Looking to export your innovations? Read on

The information technology business is becoming a world of espionage and intrigue. World governments are loathe to reveal computer secrets to foreign states and they are increasingly proprietary about the computer software developed within their borders.

In Canada, the federal government controls and regulates the export of computer software and technology in one of two ways. Canada, as a member of the United Nations, is prevented from exporting goods and services, the movement of people and money, to any country on which the UN imposes economic sanctions, such as Iraq.

Canada also regulates and restricts the export of computer software and information technology by placing a country on a prohibited export list or by prohibiting the export of a particular computer product. It is an offence under the Export and Import Act to violate these restrictions and an offender may be punished by fine or imprisonment.

Permission is available if you want to export a computer product to a prohibited country or to export a prohibited computer product to a non-prohibited country. You must speak to an official with the Department of Foreign Affairs and International Trade (DFAIT) if you wish to do so.

There are special permits available for U.S.-origin goods exported from Canada. The problem is the definition of a U.S.-origin good. U.S. authorities state that if a computer is made from not less than 20 per cent U.S. made parts, then it retains its U.S.-origin classification. The Canadian position focuses on a product’s tariff classification and not primarily on the percentage of U.S. parts going into it.

In situations where both countries claim origin, the exporter is caught in the diplomatic cross-fire. There is no easy solution. A call should be made to DFAIT for assistance.

It should be noted that specific prohibition of computer products is based on technical specifications and on categories of computer parts themselves. For example, it is not an individual computer that is prohibited from export but whether the computer has a specific processing power, for example 260 MTOPS (million theoretical operation per second). The specification threshold is cumulative so that multiple personal computers with coprocessors or processors working in parallel may exceed the threshold.

Permission is available for computers exceeding 260 MTOPS but under 500 MTOPS provided that the export destination is not Iran, Iraq, or North Korea. Computers exceeding 1,500 may be exported without permission to Hong Kong, Japan, Australia, New Zealand, Turkey, and several European countries. Be aware that if you are travelling with a personal computer or notebook you may need special permission to visit certain countries.

You should also understand that if a particular product, remote control air planes for example, is a prohibited export then any computer software associated with that product is also prohibited. Perhaps the only computer product you do not require permission to export is off-the-shelf mass marketed software that is in the public domain.

However, encryption technology is an exception to the above rule. Western intelligence agencies want to maintain their eavesdropping capabilities on foreign governments. Nevertheless, it’s all right to export off-the-shelf mass-marketed encryption software, provided it is not of U.S. origin. Secondly, permission is also available to export encryption software that authenticates the identity of the sender only but does not mask the message itself.

Which countries are on a prohibited list and which computer products are prohibited from export changes daily. Contact DFAIT in Ottawa or one of its International Trade Offices located across Canada for an up-to-date list.

Goldstein writes on legal issues and technology and practices law in Toronto. The opinions expressed in this column are not to be taken as legal advice. He can be reached at [email protected].

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