International Sanctions Lead to Charges Being Laid in Canada and Iran by US Authorities

On January 12, 2021, the United States Department of Justice announced that it charged three individuals, including two residents of Ontario, Canada in an indictment with conspiracy to export U.S. goods to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR). In addition to the foregoing, the roster of charges includes conspiracy to smuggle goods from the United States, and conspiracy to engage in international money laundering spanning 11 countries and stretching over two years.

The indictment and arrests of those individuals in Canada demonstrate the strength of sanctions law and its extra-territorial nature. Charged in the indictment are:

  • Arash Yousefi Jam, also known as Arash Yousefijam, 32, an Iranian national living in Ontario, Canada.  Arash Jam was arrested by U.S. authorities on December 23, 2020;
  • Amin Yousefi Jam, also known as Amin Yousefijam, 33, an Iranian national living in Ontario, Canada; and
  • Abdollah Momeni Roustani, also known as Abdollah Momeni, Ab Momeni, and Amir Amiri, 44, an Iranian national believed to be living in Iran.

Quoting the indictment, the announcement by the Justice Department states that “between January 2015 and February of 2017, Arash Jam, Amin Jam, and Abdollah Momeni allegedly conspired with each other and others to obtain goods in the United States and export them to Iran.  Specifically, the individuals are alleged to have conspired to fraudulently and knowingly export and send nine electrical discharge boards, one CPU board, two servo motors, and two railroad crankshafts from the United States to Iran in violation of economic sanctions.

According to a news source, “the shipment made it to port in Iran. Payments for the supplies were wired through different countries, including Turkey and Uganda.”

These allegations have not been proven in a criminal trial. However, if convicted, the individuals face a statutory maximum penalty of five years in federal prison and a $250,000 fine on the export and smuggling violations, and 20 years in federal prison and a $500,000 fine on the money laundering violation.

The lawyers at Tereposky & DeRose have significant experience in the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

If you would like to discuss any aspect of the Canadian sanctions regime, contact Vince DeRose, Jennifer Radford or Umair Azam at:

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Canada Launches Public Consultations on a Potential Comprehensive Economic Partnership Agreement with Indonesia

On January 11, 2021, the Honourable Mary Ng, Canadian Minister of Small Business, Export Promotion and International Trade, announced the launch of public consultations on a possible comprehensive economic partnership agreement (CEPA) with Indonesia.

The press release announcing these consultations explains that “[e]xpanding Canada’s trade and investment opportunities in Southeast Asia’s fastest-growing economy will diversify Canada’s trade portfolio and support our economic recovery from the COVID-19 pandemic.”

Indonesia is one of the member states of the Association of Southeast Asian Nations (ASEAN). Previously, Canada and the ASEAN member states have engaged in exploratory discussions for a possible Canada-ASEAN free trade agreement. The conclusion of these discussions was announced on September 10, 2019, when the Government of Canada expressed its “aim to expand trade and investment with large, fast-growing markets, including ASEAN”, explaining that, taken together, the “ASEAN member states represent the fifth largest economy in the world, and Canada’s sixth largest trading partner”.

Indonesia is Southeast Asia’s largest economy, a G20 member, Canada’s largest export market in Southeast Asia, and the second-largest destination for Canadian direct investment in Southeast Asia. According to the Government of Canada, the value of bilateral merchandise trade between Canada and Indonesia was $3.7 billion in 2019, and the total value of Canadian direct investment in Indonesia totaled $3.84 billion at the end of that year. Notable Canadian exports to Indonesia include agricultural products, including cereals, fertilizers, and wood pulp.

