1998 arms exports reach post-Cold War high.

In a world where arms trade details are the exception, the Canadian standard of transparency is one of the best, even if some states report trade details that Canada does not.

While Canadian military sales to Africa and the Middle East declined sharply in 1998, increased sales to the US, Australia, and Asia pushed exports to a post-Cold War high. Continued sales to regimes that are undemocratic and to human rights violators indicate the further need for measures to tighten Canadais military export guidelines.

The Canadian government released the latest edition of the Annual Report on the Export of Military Goods from Canada in late December to reveal overseas arms sales of $421.4-million for 1908, an increase of almost 40 per cent over the 1997 total of $304.3-million. Combined with a rise in estimated arms sales to the United States,(1) which are not included in the government report, Canadian military exports totaled $1.3-billion in 1998, the highest in the post-Cold War period (see Figure 1). The most dramatic regional increases occurred in Canadian arms sales to the US, at $895.5-million up more than $200-million from the estimated $659-million in 1997; Asia, where shipments of military goods increased more than $100-million from $38.1-million to $145.8-million; and Oceania (largely Australia), which saw shipments more than triple from $25.3-million to $81-million. Other regions experienced a decline, notably Africa (a drop from $35.4-million to $4.3-million) and the Middle East ($84.7-million to $36-million).

According to the government report, simulation and training equipment was the leading category of 1998 Canadian military exports, jumping from $6.4-million in 1997 to $122.9-million in 1998. Although supplier details are omitted from government data, press and other sources suggest the expansion in training equipment sales was largely due to military helicopter and fighter aircraft simulators shipped by Montreal's CAE Electronics to Australia, Malaysia, and the United Kingdom (see Table 1).(2) At $86.8-million, sales of military aircraft, helicopters, and related components formed the second largest export category in 1998, a small increase over 1997. Exports of military electronic equipment meanwhile rose more than $30-million to $74.1-million in 1998, the result of major shipments of anti-submarine warfare equipment to Australia and radio equipment to Saudi Arabia. Proportionately, the biggest rise in exports occurred in the "large-calibre armaments" category -- from less than $500,000 in 1997 to $27.3-million in 1998 -- almost certainly due to transfers of CRV-7 2.5-inch air-to-ground rockets to Malaysia by Bristol Aerospace in Winnipeg. The year also saw significant drops in some categories -- in particular, sales of small arms and automatic weapons declined from $23.1-million to $9.4-million as the Netherlands' multi-year order of C-7 automatic rifles from Kitchener's Diemaco wound down. More significantly, shipments of military vehicles dropped more than $60-million to $20.2-million in 1998, with the report citing no shipments of light-armoured vehicles to Saudi Arabia after several years of large LAV transfers by General Motors of Canada.

Table 1 -- Selected Canadian Military Export Details in 1998(*)
[Part 1 of 2]

Destination   Government comment          Value of shipment

Australia     Anti-submarine and          $19,693,819
               navigation equipment
Australia     Simulator                   $44,301,509
Belgium       Sonar                       $6,375,721
France        Thermal imagers             $7,460,577
Malaysia      Rockets                     $27,032,365
Malaysia      Simulators                  $63,171,597
Thailand      Helicopters                 $34,332,000
United        Simulator                   $6,743,179
 Kingdom

Table 1 -- Selected Canadian Military Export Details in 1998(*)
[Part 2 of 2]

Destination   Likely equipment (and supplier)

Australia     Magnetic anomaly detection equipment for
              P-3C Orion aircraft update progra
              (CAE Electronics Ltd, Montreal)
Australia     S-70 Black Hawk helicopter full flight &
              mission simulator (CAE Electronics)
Belgium       AN/SQS-510 medium frequency sonar for
              Wellington-class frigates
              (Computing Devices Canada, Nepean)
France        Eryx missile Mirabel night sight
              (Thomson-CSF Systems Canada, Nepean)
Malaysia      CRV-7 air-to-ground rocket
              (Bristol Aerospace, Winnipeg)
Malaysia      MiG-29N fighter aircraft simulators
              (CAE Electronics)
Thailand      Bell 212 helicopters
              (Bell Helicopter Textron Canada, Mirabel)
United        Medium support helicopter program flight
Kingdom       simulator (CAE Electronics)

(*) Source: Canadian Military Industry

Database, Project Ploughshares.

