CMKZ would like to thank Bernard Colas, as well as Éléonore Gauthier, CMKZ Collaborator, for preparing this blog.

Import and export controls are increasingly used to uphold democracy and sanction violations of human rights. We have previously written about the use of import restrictions in relation to human rights abuses, particularly forced labor. When it comes to export controls, the advanced technologies that allow authoritarian regimes to monitor and control their populations are now under increasing scrutiny by democratic governments. The United States is the leader in this regard.

From December 9 to 11, the Democracy Summit was held, organized by the United States, which brought together representatives of governments, the private sector and civil society. During the conference, several governments made commitments. The United States, Australia, Denmark and Norway have announced a new initiative called the Export Controls and Human Rights Initiative aimed at export controls on technologies that can be used by authoritarian governments to monitor and repress their populations. Although Canada is not a signatory to the declaration, it expressed its support for the initiative, along with the United Kingdom, France and the Netherlands. Dual-use technologies (civilian and military) are mainly targeted, including technologies initially developed for civilian purposes, but that can be purchased for military ones.

Examples of dual-use technologies are technologies relating to geolocation, electronic eavesdropping, hacking and infiltration software, as well as facial recognition technologies. For example, the Japanese company NEC reported a few months ago that it had sold more than 1000 biometric identification systems (fingerprints, iris and face recognition, etc.) in 70 markets. China has also been repeatedly accused of using facial recognition technologies to control Uyghurs in its Xinjiang region.

What makes the Export Controls and Human Rights Initiative unique is that it includes a voluntary code of conduct for states that would guide them in applying human rights criteria when issuing export permits. Codes of conduct exist for companies and organizations, but normally not for states. The initiative would therefore also allow the cooperation of states on this subject, the maintenance of common political ideas on democracy and human rights, as well as the prevention of the proliferation of technologies allowing violations.

It was in 2018 that the United States passed the Export Control Reform Act allowing it to specifically control the export of dual-use technologies for security and foreign policy reasons. Since 2018, the BIS (Bureau of Industry and Security), in charge of its application, has revised its policies, so as to increasingly take into account in its decisions to issue permits, potential human rights violations or surveillance of citizens by authoritarian regimes. Canada actually got its current system of export controls in place in 2019, by amending the Export and Import Permits Act. An export or brokering permit will not be issued if there is a significant risk that the transaction will participate in violations mentioned in the law, such as violations of human rights or humanitarian law. In November 2020, the European Union adopted a law which also requires companies to apply for an export permit for certain dual-use technologies. The law requires companies to do more due diligence and for EU governments to publish details of allocated permits. These details were previously kept confidential.

Now, with the war in Ukraine, export restrictions are indeed one of the types of sanctions used by Western countries against Russia. Several countries, including Canada and the United States, have increased restrictions on the export of certain dual-use technologies to this country. Among other things, Canada cancelled the issuance of export permits to Russia, for listed goods requiring control, and cancelled existing permits (exceptions made for humanitarian and medical needs).

The war in Ukraine illustrates well the split between allegiances to democratic and authoritarian principles. Even beyond the war (as far as this is pending at the moment), companies should exercise due diligence on technologies intended for export that can be used by authoritarian regimes. In Canada, it is necessary for exporters to carry out due diligence with foreign customers and declare the relevant information in their permit application when applicable. It is necessary to identify recipients and end users.

For companies intending to implement a due diligence and risk management policy, we strongly recommend the use of the Guide prepared by the US Department of State and we remain at their disposal for further information.