 1994 dollars).
More significantly, Canadian arms shipments to developing countries jumped $100 million in 1994 from the already high 1993 value of $242.2 million to $342.6 million. Although the higher starting point meant that the increase of 41.5 per cent was less than that for European sales, the increase took the Third World total to a record level, surpassing the previous (1982) peak even after adjustment for inflation. The 1994 results also underline the position of the Third World, with shipments more than two and a half times the value of shipments to Europe, as the current major Canadian arms market after the US.
Bucking the trend
The large increase in Canadian military exports to the developing world is in marked contrast to the arms sales trend of the rest of the world. According to the latest edition of the authoritative annual report on “Conventional Arms Transfers to Developing Nations” published by the US Congressional Research Service (CRS), global arms deliveries to the Third World declined in 1994 to $14.4 billion (US) from the previous year’s total of $17.2 billion, a drop of 16.4 per cent. The CRS report shows a drop in arms deliveries for all major suppliers except France between 1993 and 1994.
Figure 1 (Global Arms Sales to Third World) and Figure 2 (Canadian Arms Sales to Third World) illustrate the extent to which recent Canadian military exports to the Third World are out of step with the global trend. While worldwide arms transfers to developing nations dropped steadily from a peak in 1987, the volume of Canadian military exports, after an initial decline during the period, rose dramatically in 1992 and again in 1994. Put another way, during the same eight year period that global arms deliveries to Third World nations shrunk to one-quarter of their 1987 volume the equivalent Canadian exports almost tripled.
The larger volume of Canadian military goods deliveries has earned Canada a place in the CRS report’s top supplier list – the latest edition ranks Canada as the seventh largest supplier to the Third World for the four year period 1991 through 1994 with a total value of arms deliveries of $800 million (US). The report also shows a significant boost in Canadian trade (from $600 million to $800 million or 33 per cent), and a step up from the rank of eighth largest supplier, over the previous equivalent four-year period, 1990 through 1993.
Much of the increase in 1994 Canadian arms sales to the Third World can be attributed to higher shipments of one product – General Motors of Canada’s Light Armoured Vehicle (LAV) – to one country – Saudi Arabia. Part of the largest-ever export order for Canadian military equipment, estimated to be worth more than $1 billion, the value of the LAVs shipped to the Saudi Arabia National Guard in 1994 was $255.7 million, an increase of $43.8 million over the value of deliveries in 1993. Indeed, the shipments of these wheeled, small tank-like vehicles constituted just over half the value of all non-US military shipments by Canada for the year. Yet, there were significant increases in deliveries to other Third World nations too, especially to countries on the Pacific Rim. As seen in Table 1, Canadian weapons deliveries increased by at least $1 million to eight developing nations between 1993 and 1994. Similarly, although deliveries to some countries declined, in 1994 the armed forces of 25 Third World nations received more military goods from Canada than they did in 1993.
The government report does not disclose details of military goods shipments to overseas recipients. It provides no information on the type or value of the equipment exported nor the names of the manufacturers or suppliers. Such data may be released through other sources, such as press reports, but detailed contract data is sporadic. Table 2 lists contracts reported for 1994 that may in part correspond to the aggregate figures of the government report. As Table 2 demonstrates, the Canadian arms export picture is far from complete. (For example, the table lists contracts for exports to only five developing countries.) Nevertheless, reported contract data does allow some insight into the nature of the military equipment exported by Canada to the Third World. During 1994 this equipment included complete weapon systems, such as LAVs sold to Saudi Arabia and Air Defence Anti-tank Systems (ADATS) shipped to Thailand. It also included military support systems, such as radios for Taiwan and a Tactical Air Navigation System (TACAN) for Thailand, that have been the mainstays of recent Canadian military production.