In the notice of the consultations published in the Canada Gazette, Part I on January 9, 2021 (Vol. 155, No. 2), Global Affairs Canada invites “all interested parties” to submit their views by February 23, 2021. The consultations are broad in scope, and “examples of areas where the Government would appreciate receiving views from Canadians” include the following:

  • Goods of interest in terms of export opportunities, import needs (e.g., input materials for Canadian manufacturing), and import sensitivities;
  • Rules of origin for preferential tariff treatment;
  • Procedures vis-à-vis origin (e.g., determining, certifying, and verifying origin);
  • Non-tariff barriers (e.g., technical barriers to trade and sanitary/phytosanitary measures);
  • Cross-border and customs issues;
  • Investment barriers;
  • Trade facilitation issues;
  • Services of interest in terms trade with Indonesia;
  • Temporary entry of business people from Canada into Indonesia and vice versa;
  • Electronic commerce;
  • Government procurement markets in Indonesia, including at the central, sub-central and local levels, for Canadian suppliers;
  • Issues affecting business practices when interacting with state-owned enterprises;
  • Indonesia’s application and enforcement of intellectual property (IP) protection rules;
  • Matters relating to competition policies;
  • Trade remedies with respect to ASEAN member states and Canada;
  • Any unfair business practices that may need to be addressed;
  • Issues relevant to the development of small and medium-sized enterprises; and
  • Matters relevant to Canada’s progressive trade priorities (including, for example, the rights and interests of Indigenous peoples, transparency, rule of law, gender equality, human rights, and environmental protection). In this regard, Canada has also announced its intention to conduct impact assessments with respect to the potential Canada-Indonesia CEPA, including an “initial environmental assessment” and a “gender-based analysis plus”.

Tereposky & DeRose regularly provides advice on international trade agreements. Should you have any questions regarding the consultations outlined above or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Canada Shines Light on US Solar Cell Tariffs by Initiating USMCA/CUSMA Dispute Settlement Process

On December 22, 2020, the Government of Canada requested dispute settlement consultations with the United States under Chapter 31 of the Canada-United States-Mexico Agreement (CUSMA, which is also referred to as the USMCA in the United States and the T-MEC in Mexico) concerning the continued US safeguard tariffs on Canadian crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products (CSPV products).

By way of background, the US International Trade Commission (USITC) initiated a Section 201 global safeguard investigation on imports of solar photovoltaic products (i.e., cells, modules, panels, laminates) on May 23, 2017, and imposed a 30% tariff on imports of solar products from Canada on January 22, 2018 (with the tariff set to decline by 5 percent each year). The first 2.5 gigawatts of imported solar cells in each of the four years were exempted from this measure. In October 2020, the White House issued a proclamation that would make the fourth-year tariffs 18 percent instead of the expected 15 percent. The rate is set to take effect in February 2021.

Canada has taken the position that under Chapter 10 of the CUSMA, an emergency safeguard action by the United States would exclude Canada unless those imports (i) account for a substantial share of total imports, and (ii) contribute importantly to serious injury caused by imports. The USITC found that neither of these two conditions were met. As a result, the US was required under the North American Free Trade Agreement (NAFTA), and now CUSMA, to exclude Canadian solar products from its safeguard tariffs.

In her letter to the United States Trade Representative, the Honourable Mary Ng, Canadian Minister of Small Business, Export Promotion and International Trade, wrote: “In addition, Chapter 10 of CUSMA prohibits a party from imposing restrictions on a good that would have the effect of reducing imports below the trend over a recent period with allowance for reasonable growth. The United States failed to observe this prohibition in taking its emergency action and continues to fail to observe this prohibition with respect to imports from Canada.”

Under the state-to-state dispute settlement rules provided in Chapter 31 of the CUSMA, if the parties fail to resolve a dispute through consultations, the establishment of a dispute settlement panel may be requested. Chapter 31 states that when a party believes that another party has “nullified or impaired” a benefit that the first party “could reasonably have expected to accrue to it” under the trade agreement, a request may be made for setting up the dispute settlement panel.

According to the statement issued by Minister Ng on January 7, 2021, the US safeguard tariffs have caused Canada’s exports of solar products to the United States to decline by as much as 82% since they were imposed in January 2018.

