Arms Trade

The CBC has just produced a fine series of radio reports on Canadian military exports[i] highlighting key issues such as the Government’s failure since 2002 to issue its promised annual report on arms exports, the upward trend in sales, and high volumes of armored vehicles shipped to Saudi Arabia and the United States. In the absence of official figures the CBC relied on Canada Border Services Agency reports to compile its own account of the arms trade, and while the numbers are revealing, they do not nearly reflect the actual levels and scope of Canadian military exports.

The CBC website materials acknowledge that its “analysis doesn’t capture total exports,” or that “these statistics may tell only part of the story” – so here is more of the story. The full story can’t be known as long as the Government fails to meet its annual reporting obligations – although even then gaps remain.

The figures compiled by the CBC focus on a narrow range of military commodities, notably tanks and armored vehicles (Canada makes the latter), munitions and some guns and components, but these constitute only a fraction of total sales. Canada produces a broad range of aerospace, electronic, communications and other military commodities for export. The CBC reports that total Canadian military exports for the seven years from 2000 to 2006 tripled to reach $3.6 billion, but the surge of that scale applies only to one category of exports and the reported total accounts for only about a quarter of all exports. The same goes for the report that $2 billion in arms sales went to the US over the same period.

The Project Ploughshares Military Industry Database maintained by senior program associate Ken Epps[ii] estimates an average of about $2 billion in exports annually – meaning the actual total for the 2000 to 2006 period is closer to $14 billion. Exports to non-US customers are conservatively estimated to have averaged around $500 to $700 million per year with another $1 billion or more going to the US.

Military exports fluctuate widely. The pace of the international arms trade is linked to the level of global military spending, and the level of Canadian military exports is in turn linked to these trends. Worldwide military spending has risen by about a third over the past decade, with most of the increase accounted for by the United States, which now accounts for 46 percent of the world total. World spending reached $1.2 trillion (current US$) in 2006, representing about 2.5 percent of world GDP or $184 per capita. The 15 top countries account for 83 percent of world military spending (Canada ranks 13 ^th on that list).[iii]Figures compiled by the International Institute for Strategic Studies for 2005 are similar, with the total at $1.2 trillion (current US$) and with Canada ranked 14 ^th from the top.[iv]

Of this annual one-trillion-dollar-plus outlay, at least 20 percent, or roughly $200 billion, is used for arms procurement[v] – that is, to acquire the weapons and related military equipment that make up national military arsenals. The vast majority of this procurement is for the arsenals of advanced industrial states and comes from their own domestic production. Between one-fifth and one-quarter of world military procurement is from foreign sources. The US Congressional Research Service (CRS), which also produces an annual report on global arms transfers, sets the value of international arms deliveries in 2006 (the last year for which its figures are available) at $27 billion.[vi]

While military spending has increased by a third since 1996, the bulk of those increases have occurred since 2001, and because they are largely a reflection of increased US spending rather than a broad global trend, there has not been a corresponding increase in global arms transfers. In fact, the global arms trade has been in steady decline since the mid-1980s, but that is now changing and the CRS shows a slight increase in 2006. The Stockholm International Peace Research Institute shows modest increases in each of the last four years.

Not surprisingly, the primary military exporters are the countries with the largest military establishments and domestic military industries to help supply their own forces. In 2006 the United States, Russia, the United Kingdom and Germany were collectively the source for about 90 percent of all arms transfers. Another seven suppliers provided most of the rest, and the CRS shows Canada as second from the top of that second tier group, just after China, with an overall ranking of 6 ^th.[vii]

Canada’s high ranking as a military exporter is disproportionate to the size of its own military spending primarily because of the integration of the Canadian industry into the continental military production economy through the Canada-US Defence Production Sharing Arrangements.

Canadian export figures, tabulated by the Department of Foreign Affairs and International Trade (DFAIT) from Canadian industry reporting, are considerably higher than those reported by SIPRI and the CRS (the methods of collecting data and of valuing transfers are different among all the sources and thus they are not readily comparable). For 2002, the last year for which official figures are available, the Government of Canada’s annual report[viii] on Canadian military exports to non-US customers showed exports of C$678 million. The CBC correctly notes that is double the sales in 1997 – but there is great fluctuation in sales and increases and decreases depend on the dates selected. In the period 1987 to 2002 total Canadian sales declined, and in the period 1994 to 2002 they stayed about level.

The government acknowledges that shipments to the US “are estimated to account for over half of Canada’s exports of military goods” yet there are no official figures on sales to the US. Independent tracking by Ken Epps of Project Ploughshares of Canadian prime contracts with the Pentagon arranged through the Canadian Commercial Corporation (CCC)[ix] indicates that in 2006 Canadian prime contracts with the US Department of Defence exceeded $800 million. Traditionally, when the Government still compiled US export numbers, Canadian subcontracts in military sales to US corporations were at least at the level of the prime contracts. If that pattern still holds, a combination of prime contracts with the US Department of Defense and subcontracts with US corporate prime contractors would now be about $1.7 billion per year – indicating total annual military exports to US and non-US customers of well above $2 billion.

