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Production of high-tech pieces of hardware such as the U.S. M1 Abrams Main Battle Tank, pictured here, often require collaboration with Canadian companies. (Photo supplied)

With elections on both sides of the border complete, industry hopes for quickened negotiations

Canada's aerospace industry is requesting federal officials press their American counterparts to expand an agreement allowing dual nationals to work on joint high-level military-related projects.

The dual-nationality issue has hampered Canadian defence and security firms for years because American International Traffic in Arms Regulations (ITAR) prohibit secure data from being exported to Canadian companies who employ certain workers – in particular, employees holding citizenship from countries the United States deems sponsors of terrorism or in non-compliance with nuclear or biological weapon treaties.

Around a year ago, an agreement was reached between the two governments permitting federal public servants holding a 'secret' security clearance to have access to ITAR material, regardless of whether they hold dual citizenship, says Ron Kane, the vice-president of the Ottawa-based Aerospace Industries Association of Canada (AIAC).

"We now have our (precedent) that has been set in terms of Canadian government employees. Our want is to get that same approach extended to encompass Canadian industry," says Mr. Kane, adding most defence and aerospace companies already have their employees cleared at the secret level.

He says his organization is also advocating for individuals to be assessed on their inherent security risk, as opposed to their citizenship.

"An individual born in Canada could pose just as much of a security risk as someone who immigrated to Canada from another country. You have to look at the behaviour of individuals, not their nationalities," he says.

Mr. Kane says he has seen efforts on the part of the U.S. State Department to make ITAR more efficient by shortening licence approval timelines, and examining whether certain dated technologies covered by the regulations still pose a security risk.

Businesses were not expecting any breakthroughs this year because of elections on both sides of the border, but hope serious discussions can resume in the new year. Likewise, Tim Page, president of the Canadian Association of Defence and Security Industries, says it's reasonable to expect the new Barack Obama administration will examine ITAR in its first term.

"Our two economies in the defence and security industries have become deeply integrated. So any regulation or legislation that impedes the ability of defence and security companies on either side of the border to do business with each other is not helpful," says Mr. Page.

He adds the same restrictions can put Canadian companies at a disadvantage if it prevents them from hiring qualified employees.

In this regard, ITAR requirements are becoming more stringent as Canadian companies find candidate pools shallowing, observes Harrison Crotin, recruitment director at the aerospace and defence industry staffing firm Recruitall.

He says an increasing number of his clients are running into ITAR barriers when looking to fill positions in manufacturing. In the past, he says, obstacles were generally reserved for jobs in design.

"Clients consider industry experience a primary interest when they look at a potential job candidate. That is already enough of a challenge ... When you add ITAR on top of that, it just makes things much more competitive."

-With files from Elizabeth Howell

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TECHNOLOGY TRANSFER

Cross-border compliance conundrums

The International Traffic in Arms Regulations (ITAR) are American controls on the export and import of defence-related articles and services. U.S. State Department approval is often required before an American company can export technical data to a foreign vendor so it can complete a contract.

Low-complexity data, such as blueprints required for a Canadian company to mass-produce a product, can often be exported without a licence, providing the Canadian company is registered here under the Controlled Goods Program and has gone through the necessary steps in terms of site security and assessing its employees with respect to honesty, integrity and reliability, says Ron Kane, the vice-president of the Aerospace Industries Association of Canada.

More sensitive technologies require a one-time export licence or, if the project requires transfers to take place on an ongoing basis, either a technical assistance agreement or a manufacturer's licence agreement that permits recurring transfers.

In these cases, the American exporter must confirm which employees at the Canadian recipient company will have access to the technical data covered by ITAR. The State Department takes a close look at Canadian dual nationals on a case-by-case basis, depending on how the U.S. defines its national security interests on a particular project, says Mr. Kane.

However, he adds that in no cases will access be granted to Canadians who hold dual nationality with "prescribed countries" that are deemed to be sponsors of state terrorism or are in non-conformance with nuclear or biological weapon treaties.