How the incoming US administration will address this dispute is not currently known. On December 9, 2020, the USTR requested formal consultations with Canada under Chapter 31 concerning how Canada regulates fourteen categories of dairy imports (See “Who’s Milking the New NAFTA? USTR Challenges Canada’s Dairy Quotas under the CUSMA/USMCA”). Stakeholders in Canada, the United States, and Mexico across the economic spectrum will be watching with great interest how these disputes unfold under the dispute settlement machinery of the CUSMA.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements and acts as counsel in international trade disputes, including WTO and regional trade agreement dispute settlement proceedings. Should you have any questions regarding the CUSMA, or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Maintaining the Status Quo – The Canada-United Kingdom Trade Continuity Remission Order, 2021

On December 22, 2020, the Government of Canada announced measures taken to ensure stability for Canadians relying upon goods imported from the United Kingdom during the period of time between January 1, 2021 and the date when the Canada-United Kingdom Trade Continuity Agreement (TCA) eventually enters into force (see “Preparing for Brexit – Canada and the United Kingdom Clinch a Transitional Trade Continuity Deal”).

The transitional period following the withdrawal of the UK from the European Union will come to an end on December 31, 2020. This means, among other things, that from January 1, 2021, the European Union’s regional free trade agreements — such as the Canada-EU Comprehensive Economic and Trade Agreement (CETA) — will no longer cover the United Kingdom. The Canada-UK TCA, which was concluded as of November 21, 2020, is intended to generally continue the rights and obligations set forth in the CETA vis-à-vis Canada and the United Kingdom until a more permanent trade agreement between the two countries can be negotiated and implemented.

However, there was simply insufficient time between the conclusion of the TCA in late November and the Brexit deadline in early January for the Parliament of Canada to pass the legislation required to implement the new agreement into Canadian law (see Bill C-18, An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland). Legislation to implement international trade agreements often requires months to move through three readings in the House of Commons (the “Lower Chamber” of Parliament), followed by three readings in the Senate (the “Upper Chamber”). This process includes referral of the draft legislation to specialized committees and often involves consultations with stakeholders. Therefore, an interim measure was needed in the meantime, to ensure that UK goods entering Canada would not become subject to customs duties pursuant to the MFN tariff under the Schedule to Canada’s Customs Tariff, potentially disrupting supply chains established under the CETA.

The solution is set out in the Canada-United Kingdom Trade Continuity Remission Order, 2021 (see CBSA Customs Notice 20-39). When it enters into force on January 1, 2021, this Remission Order will operate to provide the tariff benefits of the TCA for UK goods entering Canada. This measure implements the Memorandum of Understanding (MOU) concluded between Canada and the UK (published December 23, 2020), which lays out each country’s commitment to continue to give effect to the preferential tariff treatment for trade in goods “for the period between the date on which CETA ceases to apply to the United Kingdom and the entry into force or provisional application of the TCA”.

In order to benefit from the remission of duties, importers of qualifying goods must cite the Remission Order on their B3 Canada Customs Coding Forms in the prescribed manner. When this is done, the difference between the MFN Tariff rate of customs duty and the rate of customs duty that would apply under the CETA is remitted. For Canadian importers, this replicates the tariff benefits that would have applied to eligible imports from the UK. In return, the UK has agreed to provide reciprocal tariff benefits for eligible Canadian exports to the UK. It should be noted that importers are responsible for ensuring that they maintain the records required to support a claim for remission under the Order.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the Canada-UK TCA, the CETA, or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

 

Canada Not Ready to Give Up Its Seat? CBSA Launches Investigations concerning Imports of Certain Upholstered Domestic Seating Products

On December 21, 2020, the Canada Border Services Agency (CBSA) initiated investigations concerning the alleged injurious dumping and subsidizing of certain upholstered domestic seating imported from China and Vietnam. The investigation has been commenced under the Special Import Measures Act (SIMA), which helps to protect Canadian industries from injury caused by the dumping and subsidizing of imported goods. The investigations were initiated further to a complaint filed by Palliser Furniture Ltd. (Winnipeg, Manitoba).

