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Viewing cable 09STATE120099, BLUE LANTERN OUTREACH TO CANADA: DISCUSSIONS WITH
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09STATE120099 | 2009-11-20 18:55 | 2011-04-28 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Secretary of State |
VZCZCXRO5397
RR RUEHMT
DE RUEHC #0099/01 3270604
ZNR UUUUU ZZH
R 201855Z NOV 09
FM SECSTATE WASHDC
TO RUEHOT/AMEMBASSY OTTAWA 0426-0429
RUEHMT/AMCONSUL MONTREAL 0043-0046
RUEHON/AMCONSUL TORONTO 0020-0023
INFO RHMCSUU/FBI WASHINGTON DC 7001-7004
RUEAIIA/CIA WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC 6078-6081
RUEKJCS/SECDEF WASHINGTON DC
RUEPINS/HQ BICE INTEL WASHINGTON DC 0767-0770
UNCLAS SECTION 01 OF 04 STATE 120099
SENSITIVE
C O R R E C T E D C O P Y (SENSITIVE CAPTION ADDED)
SIPDIS
STATE
E.O. 12958: N/A
TAGS: ETTC KOMC CA
SUBJECT: BLUE LANTERN OUTREACH TO CANADA: DISCUSSIONS WITH
EMBASSY AND CONSULATES, GOC OFFICIALS, AND INDUSTRY
REF: 2006 BLUE LANTERN GUIDEBOOK
STATE 00120099 001.2 OF 004
¶1. (SBU) Summary: Representatives from the Bureau
of Political-Military Affairs, Office of Defense
Trade Controls Compliance (PM/DTCC) met October 13-16 with
Mission Canada staff in Montreal, Ottawa, and Toronto, GOC
officials, and local defense industry to discuss
the Blue Lantern end-use monitoring program and
related defense trade compliance issues. PM/DTCC reps
briefed
embassy and consular staff on implementing the
Blue Lantern program at post and shared results of
a research project involving U.S. companies'
use of the Canadian exemption to export defense articles
to Canada. Preliminaryresults of the research indicate as
many as 154 third party transfer violations involving U.S.
defense articles exported under the Canadian exemption; DTCC
team agreed to further consultations with ICE
attach office as additional results are obtained.
Team also conducted a Blue Lantern site visit
in Montreal to Unisource Technology, Inc., a private
company which provides ITAR-controlled defense articles
to National Defense Canada. Washington believes the
outreach visit achieved goals of improving GOC and industry
understanding of U.S. export control laws and regulations,
strengthening country team's knowledge of Blue Lantern
program, and enhancing DTCC's understanding of Canadian
defense industry and GOC export/import and technology
security procedures.
--------------------------------------------- ---
PURPOSE OF TRIP AND MEMBERS OF BLUE LANTERN TEAM
--------------------------------------------- ---
¶2. (U) Administered by the Office of Defense
Trade Controls Compliance (PM/DTCC) and pursuant
to the Arms Export Control Act (AECA), Blue
Lantern is a global program designed to verify
the end-use, end-users, and final disposition
of U.S. defense articles,
technology and services subject to the
International Traffic in Arms Regulations (ITAR).
This visit was part of ongoing PM/DTCC's efforts
to improve the effectiveness of Blue Lantern
through outreach visits with embassies, foreign
industry, and host governments. The DTCC Blue
Lantern team consisted of Research and Analysis
Division (RAD) Chief Ed Peartree and PM/DTCC/RAD
Compliance Specialists Kyle Ballard and Tim Mazzarelli.
--------------------------------------------- --------
MONTREAL CONSULATE TEAM BRIEF AND INDUSTRY SITE VISIT
--------------------------------------------- --------
¶3. (U) The Blue Lantern team briefed Political
Officer Peter Martin, Assistant ICE attach David Denton,
and Foreign Commercial Specialist Gina Bento on the
Department's program for end-use monitoring of defense
articles and services, guidelines for implementing the
program at post, and the importance of preventing the
unauthorized re-export and retransfer of U.S. defense
articles. Team also briefed participants on its research
project involving U.S. companies' use of the
Canadian exemption and Department's concern that the
exemption may be abused by certain parties to facilitate
illegal exports.
¶4. (U) Embassy Ottawa Economic Officer Lori
Balbi and Peter Martin accompanied Blue Lantern
team on a site visit to Unisource Technology, Inc.
