Why not use Canadian Commercial Corporation’s Own Data to Estimate Canadian Export Figures?

Kenneth Epps Conventional Weapons

Kenneth Epps

The Ploughshares Monitor Spring 2011 Volume 32 Issue 1

Canada’s support for negotiation of an effective international Arms Trade Treaty (ATT) implicitly includes support for transparency provisions that are needed to monitor state compliance with the treaty. Yet Canadian arms exports transparency is poor and has eroded in recent years. Most significantly, the Department of Foreign Affairs and International Trade (DFAIT), which releases reports on the export of military goods from Canada, provides data on exports to all foreign recipients except the United States, a market that is larger than all other recipients combined. In practice, Canadian transparency omits the bulk of Canada’s arms exports, creating an enormous gap and a major failing that needs correcting to fulfill anticipated ATT transparency requirements.

An accurate record of Canadian arms exports to the United States will be available only when the Canadian government requires Canadian-based companies to report all relevant US shipments—a requirement from which the companies are currently exempt under the Canada-US Defence Production Sharing Agreement. Given that the exemption has applied for several decades, a period of adjustment may be needed before Canada would reach full ATT transparency compliance. In the interim, Canadian Commercial Corporation (CCC) data on US contracts may help to assemble a more transparent picture of Canadian arms exports.

However, it is important to recognize the limitations of supplementing the current official reports on arms exports with CCC data. CCC data differs in significant ways from the military export data provided by DFAIT.

One difference is definitional. The CCC contract data obtained by Project Ploughshares assumes an end-use definition of military sales and exports. The CCC provides details of all contracts for goods and services awarded to Canadian companies for shipment to foreign military end-users. Most of these goods and services are unambiguously military products (armoured vehicles or munitions, for example) and the largest recipients of CCC contracts are leading military contractors. Nevertheless, some CCC contracts are for products that are considered civilian because of their typical use.

The end-use definition differs from the “special design” definition of military goods that is used in DFAIT’s military export reports. DFAIT reports on exports of defined categories of goods “specially designed for military use,” which are independent of the final destination or user. Most recipients of specially designed equipment are military, but they also may include non-military agencies or personnel.

Another difference between the two data sources arises from their respective reporting periods. The CCC reports are based on the April 1 to March 31 government fiscal year, while the DFAIT report uses the calendar year.

Finally, the CCC data is based on contracts—that is, agreements between Canadian suppliers and military end-users. DFAIT reports record the shipments made by Canadian companies. Sources of global arms trade data also differentiate between military trade agreements and deliveries. Trade agreement volumes may be larger than delivery volumes because not all agreements result in deliveries or deliveries may occur over longer periods.

Despite differences between CCC and DFAIT military export data, it is instructive to compare and even combine the two datasets to improve arms export transparency. The figure below is an example of how export contract data from the Canadian Commercial Corporation may be used to provide a more complete, and transparent, picture of Canada’s military export volumes.

The figure’s series of green bars represents the arms export volumes reported by the Department of Foreign Affairs, that is, total arms shipped to all states except the United States. Reported by calendar year, they are placed here in the closest fiscal year. (Thus, calendar year 2000 is placed in fiscal year 2000-01 because the two periods overlap by nine months.)

The latest delivery total reported by DFAIT is for 2009, the most recent figure released by the government in a March report that also contained the delivery totals for 2007 and 2008.

The blue bars represent totals by fiscal year of all military export contracts arranged by the CCC with the United States. Although there are the data differences noted above, there is no overlap in arms export volumes between the two sources. Strikingly, the CCC data demonstrates an export volume trend that contrasts with the DFAIT volume trend.

The red bar series is the sum of the DFAIT and CCC US volumes. It is not an accurate representation of Canada’s total arms exports, but it is more complete than that provided by DFAIT reports. From the figure it is possible to draw two clear conclusions:

  • First, the annual volume of Canadian military trade is demonstrably much larger than that reported by DFAIT. Canadian arms sales should be measured in billions of dollars, not the hundreds of millions typically reported by DFAIT.
  • Second, it is clear that Canada’s military export volumes have risen substantially in recent years. While the DFAIT figures suggest an export trade that has levelled off in recent years, the US volumes are unequivocally moving Canadian arms sales upward. Thus, by omitting US data DFAIT reports represent neither the true volume nor the overall trends of Canadian arms exports.

It is possible to draw these conclusions with some confidence because CCC data on US contracts is sufficiently detailed to determine that the US trade volumes illustrated in the figure represent a minimum for Canadian arms exports to the United States. The real US volumes are almost certainly much higher, perhaps as much as double those shown above.

Here, they provide an initial baseline toward a more accurate picture of Canada’s arms exports. The red bar trade totals are calculated to improve on the incomplete annual volumes reported by the Canadian government. But they should be viewed as only interim estimates.

To meet the anticipated transparency obligations of an Arms Trade Treaty, DFAIT must assemble and report details of arms shipments to the United States. At that point, CCC data could be used to cross-check reported US figures.

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