The Foreign Affairs report cites three factors to explain the significant growth in Canadian arms exports during 1994 – improved exchange rates that benefitted Canadian exports generally, better reporting of arms exports, and the impact of the single large LAV contract with Saudi Arabia. The implication is that Canadians should not rush to judge Canadian arms exports on volume alone, since unique conditions (such as the record-breaking LAV contract) or circumstances beyond the department’s control (such as exchange rates) may influence arms trade results heavily. Yet the 1994 record of Canadian arms exports suggests there are grounds for concern about the results apart from volume.
In total, Canada exported military goods to 34 developing nations in 1994. The human rights advocacy group Amnesty International reported significant human rights violations in 18 of these countries in its 1994 report. These same 18 nations were also classified in Ruth Sivard’s report, World Military and Social Expenditures 1993 (the latest edition available), as countries whose governments practised “frequent” violence against their own citizens. Hence, over half of the 1994 Third World recipients of Canadian military goods were involved in human rights violations in spite of Canadian export control guidelines that call for close control of arms transfers to governments with poor human rights records. Although Ottawa qualifies this control in cases where “it can be demonstrated that there is no reasonable risk that the goods might be used against the civilian population,” it remains unclear how the government assesses “reasonable risk.” For example, the largest 1994 Canadian arms shipment consists of armoured vehicles for the National Guard of a country cited for human rights violations (Saudi Arabia) where they will be used “largely for internal security.”
Canadian export control guidelines also call for restrictions on arms sales to countries “involved in or under imminent threat of hostilities.” Yet, Canadian military goods reached eight Third World countries that were sites of major conflict in 1994 (Algeria, Colombia, India, Indonesia, Kenya, Peru, South Africa and Turkey) and three countries (Egypt, Mexico and Pakistan) where insurgencies may soon reach the level of a major conflict. Four of these countries – Algeria, Colombia, Indonesia and South Africa – received no Canadian arms shipments in 1993. (South Africa was under a UN arms embargo at the time.) In the most striking case, Canadian arms sales to Algeria jumped from nil in 1993 to over $6 million in 1994 in spite of a vicious civil war that has killed more than 30,000 people since 1992.
The Canadian government has expressed strong endorsement and support for the recently-created UN Register of Conventional Arms, stating in the 1995 foreign policy statement Canada in the World that “we continue to attach great importance to the UN Conventional Arms Registry, and will press other UN member states to make use of it.” Canadian weapons trade results suggest that the government has yet to weigh participation in the Register in its arms export decisions, however. Eighteen developing nations, or more than half of all Third World recipients of Canadian weapons in 1994, did not report to the Register on their 1993 arms transfers. Since an even greater portion of 1993 customers did not participate, Canada has exported military goods to more developing countries that did not report arms transfers to the UN than to those that did in both of the first two years of the UN Register.
Military sales not reported
One of the major weaknesses of the government’s annual report is that it documents only the direct shipment of military goods defined by the Export Control List. The report does not include statistics on the supply to overseas military end-users of Canadian “dual-purpose” equipment (that has both military and civilian use) nor the “indirect” sale of Canadian military goods to the military via an intermediary (typically US) contractor. These two additional categories of equipment sales to Third World military customers can add up to a substantial export volume, and their omission from official figures means that the full extent of Canadian military exports to the Third World is underreported.
Table 3, compiled from data assembled in Project Ploughshares’ Canadian Military Industry Database from press and other reports, provides examples of both categories of Canadian military sales during 1994. The table is not comprehensive (information is released at the discretion of the contractor) but it does provide details of some of the contracts that were omitted from government statistics. For example, during 1994 several sources reported contracts for Bell Helicopter Textron of Mirabel, Quebec to supply utility helicopters to military end-users in Colombia, Iran, Thailand and Venezuela. The largest order, for the supply of 20 Bell 212 helicopters to the Thai Army, is valued at almost $150 million, with deliveries beginning in 1994 and lasting three years. Shipments under this contract alone could have added $50 million to the 1994 total of Canadian military exports to developing countries if Bell 212s were included in the Export Control List. Instead, and in spite of the original development of the 212 to meet military requirements, the export of the helicopter does not require an export permit because it has commercial aircraft certification and currently most sales are to civilian customers. Only shipments requiring export permits are included in official arms exports records regardless of the end-use of the equipment.