(Unisource). Team met with Unisource President
& CEO Rudy Rutenberg, Executive Director Bruce
Rutenberg, and Contracts Administration Director
Cathy Jones. Unisource staff provided background
information on export requests and business operations,
as well as Unisource's physical security measures
STATE 00120099 002.2 OF 004
for handling sensitive U.S. defense articles.
Based on verification of order and documentation
establishing Canadian Armed Forces as final end user
and evidence of a long standing business relationship
with National Defense Canada, team was confident that
Unisource is a reliable recipient of USML items.
--------------------------------------------- --------------
OTTAWA CONSULATE TEAM AND GOC OFFICIALS BRIEF
--------------------------------------------- --------------
¶5. (U) Blue Lantern team PM/DTCC reps briefed Senior Case
Officer,
Controlled Goods Directorate (CGD), Public Works and
Government Services Canada, Serge Poirier and colleague
Mary Hyde on the Blue Lantern end-use monitoring
program. Team emphasized that Blue Lantern is not an
investigation
or law enforcement activity but rather a cooperative
program designed to improve security and integrity of
defense trade relationship between U.S. and international
partners.
6 (U) Poirier in turn provided a detailed
accounting of the CGD's compliance program including
Canada's SOP for registration of companies dealing in
strategic goods. According to Poirier, companies go
through a general vetting process which assesses a
firm's history and ownership. Registration lapses
after a five year period at which time the company
must re-justify/re-apply. During the five year
registration period companies must maintain all business
records and visitation logs, must internally vet all
employees, and are subject to inspection by the CGD.
Poirier noted that all registered companies will be
inspected at least once during the five year
registration period. Should inspections reveal
noncompliance, company registration can be suspended
or revoked. Problems that reveal possible criminal
violations are referred to the Royal Canadian Mounted
Police (RCMP).
¶7. (SBU) Blue Lantern team met with ICE attach
Craig Healy, Deputy ICE attach Bobby Fuentes, Assistant
ICE attach Spencer Schneider, ATF attach Bob Thomas,
and FBI Legal Attach Bob Doherty to discuss Blue Lantern
end-use monitoring and related defense trade issues.
ICE attach office was
familiar with the Blue Lantern program and is highly
focused on export-related cases. Healey noted that there
is strong cooperation at the working level with Canadian
Border Security Agency (CBSA) and the RCMP; less so at senior
levels where legal complications and obstacles to joint
cooperation arise.
¶8. (SBU) Canadian export controls enforcement
has traditionally been viewed mainly as a regulatory issue,
rather than as a criminal enforcement matter; this
according to Healy, is gradually changing. CBSA is Canada's
Customs
agency but has limited enforcement capability; RCMP is
the body that investigates potential criminal cases.
During the meeting it was noted that an obstacle in
the U.S.-CA law enforcement relationship is that
RCMP has a tendency to over-classify information, creating
barriers to information exchange. Furthermore, Canadian
laws on privacy inhibit the free exchange of information
regarding Canadian citizens, even among GOC agencies.
Healy noted, however, that with regard to Blue Lantern
requests information seems to flow more freely. ICE
will approach CBSA or RCMP to find out what they might
know about a Canadian company (subject of a Blue Lantern
check) and/or to share Department's concerns.
¶9. (SBU) PM/DTCC team met with CBSA Counterproliferation
Section Manager George Webb, RCMP Staff Sergeant,
Tim Ranger, and ICE attachs. Webb and Ranger described
their
respective agencies' missions and discussed shared agency
goals. Webb indicated that destination of an export is the
primary factor scrutinized by CBSA, and that they also
consider
the track record and reputation of exporters. The agency
does not have discretionary authority to ban a problematic
exporter (Comment: DTCC can place a company/entity under
STATE 00120099 003.2 OF 004
a "policy of denial" based on documented concerns, without
criminal indictment or conviction) without a
criminal conviction but can detain goods as long as the
agency deems
appropriate. The GOC is currently reviewing
counterproliferation
legislation that would further criminalize proliferation
activity,
and presumably expand their powers with regard to export
investigations. Webb also noted that CBSA has an "alert"
system similar to DTCC's Watch List that flags potentially
problematic entities.
¶10. (SBU) DTCC discussed its research findings
from export filings citing the Canadian exemption
and noted that there were 154 instances of possible
exports (or re-exports) to third countries (Comment:
exports under the Canadian exemption are for end-use
in Canada only). Webb indicated that CBSA could
put an alert on the companies involved into their system.
Webb and Ranger noted that traditionally, both CBSA
and RCMP have been focused on in-bound shipments and
are only now becoming more focused on exports.