Bypassing control guidelines

Despite export control guidelines that call for close control of Canadian military exports to countries threatened by "hostilities" or where there is a risk of use against civilian populations, Canada shipped military goods in 1998 to countries at war and to states where governments were cited for severe and persistent human rights violations. As illustrated by Table 2, Canadian military goods worth more than $100,000 reached five countries -- Egypt, Israel, Philippines, South Africa, and Turkey -- where armed conflicts persisted, in some cases after decades of hostilities.(3) In all but one of these conflict-affected countries, state authorities also were involved in serious human rights violations reported by both Amnesty International and Human Rights Watch. In addition, Canada exported military systems to five other countries -- Brazil, China, Mexico, Saudi Arabia, and Venezuela -- where state-sanctioned human rights abuse is an on-going problem.

Table 2 -- Selected recipients of Canadian military exports
exceeding $100,000 in 1998
[Part 1 of 2]

Country                Armed       Rights    Non-         No report
                       Conflict    abuse     democratic   to UN

Botswana                                                  X
Brazil                             X
China                              X         X            X
Egypt                  X           X         X            X
Hong Kong                                    X            X
Israel                 X           X
Jordan                                       X            X
Malaysia                                     X
Mexico                             X
Morocco                                      X            X
Oman                                         X            X
Philippines            X                                  X
Saudi Arabia                       X         X            X
Singapore                                    X
South Africa           X           X
Spain                                                     X
Taiwan                                                    X
Thailand                                     X
Turkey                 X           X
United Arab Emirates                         X            X
Venezuela                          X                      X

Table 2 -- Selected recipients of Canadian military exports
exceeding $100,000 in 1998
[Part 2 of 2]

Country                        1998 Canadian arms
                               export value

Botswana                       $3,728,231
Brazil                         $3,363,152
China                          $814,170
Egypt                          $622,403
Hong Kong                      $370,563
Israel                         $783,455
Jordan                         $187,795
Malaysia                       $91,792,358
Mexico                         $1,671,730
Morocco                        $171,652
Oman                           $467,940
Philippines                    $1,069,175
Saudi Arabia                   $29,800,192
Singapore                      $2,857,066
South Africa                   $368,204
Spain                          $716,554
Taiwan                         $3,202,336
Thailand                       $37,174,639
Turkey                         $3,531,616
United Arab Emirates           $4,123,639

Venezuela $523,106

A recent and gradual decline in both the number of states in conflict receiving Canadian military goods and the value of these sales suggests that instructions by Foreign Affairs Minister Lloyd Axworthy to department officials to tighten interpretation of export control guidelines may be having an effect. In June 1996, Axworthy announced that his officials would conduct "more rigorous analyses of security issues," taking into account conditions that included "internal conflicts such as civil wars." In 1996 eight states affected by armed conflict received Canadian military goods worth more than $100,000, together totaling $17.1-million (see Ploughshares Monitor, March 1998). The equivalent numbers dropped to seven states receiving $9.8-million in shipments in 1997 and five states acquiring $6.4-million in 1998.

Nevertheless, Canada's military export policy has yet to be fully squared with a progressive human security foreign policy (see Ploughshares Monitor, June 1999). Control guidelines, formulated in 1986, make no reference to good governance requirements of human security policy, for example, including respect for democratic rights and freedoms. To illustrate the disjuncture between human security policy and current Canadian export controls, Table 2 includes countries receiving Canadian military goods in 1908 that are defined as non-democratic under proposed US legislation to support an arms trade code of conduct. The table also lists countries that did not report to the latest UN Register of Conventional Arms, an indication of the extent of recipients' transparency in arms trade reporting. Although an early proponent of the UN Register. Canada, like most other supplier nations, has shown little interest in proposals to promote adherence to the Register via arms export controls.(4)

Canada itself provides a high degree of transparency according to the Annual Report. In a world where arms trade details are the exception, the Canadian standard of transparency is one of the best, even if some states report trade details that Canada does not (Sweden's annual report contains data on export permits and exporting companies, for example). Yet there is ample room for improvement, including greater equipment detail to support independent assessment of the risk of specific military equipment being used against civilian populations. (As it stands, the report provides generic information such as "firearms," "aircraft parts," and "radio equipment.") Since many Canadian companies already report military export orders that can be matched against government figures (see Table 1), the government case that full equipment details would jeopardize commercial arrangements is unconvincing.

Canadian arms export transparency also would be enhanced by harmonizing record keeping and commodity codes among the Canadian government departments responsible for tracking military exports. In one example of discrepancy, Statistics Canada reported a total of $862.3-million in sales of "tanks and other motorized armoured fighting vehicles" to Saudi Arabia during the five calendar years 1994-1998. Canada exported only light-armoured vehicles in this StatsCan category to Saudi Arabia, yet the Department of Foreign Affairs reported a significantly lower figure -- $662.8-million -- in LAV exports for the same period. The Canadian Commercial Corporation meanwhile, the crown corporation which brokered the Saudi LAV order, tracks export sales on a government fiscal year basis (April 1 to March 31) and reported $1,150.3-million in LAV exports to Saudi Arabia for the nearest equivalent five-year period (FY 1995 to FY 1990).

