US rules hampering Canada arms purchases - paper

OTTAWA, Oct 5 (Reuters) Canada's plan to buy C17 billion dollars worth of military equipment, much of it from Boeing Corp is running into problems because of US restrictions on who is allowed access to top-secret information, the Globe and Mail said today.

The newspaper cited a document written by a senior official at the Canadian Department of National Defence (DND) which said the US requirements posed an ''unmanageable problem.'' The problem involves U.S. rules which prevent some dual nationals -- including those from China, Cuba and Vietnam -- from working on military projects that involve US technology.

Canada, one of the few major countries still seeking large scale immigration, has many dual nationals and says the US requirements are unconstitutional.

''DND's recent defence procurement announcements of C17 billion dollars could be negatively impacted by the dual-national ...

requirement,'' the official wrote.

Ottawa says Boeing Co is the front-runner to supply C8.1 billion dollars worth of heavy-lift aircraft and helicopters which Canada is seeking to buy. Boeing is also in the running for a separate C4.9 billion dollars purchase of smaller tactical cargo planes.

Federal officials told the newspaper that Canada might be forced to buy the US equipment directly from Washington, which would take a 5 per cent commission to order the planes and then send them north.

No one from the Department of National Defence was immediately available for comment.

REUTERS PB KN1902