When is an export not an export?
That’s the issue behind Global Affairs Canada’s Notice to Exporters No. 1159, which provides clarity and guidance on the global movement and storage of controlled technology in the cloud. And with information routinely stored on servers around the world, a clear definition of a technology export is particularly welcome.
A ‘transfer‘ occurs when the content of controlled technology is disclosed from within Canada to outside Canada. For GAC, the defining characteristic of an export is ‘disclosure’ – or, if there is a reasonable possibility that someone outside of Canada might be able to access the technology in question.
Not all technology transfer is considered an export. For example, controlled technology transfers within Canada are not considered an export. Controlled technology transferred from within Canada to a place outside Canada but inaccessible to anyone outside Canada is also not considered an export. However, technology transferred from within Canada to a place outside the country that might be accessed by someone outside Canada may be considered an export and may require an export permit.
Specific examples of transfers include:
- Individuals outside of Canada (including Canadian employees of a Canadian company) can access and review controlled technology stored in Canada from abroad,
- Controlled data is moved or stored outside Canada without adequate security measures (i.e., industry-standard encryption), and
- A cloud service provider creates an unencrypted disaster recovery snapshot containing controlled technology, which is stored on servers outside of Canada and accessible to foreign administrators.
Security is obviously a major factor in determining whether information transfers qualify as exports, and cloud service providers (CSPs) and technology owners will share responsibility for security and truthful disclosure.
McCarthy Tetrault’s summary provides a great overview of the rules on cloud storage and transfers, and we recommend reading it in its entirety. We also recommend consulting a trade law specialist or GAC with specific questions about these rules – and as always, follow this blog for more trade updates.
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