GEP Ex. 1: Export of Goods for Special and Personal Use Permit – it still exists?

By Brad Lehigh, Global Trade Management Governance Canada

A General Export Permit (GEP) is a convenient and time saving method when it comes to exporting controlled goods out of Canada. When an export meets the criteria to use the authority of a GEP, it expedites the process as it eliminates the need to make a submission to the government for an export permit. A prospective exporter does not have to wait for the permit to be issued, or go through the process of applying to the government. Most of Canada’s eleven GEP’s are very restrictive in the manner in which they can be used, and are usually geared towards sending certain products to specific locations.

Then there is General Export Permit Ex. 1.

GEP Ex. 1 is the oldest General Export Permit valid today, and there is a good possibility that even if you are reading this article you may have never heard of it. Before we touch on the problems surrounding GEP Ex. 1 let’s take a brief look at what it can be used for

GEP Ex. 1 Purpose

This GEP allows for anybody to export any goods from Canada provided that

  • The goods have a value of $100 or less (Cannot separate the unit to get around this threshold)
  • The goods are not radioactive
  • They will not be exported to any country on Canada’s Area Control List
  • The goods are not helicopters and/or helicopter parts (Find me a helicopter worth less than $100 and we can complain then)

Although rules 2-4 must always be followed when using GEP Ex. 1, there are scenarios in which the $100 threshold is not applicable. Most of these scenarios are for personal use such as gifts/household articles and personal effects of people leaving Canada. However there are a few other provisions which give GEP Ex. 1 some real usability in today’s world. An example of this is being able to export goods to the original manufacturer as long as the goods have not been altered while in Canada.

Problems with GEP Ex. 1

GEP Ex. 1 was originally introduced in 1964, and was amended in 1989, mainly to update the value threshold from $50 to $100. If you are wondering why I haven’t mentioned the most recent amendment, it is because I already have. 1989 was the last time this legislation was amended. That’s over 25 years ago, and during that time, many laws and regulations have been introduced, altered, and repealed that would have some effect on this GEP. Let’s take a look at a few examples;

  • $100 in 1989 is worth over $172 today due to inflation
  • Old, non-existent laws such as the Goods Not as Ordered Remission Order and the Articles for Special Use Regulations are still cited
  • An “Export Control List Number” format that has not been used since 2002 is still being used to specify helicopters and helicopter parts
  • SEMA regulations are not mentioned, as the Special Economic Measures Act did not exist until 3 years after the most recent amendment

Even seasoned trade compliance professionals can be stumped when trying to understand how this antiquated regulation can be used in 2016. Some industry experts have advised this GEP can be used to bypass SEMA sanctions regulations because if the government felt the GEP could be used to skirt SEMA; they would have included a provision preventing such uses in the same manner as newer GEP’s have. However, this is risky and it is more likely that SEMA is not mentioned only because it did not exist when the GEP was last amended.

A lawyer may look at the regulation and say go ahead and export helicopter parts using this GEP because “helicopters and their parts as described in item 1460 of the Export Control List” carries very little meaning when 1460 has been a non-existent ECLN number for over 14 years. Although, this would be a risky and ill-advised proposal.

Taking the regulations at face value, one might question why if they wanted to send $90 worth of ammunition to Iraq, this General Export Permit seems to allow for such a transfer. It just doesn’t seem right.

Because the regulation has gone beyond being merely “out of date”, many trade professionals opt to ignore the GEP altogether and act as if it does not exist, rather than trying to make sense of it under today’s modern Export Control and Sanctions regulations.

Recommended Changes

It should be clear to both industry and government alike that GEP Ex. 1 regulations are in dire need of a modern update. These proposed changes listed below would provide more clarity and trustworthiness to the regulation. General Export Permit Ex. 1 is a useful and versatile permit, and Canada’s government should take the initiative to amend the regulations to allow exporters to feel more confident in using this permit. Going forward, the Livingston International, GTM team will be recommending the following changes at a minimum.

  • Raise the dollar threshold from $100 to the $150-$200 range
  • Make a clear declaration whether or not the GEP can be used to export to end-users in countries that have economic sanctions imposed against them
  • Update the restriction on helicopters and their parts so the current ECLN format is used

Remove references to other repealed regulations

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