ICE attach Craig Healy suggested that a further avenue of
U.S.-Canada cooperation might include the creation of
an international task force that would bring
Canadian-U.S. DOJ prosecutors together to create pressure
at higher levels in support of export enforcement.
DTCC indicated that it would pass this information to
the U.S. DOJ, National Coordinator for Export Enforcement
Cases, Steve Pelak.
¶11. (U) Blue Lantern team also met with Canadian
Department of Foreign Affairs and International
Trade (DFAIT) Senior Export Control Officer
Lynne Sabatino to discuss the respective
features of Canadian and U.S. export controls.
Sabatino exhibited extensive knowledge of ITAR
regulations and provided a detailed
description of the Canadian export control review process.
Sabatino explained that DFAIT export controls cover
both munitions and dual-use commodities, and consider
Canadian foreign policy in addition to national security
and international regimes
when making export decisions. Sabatino noted
that all license permit applications are reviewed
by technical experts who pre-screen authorization
requests for licensing permit officers. She
also explained procedural features that are
incorporated into the permit process which act to
safeguard transactions involving USML items. For
example, applications for permits have fields
for "country of manufacture" and "U.S. content".
If the end-items for export are listed as including
any U.S. content, the system will automatically prompt
the license permit officer to demonstrate compliance
with U.S. law. In items that include USML, the
applicant is required to obtain U.S. re-export
authorization. The system, however, relies on the
applicant for full disclosure. The improper re-export
of USML (by either failing to note content or false
declaration) thus is not only a violation of U.S.
law but of Canadian law as well.
¶12. (U) Canada conducts "post audit"
checks via their overseas Embassies. Pre-
permit checks are conducted from Ottawa and
consist mostly of background research and analysis.
Audits are initiated based on a variety of factors
including commodity sensitivity and destination
and are conducted at the discretion of the
permit officer. Sabatino stressed that DFAIT is
committed to maintaining the Canadian exemption
and that Canada applies appropriate security
and control measures to ensure the safe handling of USML.
--------------------------------------------- ----
TORONTO CONSULATE TEAM BRIEF
--------------------------------------------- ----
¶13. (SBU) In Toronto, Blue Lantern team met with Economic
and Political Section Chief, Lee MacTaggart and ICE
attach John Ward. MacTaggart and Ward emphasized
that Toronto - given its status as a business center
and ethnically diverse community - is where the
majority of export enforcement cases arise within the
STATE 00120099 004.2 OF 004
province.
They indicated that, due to equal opportunity laws
in Canada, dual citizens are often not required
to present themselves as such, making it difficult
to monitor possible ITAR violations involving
foreign nationals. MacTaggart also noted that
Canadian companies commonly establish post office
boxes in the United States through which they could receive
shipments, further complicating ITAR enforcement.
¶14. (SBU) Ward echoed many of the sentiments expressed
by ICE Ottawa indicating that at the working level,
the relationship between U.S. law enforcement and
the CBSA/RCMP is good but becomes less cooperative
at higher levels. MacTaggart indicated that a
possible avenue for better U.S.-CA enforcement
cooperation is through DFAIT, as the agency's
international trade component is the
"center of gravity" given its strong interest
in preserving positive U.S.-CA trade relations
and maintaining special status as it relates to the
Canadian exemption. DTCC team
briefed the preliminary results of
Canadian exemption research project, which had been
the basis for several recent Blue Lantern checks,
including an unfavorable check in Toronto. MacTaggart
requested information updates from Washington on
final disposition of Blue Lantern cases so that
Consulate team members can increase their own understanding of
local exporters and possible companies of concern
in the Toronto area.
¶15. (SBU) Comment: PM/DTCC Blue Lantern outreach
team found high interest and strong cooperation
from GOC officials and a motivated and well-informed
Mission Canada team with respect to the conduct
of Blue Lantern end-use monitoring.
The visit also appears to have met the
objectives of improving understanding of the
Blue Lantern end-use monitoring program and
USG munitions export laws and regulations. DTCC
team agreed to further consultations with ICE
attach office as additional results
are obtained regarding the use of the Canadian
exemption for license-free exports to Canada.
Outreach visit achieved goals of improving
industry's understanding of U.S. export control
laws and regulations, strengthening country
team's knowledge of Blue Lantern
program, and enhancing DTCC's understanding
of Canadian defense industry and GOC export/import
and technology security procedures.
¶16. (U) DTCC would like to express its gratitude
to Embassy Ottawa and Missions Montreal and Toronto,
and especially control officer Lori Balbi for
her assistance in arranging and executing this visit.
CLINTON