The Foreword to the Annual Report acknowledges "certain types of statistics on Canadian exports to military users may be available from other sources," noting that StatsCan in particular uses commodity codes that differ from the Report. It goes on to state that "since each source uses different methods of compilation, no meaningful comparison can be drawn between the two data from these two sources." Yet, as a means of cross-checking the detail and value of Canadian military exports -- and thereby advancing the transparency and external scrutiny of trade data -- it is not unreasonable to require Statistics Canada and the Export Control Bureau in the Department of Foreign Affairs to use the same commodity codes, time periods, and other necessary measurements.(5)

Missing military sales

Apart from the failure to provide data on military export sales to the US -- a market which in 1998 was estimated at more than twice all reported sales elsewhere -- the Annual Report on the Export of Military Goods from Canada excludes some equipment shipped overseas for military end-use (see Table 3). Unreported sales arise from a loophole in the export control process which bases regulation on technical specifications, not ultimate use. Annual Report data is compiled from export permits required for shipment of military goods, that is, goods which appear on the Export Control List (ECL) of equipment "specially designed for modified or military use." All ECL goods require an export permit, regardless of user or destination (with the exception of the US). Conversely, goods not on the ECL list do not require export permits, even if they are shipped to military users. And if a shipment does not require an export permit, it does not appear in government arms export tallies.

Table 3 -- Selected Exports for Military Use in 1998
Not Reported in Annual Report(*)

Destination   Est. shipment value   Equipment (and supplier)

Denmark       $20,000,000           1 Challenger 604 transport aircraft
                                    (Bombardier Inc)
Ecuador       $10,000,000           1 Bell 412EP helicopter for
                                    anti-submarine
                                    warfare (Bell Helicopter Textron
                                    Canada, Mirabel)
Ecuador       $2,000,000            2 dual sensor camera systems for naval
                                    helicopters (Wescam Inc, Flamborough)
Taiwan        $11,000,000           22 Bell-206B Jet Ranger-3 helicopters
                                    (Bell Helicopter Textron Canada,
                                    Mirabel)
Venezuela     $2,000,000            2 dual sensor camera systems for naval
                                    helicopters (Wescam Inc, Flamborough)

(*) Source: Canadian Military Industry Database,

Project Ploughshares.

The loophole allows sales of commercial equipment to military users without government regulation or scrutiny. In the examples of Table 3, the identified equipment is characterized as commercial, and though all items were purchased by military forces for military purposes, none is included in the Annual Report. The table examples alone total more than 10 per cent of official sales, suggesting that the value of Canadian military exports based on military use would be substantially higher than ECL-based government figures.

Military forces, faced with tighter budgets and rising commercial standards in sectors such as aerospace or digital equipment, are turning more to "commercial off-the-shelf" products to meet military requirements. In this context, the export control loophole that allows commercial goods to pass to military users without regulation presents a growing problem. In the single case of Mirabel's Bell Helicopter Textron Canada, since 1992 the company has needed no government approval to ship helicopters to military forces in Argentina, Ecuador, Chile, Colombia, Croatia, Iran, Slovenia, Taiwan, Thailand, United Kingdom and United States. None of these sales -- together totaling hundreds of millions of dollars -- has appeared in the government's annual report on military shipments.

(1) Because the Canadian government no longer calculates a total for annual Canadian arms exports to the US, Project Ploughshares estimates the figure from data provided under the Access to Information process by the Canadian Commercial Corporation.

(2) CAE Electronics Ltd. a subsidiary of Toronto-based CAE Inc, appears to have replaced the Diesel Division of General Motors of Canada as the leading Canadian arms exporting company to non-US destinations in 1998. For the six-year period 1902 to 1997, GM Canada shipments of light-armoured vehicles (LAVs) to Saudi Arabia and Australia dominated Canadian military exports

(3) Canada shipped military goods valued at less than $100,000 to each of an additional six countries affected by conflict in 1908.

(4) A well-developed set of proposed regulations, the International Code of Conduct on Arms Transfers offered by a group of Nobel Peace Laureates, is based on international laws and obligations. The Code is intended to support, among other human security standards, humanitarian law, human rights, fundamental democratic rights, and respect for international arms embargoes and transparency agreements like the UN Register.

(5) Another disjuncture in official data occurred when Canada reported the 1998 delivery of eight light-armoured vehicles for Saudi Arabia to the UN Register of Conventional Arms. For the same period the Annual Report listed none Foreign Affairs officials responsible for the Annual Report claim the difference was due to a reporting delay in data which will be included in the 1999 edition of the Report.