The subject goods are usually classified under the following tariff classification numbers: 9401.40.00.00; 9401.61.10.10; 9401.61.10.90; 9401.71.10.10; and 9401.71.10.90.

Appendix 1 to the notice of initiation of investigations provides the product definition and additional information on the subject goods. The product definition provides that the subject goods are any upholstered seating used for domestic purposes that originate in or are exported from China and Vietnam. This definition extends to include both stationary and “motion” seating. The phrase “for domestic purposes” is defined under Chapter 94 of the Schedule to the Canadian Customs Tariff and has been interpreted and applied in Tribunal jurisprudence (see e.g., Stylus Sofas, Appeal No. AP-2013-021).  It covers seating products that are intended and designed for use in residential settings. The product definition includes an explicit exclusion for seating products that are “clearly designed and marketed for non‑domestic (i.e. commercial) use, such as in offices, business reception areas, restaurants, studios and other non‑residential applications.”

Additional guidance addresses the different descriptive marketing terms that may be used by manufacturers and retailers to describe the subject goods, noting that these “descriptive words generally do not indicate any material differences in the nature of the goods or detract from the goods being subject goods.”

Further information regarding the investigations will be available in a Statement of Reasons that will be posted within 15 days on the CBSA’s website.

Tereposky & DeRose regularly provides advice on Canadian trade remedy and trade defence matters, including anti-dumping and countervailing investigations. Should you have any questions regarding this matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Who’s Milking the New NAFTA? USTR Challenges Canada’s Dairy Quotas Under the CUSMA/USMCA

In a statement issued on 9 December 2020, the U.S. Trade Representative (USTR) announced that the United States has made a formal request for consultations to address Canada’s import limits on a variety of dairy products. This request for dispute settlement consultations is the first enforcement action taken under the Canada-United States-Mexico Agreement (CUSMA), which entered into force on July 1, 2020. (See “Farewell to the NAFTA and Welcome to the USMCA/CUSMA/T-MEC”).

In its statement, the USTR formally alleges that Canada is unfairly undermining the American dairy farmers’ ability to sell their products to Canadian consumers, and presents a four-pronged argument against Canada’s tariff-rate quota (TRQ) allocation measures. This accusation echoes the concerns of the U.S. Dairy Export Council, which complained in June 2020 about Canada’s TRQs. The USTR’s “request for consultations” could be the first step in what might become the first full-blown trade dispute under the CUSMA between Canada and the United States.

Under Chapter 31 of the CUSMA, the establishment of a dispute settlement panel may be requested if the matter is not resolved by consultations. The dispute resolution mechanism under Chapter 31 may be invoked when a party believes that another party has “nullified or impaired” a benefit that the first party “could reasonably have expected to accrue to it” under the CUSMA.

According to the USTR’s statement, the CUSMA allows Canada to maintain the right to apply certain TRQs on dairy products, including for the following kinds of goods: milk, cream, skim milk powder, butter and cream powder, industrial cheeses, cheeses of all types, milk powders, concentrated or condensed milk, yogurt and buttermilk, powdered buttermilk, whey powder, products consisting of natural milk constituents, ice cream and ice cream mixes, and “other” dairy. The USTR claims that Canada’s dairy TRQ allocation measures appear to be inconsistent with the following provisions of the CUSMA:

  1. Article 3.A.2.11(b) because Canada is setting aside and reserving a portion of the quota to processors.
  2. Articles 3.A.2.4(b) and 3.A.2.11(e) because Canada is not providing “fair” and “equitable” procedures and methods for administering its TRQs.
  3. Article 3.A.2.11(c) because, as a consequence of reserving large shares of the quota for processors and so-called “further processors”, Canada fails to ensure that, “to the maximum extent possible”, the allocation is made “in the quantities that the TRQ applicant requests”.
  4. Article 3.A.2.6(a) because the allocation measures “introduce a new or additional condition, limit, or eligibility requirement on the utilization of a TRQ” that goes “beyond those set out in [Canada’s] Schedule to Annex 2- B.”

