Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Russia vs Iran: Which Country Faces More Severe Canadian Economic Sanctions?

Posted in Aerospace & Defence, Border Security, Canada's Federal Government, Controlled Goods Program, Cross-border trade, Export Controls & Economic Sanctions, Exports

Many QuestionsCanada imposes unilateral economic sanctions against both Russia and Iran pursuant to the Special Economic Measures (Russia) Regulations and Special Economic Measures (Iran) Regulations, respectively.  It was not long ago that Canadian export controls lawyers were saying that Canada imposed its most strict sanctions against Iran.  However, on February 5, 2016, Canada lifted some of its sanctions against Iran.  Canada is talking tough on Russia and Canada’s unilateral economic sanctions against Russia have been evolving. The question is, which country (Russia vs Iran) faces the more strict restrictions under Canadian laws?  Which country poses the greater risk for Canadian companies seeking business opportunities?

I have not asked an easy question and they are different elements to look at to answer the questions. To help with the analysis, I  have prepared a chart that sets out the unilateral economic sanctions and trade restrictions imposed by Canada against both countries (as at July 19, 2016).

Type of Restriction/Obligation Russia Iran
Number of Listed Entities

 

55 + 6 (as at July 19, 2016) 161 (as at July 19, 2016)
Number of Listed Financial Institutions

 

 6 (as at July 19, 2016) Not separately listed
Number of Listed Individuals

 

93 (as at July 19, 2016) 41 (as at July 19, 2016)
Number of Listed Goods

 

19 (as at July 19, 2016) 41 (as at July 19, 2016)
Prohibition to deal in any property, wherever situated, held by or on behalf of a listed person

 

Yes Yes
Prohibition to enter into or facilitate directly or indirectly, any transaction related to a dealing in any property, wherever situated, held by or on behalf of a listed person

 

Yes Yes
Prohibition to provide any financial or other related service in respect of a dealing in any property, wherever situated, held by or on behalf of a listed person

 

Yes Yes
Prohibition to make any goods, wherever situated, available to a listed person

 

Yes Yes
Prohibition to provide any financial or related service to or for the benefit of a listed person

 

Yes Yes
Prohibition to provide financing for or otherwise deal in new debt of longer than 30 days’ maturity, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments in relation to persons listed in Schedule 2 (financial institutions)

 

Yes No
Prohibition to provide financing for or otherwise deal in new debt of longer than 90 days’ maturity, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments in relation to persons listed in Schedule 3 (entities)

 

Yes No
Prohibition to provide financing for or otherwise deal in new securities, including shares or any other ownership interest in relation to persons listed in Schedule 2 (financial institutions)

 

Yes No
Prohibition to export, sell, supply, or ship any listed good

 

Yes Yes
Prohibition to provide any financial, technical or other services related to any listed good whose export, sale, supply or shipment is prohibited

 

Yes No
Exemptions

 

Yes – 7 (listed goods & services) Yes – 7 (listed goods) and 5 (technical data)
Prohibition to transfer, provide or disclose to government entity or any person in the country any technical data related to listed goods

 

No Yes
Prohibition to do anything that causes, assists or promotes, or is intended to cause, assist or promote any prohibited act

 

Yes Yes
Ongoing duties to determine

 

Yes Yes
Ongoing disclosure obligations

 

Yes No
Ministerial Authorization potential

 

Yes Yes
UN Sanctions Restrictions

 

No Yes

Based on the chart above, Canada’s economic sanctions against both countries create risks for businesses.  The Canadian sanctions against Russia include certain goods, services and financial services. As a result, more activities of Canadian businesses might be caught in a somewhat wider net of unilateral sanctions against Russia.

On the other hand, the Canadian sanctions against Iran are against more entities and more individuals and there are also multilateral UN sanctions restrictions to also consider when looking at Canada’s trade restrictions against Iran.  The tracing of the relationships adds a level of complexity to any analysis. In addition, because services are not the subject of a specific prohibition, it is necessary to take time to interpret the scope of the goods and data related prohibitions. The total volume of restrictions against Iran is still complex and also rather broad.

While it appears from media reports that Iran is being opened up and Russia is being constricted, Canada’s economic sanctions against both countries create obstacles to Canadian business.  I cannot conclude that the sanctions against Russia are more restrictive.  I have to conclude that targeted sanctions are just that – targeted.  What is desired to be open is open and what is desired to be closed is closed.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com