A U.S. drone completes its first unmanned flight at Edwards Air Force Base in California in this 2011 file photo.Alan Radecki/The Associated Press
The United States is finally scrapping a controversial rule that prompted many Canadian defence contractors to keep employees born in China and two dozen other high-risk countries away from U.S. weapons work.
The so-called International Trade in Arms Regulations, or ITARs, created a minefield of human rights violations and costly red tape for Canadian and other foreign companies.
The U.S. State Department says it will now put the onus on suppliers to track their employees' contacts with the designated countries, rather than their nationalities. The new regulation, published Monday, comes into force in 90 days.
The change, while an improvement, may not end all the legal problems in Canada just as Ottawa is preparing to buy new F-35 jet fighters - one of its largest-ever military purchases.
"There could still be the perception that employees are being isolated in certain circumstances," said trade lawyer John Boscariol of McCarthy Tetrault in Toronto.
And that could leave Canadian companies exposed to human rights complaints, Mr. Boscariol pointed out.
There could also be privacy issues as employees are pressured to reveal details of where they travel on their own time and what they do on those trips.
Ottawa, along with Canadian defence and aerospace companies, has lobbied for changes to the regulations for years, arguing that they hurt both countries without necessarily protecting sensitive technology. Canadian companies have a long history of working with U.S. companies on defence purchases by the militaries of both countries.
The Obama administration announced the proposed overhaul more than a year ago.
The problem centres around so-called dual nationals - employees who are citizens of Canada as well as another country viewed with suspicion by the United States. The list includes China, Iran, North Korea, Syria, Haiti and Vietnam.
Companies have sometimes faced the choice of discriminating against their foreign-born workers or losing lucrative defence work.
There have been at least two high-profile cases in Ontario and Quebec of employees hauling companies before provincial human rights tribunals over their treatment as a result of U.S. defence work.
Under the new rules, dual nationals will be allowed to have access to sensitive military work. But they may have to tell all about their travels.
Federal Public Works Minister Rona Ambrose called the amendment a "positive step forward" for Canadian aerospace, defence and security suppliers.
"This important revision … is positive in that it replaces nationality-based screening with security measures that can be applied to all individuals equally," Ms. Ambrose said.