But even that figure is on the low side. The gap in official figures occurs because they do not include certain goods, like some aircraft engines and helicopters that are officially designated as civilian even though they are sold to and used by military forces. For example, Ken Epps reports that Canada recently delivered more than $200 million worth of Canadian built Bell 412 utility helicopters to the Pakistan military.

The CBC reports point to a major Canadian enterprise that few Canadians are aware of and that is kept obscure by the Government’s failure four years running to produce its annual report on Canadian military exports. As a result of the CBC news series, we’ve once again been promised that the official export reports are coming, soon.

[i] “Arming the World” – http://www.cbc.ca/news/background/arming-the-world/.

[ii] See the website: http://www.ploughshares.ca/libraries/Control/ExportPubs.htm.

[iii] Stockholm International Peace Research Institute. SIPRI Yearbook 2007: Armaments, Disarmament and International Security. Oxford: Oxford University Press, pp. 267-271.

[iv] International Institute for Strategic Studies. The Military Balance 2007. Essex: Routledge, Taylor and Francis Group, pp. 406-411.

[v] The 20 percent figure is necessarily a very rough, and probably low, estimate. In the United States the 2005 procurement was 20 percent of the Department of Defense budget, and about 17 percent of total defence-related spending (which includes defence-related spending of the Department of Energy and others) (IISS, p. 18). SIPRI (2006, p. 388) reports that the world’s top 100 military contractors had $268 billion in military sales in 2004, compared with world military spending of $1,035 billion (SIPRI 2006, p. 307), or about 25 percent. In low-income countries procurement costs are relatively higher because of lower personnel costs.

[vi] Richard F. Grimmett, Conventional Arms Transfers to Developing Nations, 1999-2006. Report for Congress, Congressional Research Service, Library of Congress, September 26, 2007. http://www.opencrs.com/rpts/RL34187_20070926.pdf.

[vii] Grimmett, p. 89.

[viii] Foreign Affairs and International Trade Canada. 2003. Export of Military Goods from Canada: Annual Report 2002, December. http://www.dfait-maeci.gc.ca/eicb/military/miliexport02-en.asp.

[ix]The CCC acts as a broker and guarantor between Canadian companies and the US government, and all prime contracts of $25,000 or more have to go through the CCC.

A recent survey, conducted in countries that together represent just over half the world’s population, found strong public support for a strengthened United Nations, including strong majority support for a standing UN peacekeeping force, UN regulation of the international arms trade, and UN authority to investigate human rights violations.

The survey was conducted by the Chicago Council on Global Affairs and WorldPublicOpinion.Org, in cooperation with polling organizations in the countries surveyed,[i] and its findings of significant public support for UN regulation of the international arms trade has particular relevance for current efforts at the UN to negotiate an international arms trade treaty.[ii]

Last fall the General Assembly passed a resolution directing the Secretary-General to survey and report on the views of member states on such a treaty, and mandated an experts group to study “the feasibility, scope and draft parameters for a comprehensive, legally binding instrument establishing common international standards for the import, export and transfer of conventional arms.”[iii]

The survey of member states will soon be completed and Canada has already submitted its views, welcoming a “single comprehensive universal instrument guiding the trade in conventional weapons.”[iv] Canada ‘s submission focused on the parallel rights and obligations of states:

“Existing treaty obligations and customary international law includes the right of states to meet their own defence and security needs, and needs relating to their participation in international peace support operations, both through domestic production and through the responsible importing of arms. The export of arms to help other nations meet their defence and security needs is also valid in Canada ‘s view.

“Against this, however, are countervailing considerations that need to be addressed. These include the need to prohibit arms transfers that breach international sanctions regimes, exacerbate and prolong conflicts, destabilize countries, allow arms to flow from the legitimate to illicit markets, support terrorism, undermine sustainable development and in the commission of serious human rights abuses.

The survey results are welcome news for those promoting the arms trade treaty. Readily available arms are the most obvious means by which political conflict is transformed into war. The ongoing flow of arms encourages communities and governments already at war to resist compromise in negotiations and to press instead for redoubled efforts to win a military victory.

[i] The complete report is available from the Chicago Council on Global Affairs at http://www.thechicagocouncil.org/UserFiles/File/POS%20Topline%20Reports/….

[ii] See earlier commentary on “New Action to Control the Arms Trade,” newactio.

[iii] General Assembly Resolution A/Res/61/89, December 18, 2006.

[iv] Canadian Submission on the Arms Trade Treaty (resolution 61/89).

When the Colombian Air Force begins later this month accepting delivery of a fleet of new Super Tucano aircraft intended to help it prosecute counter-insurgency operations in its decades-long civil war, Colombia will in effect be importing engines from Canada, machine guns from Belgium, rangefinders from the United States, avionics from Israel, radios from Germany, ejection seats from the United Kingdom, and any number of other components and sub-systems from other countries.