Table 3 also lists “indirect” export contracts where the product destination was reported to be in the Third World. Hence, the $20 million sale of an Atlantis Aerospace Corporation maintenance trainer for the F-15S fighter aircraft to the Royal Saudi Air Force is included in the table even though the work was formally ordered by McDonnell Douglas Aerospace of St. Louis, Missouri. (McDonnell Douglas subcontracted the order to Atlantis Aerospace). Because the delivery will be via the US corporation, the sale does not appear as part of 1994 Canadian military sales to Saudi Arabia. Nor does it appear as part of military sales to the US since these are no longer compiled.
Incomplete data, and variation in shipments for reported multi-year contracts, precludes the derivation of an accurate figure (or even a good estimate) for the volume of “unofficial” Canadian military exports to the developing world in a given year. Nevertheless, it is possible to suggest a range for the minimum value of such trade that clearly demonstrates the shortfall in official reports. From the data in Table 3, for example, it is reasonable to draw this range from as little as $50 million (based on the Thailand helicopter deliveries) to an upper figure likely in excess of $100 million. (These are conservative “guestimates.” The total of the contract values in Table 3 is more than $340 million. A similar total for 1993 is $200 million – see the Ploughshares Monitor, September 1994.) Thus, the figure of $342.6 million for 1994 Canadian military exports to the Third World is likely to be understated by 15 to 30 per cent, and if end-use is fully accounted for, the real value of Canadian military shipments to the Third World last year may have approached half a billion dollars.
From rhetoric to reality
At the same time as Canada’s total (non-US) military exports increased 48 per cent, the number of Canadian peacekeepers posted abroad increased 52 per cent. Although a direct correlation between the two figures cannot be made, since both the international arms trade and international peacekeeping arise from a complex range of factors, it is readily apparent that there is a contradiction in Canada simultaneously pursuing both areas. By striving to obtain commercial benefit from the trade in weapons to a world that is highly militarized and saturated with arms, largely as a result of the Cold War, Canada is contributing to an international system that allows conflicts around the world to escalate and endure. These are the wars that, beyond their massive destruction of the social and natural environment, threaten the safety and effectiveness of peacekeeping efforts.
Two years ago, while in opposition, the Liberal Party issued proposals for the future of Canada’s military industry in its statement “Defence Conversion – A Liberal Priority.” This policy document noted that Canadian defence companies faced four options in the changed security environment following the end of the Cold War, one of which was “to increase exports to developing countries where arms spending has been less affected by the Cold War’s end – thereby adding to the misery of these countries.” The statement argued instead for the pursuit of other options, including “a plan that would encourage Canadian defence companies to adjust and move away from a dependence on military production and export.”
Now in government, the Liberals have reversed the position on Canadian arms exports they announced just prior to gaining office. Indeed, not only has the Liberal government failed to move Canadian manufacturers away from military exports, it has increased their export dependency, as the 1994 trade results clearly demonstrate. Recent government-sponsored trade missions, including marketing efforts by several Cabinet ministers, and other government support for overseas arms sales, make it clear that Ottawa wants to see more, not fewer, Canadian arms exports to the Third World. Like its predecessors, the current government is placing priority on the immediate commercial benefits of the international arms trade, and turning a blind eye to the longer term consequences.
The recent growth in Canadian arms sales to Third World countries underlines the need for a review of Canadian export control policy. It has been nine years since a 1986 review of Canadian export controls produced a statement by then External Affairs Minister Joe Clark that did little more than restate existing Cold War-shaped guidelines. The changed geopolitical environment and broader security context that the Liberal government acknowledged in recent foreign policy statements have yet to be reflected in new export controls. As demonstrated by the number of Third World recipients of Canadian arms that are involved in human rights violations or conflicts, and the number of sales of “dual-purpose” materials to overseas military customers, the existing controls are not up to the realities of today’s world.
