Exporters who use the Canadian Exemption provision (22 CFR §126.5) for the export of defense services should remember to have a written agreement with the Canadian recipient that satisfies the requirements of 22 CFR §126.5 and the accompanying Supplement No.1.  This agreement should limit delivery of the defense items being produced to DDTC registered company in the U.S., the U.S. or Canadian government, or a Canadian registered person authorized in writing to manufacture defense articles for the Canadian government; prohibit technical data from being disclosed to any non-Canadian registered person; assure any subcontract will contain the same restrictions; and guarantee that technical data will either be destroyed by the Canadian party (with assurances in writing) or returned to the U.S. exporter.

Additionally, there is a semi-annual reporting requirement for exporters who export defense services/technical data under this exemption provision (22 CFR §126.5).  The report must include the item being produced, the end user, the end item into which the item is to be incorporated, the intended end-use of the product, and all Canadian contractors and subcontractors.

For additional information please review Supplement No. 1 to 22 CFR §126.