None of these countries allows such exports without a permit, but not one of them has authorized the exports to Colombia. That’s because, before going to Colombia, all of the components first go to Brazil where they are assembled to become the Super Tucano – and from they are shipped to Colombia subject only to Brazil’s export control system.

Welcome to the global arms factory, the loophole-ridden international arms production and marketing system. But there are signs of change. A new initiative and landmark resolution launched at the United Nations this fall aims to finally bring the arms trade under some measure of control.

Military export controls are designed to prevent exports that could destabilize regions, exacerbate wars, contribute to human rights violations, or otherwise undermine international security and the safety of people. Canada’s policy, limits direct military sales to countries like Colombia – that is, to countries in conflict and where there is a risk that the arms will be used in gros and systematic human rights violations.

But there is no effort to exercise control over the final destination of indirect sales. So Canada authorizes exports of engines to the country where the aircraft are being assembled, but makes no judgment about where the engine is sent to actually be used military purposes.

That would be a defensible arrangement if there were universal or global standards for exports and if Canada was confident that Brazil, in the case of the Super Tucano, would apply the same control standards as Canada when it makes decisions about export permits. But there is no uniform international standard, and the situation is thus made to order for regulation shopping – looking for countries with the least stringent export controls as locations to assembly weapons systems that can then be sold throughout the world with minimal restrictions.

The new UN initiative builds on a major international civil society effort that has been ongoing for more than a decade to develop legally-binding international standards to regulate arms transfers. A General Assembly resolution acknowledges that “the absence of common international standards on the import, export and transfer of conventional arms is a contributory factor to conflict, the displacement of people, crime and terrorism,” and that the absence of common standards therefore “undermines peace, reconciliation, safety, security, stability and sustainable development.”[i]

Canada cosponsored the resolution and Canada’s Ambassador to the Geneva-based UN Conference on Disarmament, also emphasized that “a comprehensive, legally-binding Arms Trade Treaty could provide important international and human security benefits, notably by curtailing the irresponsible trade in all types of conventional arms.”[ii]

A key principle to be imbedded into the Treaty is that states are culpable if they knowingly assist other states in the commission of an illegal act – for example, if a state knowingly provides military equipment when it is reasonable to expect that it will be used to violate human rights then the supplier is also guilty of violating human rights law.[iii]

States advocating new efforts at arms trade restraint met earlier this year in Kenya and articulated a set of global standards by which exporting states acknowledge their obligation to prevent exports if there is a reasonable risk that the commodities in question will be used to commit grave or persistent violations of human rights or fundamental freedoms, grave breaches of international humanitarian law, acts of genocide, or crimes against humanity. They agreed that exports should also not contravene bilateral or multilateral commitments on non-proliferation, arms control, and disarmament, or support or encourage terrorist acts or the commission of organized or violent crimes.[iv]

The pursuit of common standards has the potential for introducing a significant measure of restraint into the arms trade, but it must also be said that effective and durable restraint will also require significant and enduring reductions in demand, including more effective conflict resolution diplomacy in chronic war situations like the one in Colombia, mutual security arrangements within regions and sub-regions, as well as region wide import bans like the small arms ban in West Africa.

An Arms Trade Treaty will still rely on national decision-making that is still subject to all the conflicting pressures that complicate the setting of national priorities – notably the conflict between export promotion and arms control objectives. But a Treaty would necessarily include mechanisms for greater transparency and accountability, as well as prior peer reviews and consultations in instances of contested export proposals.

In the case of the Super Tucano sale to Colombia, the suppliers of major components would still not have final authority, on their own, over the export permit decisions, but they would be consulted and would participate in a more collective decision-making process.

This fall’s resolution directs the Secretary-General to survey and report on the views of member states on such an instrument, and establishes the experts group that is to report to the 2008 session of the General Assembly.

[i] Resolution A/C.1/61/L.55, October 12, 2006.

[ii] Paul Meyer, “The Need for an Arms Trade Treaty,” Statement to the Conference on Disarmament, Geneva, August 10, 2006.

[iii] Emanuela Gillard, What Is Legal? What Is Illegal? Limitations on Transfers of Small Arms under International Law (Lauterpacht Research Centre for International Law, Cambridge; paper is available at http://www.armstradetreaty.com/att/what.is.legal.what.is.illegal.pdf), p. 4.

[iv] The non-paper was submitted as a Working Paper, submitted by Kenya to the Conference to Review Progress Made in the Implementation of the Programme of Action to Prevent, Combat and Eradicate the Illicit Trade in Small Arms and Light Weapons in All Its Aspects, New York, June 26-July 7, 2006, A/Conf.192/2006/RC/WP.2, (http://www.un.org/events/smallarms2006/pdf/rc.wp.2%20(E).doc).