In the interim the government could regain lost credibility on its export control practices by taking immediate steps to reduce Canadian military industry dependency on Third World sales. It could begin by more rigorously applying existing export control guidelines, such as those concerned with human rights and hostilities, that are relevant to today’s international security dynamics. It could introduce new guidelines, such as mandatory participation in the UN Arms Register, that would contribute to global arms trade restraint. The government could also end its institutional support for overseas arms sales, such as government-sponsored exhibits at international arms trade shows, trade missions involving military export promotion, and equipment demonstrations by Canadian Forces personnel (e.g. the recent spate of Patrol Frigate tours of the Middle East and the Pacific Rim) designed to market weapons systems overseas.
The government has accepted the new, wider security agenda of the post-Cold War era. It has given its rhetorical support for the conversion of the Canadian military industry away from Third World sales. The challenge now is to put the theory into practice.
Endnotes “GM Canada gets big boost,” Globe and Mail, August 17, 1995, p.B12.  See Armed Conflicts Report 1995, Project Ploughshares, Spring 1995. Note: The status of Turkey as a Third World nation varies among sources of arms trade data. Here we include Turkey as a developing country when discussing countries where there are human rights violations or conflict. (Turkey is a member of both categories.) However, because Canadian arms trade figures typically include Turkey as part of NATO (and Europe), the total of Canadian arms exports to the Third World does not include the value of shipments to Turkey.  Canada in the World, Canada Communication Group, Ottawa, 1995, p.33.  Canadian National Defence Estimates for 1994-95 and 1995-96 respectively place the “forecast” number of Canadian peacekeepers for 1993-94 as 2,998 and for 1994-95 as 4,559. These latter two fiscal years most closely correspond to the calendar years 1993 and 1994 of the reports on the export of military goods.  “Defence Conversion – A Liberal Priority,” March 26, 1993.
Third World country 1993 Value 1994 Value Increase Algeria 0 $6.3 m $6.3 m Indonesia 0 $1.2 m $1.2 m Malaysia $3.8 m $11.9 m $ 8.1 m Saudi Arabia $219.0 m $280.2 m $61.2 m Singapore $0.6 m $3.3 m $2.7 m South Korea $4.3 m $12.8 m $8.5 m Taiwan 0 $1.0 m $1.0 m Thailand $0.6 m $20.6 m $20.0 m
Recipient Contract Value Equipment Supplied Canadian Contractor Kenya $515,724 Miscellaneous Aero Support Inc. Kenya $106,198 Miscellaneous Field Aviation Co. Ltd. Malaysia n/a Naval ship ECM Lockheed Canada Inc. Saudi Arabia $219,148,871 Light armoured General Motors of Canada vehicles Taiwan $2,800,000 Counterinterference Canadian Marconi Company radio system Thailand n/a Air Defence Anti- Oerlikon Aerospace Inc. Tank System Thailand $1,000,000 Tactical Air Spar Aerospace Ltd. Navigation system
Source: Canadian Military Industry Database, Project Ploughshares.
Recipient Contract Value Equipment Supplied Canadian Contractor Colombia $65,000,000 12 Bell 212 Bell Helicopter Textron helicopters Iran $42,000,000 4 Bell 212, 1 Bell Bell Helicopter Textron 206-4 helicopters Israel n/a Corvette signature WR Davis Engineering Ltd. suppression sys* Mauritius $20,000,000 75-m ocean patrol Western Canada Marine Group vessel work Saudi Arabia $20,000,000 F-15S aircraft Atlantis Aerospace Corp. maintenance trainer* Thailand $146,000,000 20 Bell 212 Bell Helicopter Textron helicopters Turkey n/a Communications CANAC/Microtel system work* Venezuela $50,000,000 5 Bell 412 Bell Helicopter Textron helicopters * Subcontracts
Source: Canadian Military Industry Database, Project Ploughshares.