The USTR’s challenge could set the stage for bilateral discussions and the development of measures aimed at re-shaping the trade landscape with respect to supply-managed diary products.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the CUSMA, or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Preparing for BREXIT – Canada and the United Kingdom Clinch a Transitional Trade Continuity Deal

On 21 November 2020, the Governments of Canada and the United Kingdom (UK) announced the successful conclusion of talks for an interim post-Brexit trade agreement, the Canada-United Kingdom Trade Continuity Agreement (CUKTCA). The UK is one of Canada’s largest trading partners and the largest export market for Canadian goods in Europe. In 2019, under the Canada-EU Comprehensive Economic and Trade Agreement (CETA), Canada-UK trade totalled about $29 billion.

By agreement, the CETA has continued to apply to Canada-UK trade during the transitional period following the UK’s departure from the EU (see The United Kingdom’s Withdrawal Agreement with the European Union Enters into Force). Beginning 1 January 2021, however, the UK will no longer remain bound by EU treaties with third countries, and this includes the CETA. The newly concluded CUKTCA will therefore serve to ensure continuity of trade between Canada and the UK.

The CUKTCA operates as an interim agreement, setting the stage for further Canada-UK negotiations toward a permanent, comprehensive, and more ambitious free trade agreement that can be better tailored to the bilateral relationship and interests of both countries. In the meantime, the CUKTCA will provide continued access to the benefits of the CETA for Canadian and UK stakeholders. For example, it will maintain preferential access for Canadian businesses to the UK market and vice versa, including the elimination of tariffs on 98% of products traded between Canada and the UK. Further, it will preserve the progress made under the CETA toward mutual recognition of professional qualifications and progressive trade objectives. As the UK Government has explained in a news release published on 21 November, the CUKTCAwill ensure that Canada and the UK can continue to work towards recognising each other’s qualifications in areas including accountancy, architecture and law”, and “paves the way for negotiations to begin in 2021 on a new tailor-made UK-Canada trade deal, with the potential to go further in areas like digital trade, the environment and women’s economic empowerment”.

Minister Ng, the Canadian Minister of Small Business, Export Promotion and International Trade, said that officials were in the process of finalizing the legal text of the agreement, which will then be submitted to the Parliament of Canada for ratification. There will be a relatively short timeframe for Canada’s legislators to ensure that the CUKTCA is implemented before the beginning of 2021.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the CUKTCA, CETA, or any other trade matter, we are at your disposal.

Umair Azam
613.237.1208
uazam@tradeisds.com

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

 

Fifteen Countries Conclude the Regional Comprehensive Economic Partnership (RECP)

On Sunday 15 November, fifteen Indo-Pacific countries signed the text of the Regional Comprehensive Economic Partnership (RCEP), which is set to become the world’s single largest regional trade agreement to date.

The parties to the RCEP include the members of the Association of Southeast Asian Nations (ASEAN) — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam — as well as Australia, China, Japan, New Zealand and the Republic of Korea. In addition, a “Ministers’ Declaration on India’s Participation in the RCEP” provides for India’s accession to the agreement in the future, reflecting India’s participation in the RCEP negotiations while expressly “recognizing that India is not in a position to sign the RCEP Agreement in 2020”.

As it stands, the RCEP is estimated to cover a combined GDP of US $26.3 trillion and a total population of 2.3 billion people (see Government of Australia, “About The Regional Comprehensive Economic Partnership (RCEP)”). This coverage encompasses trade in goods and services, investment, government procurement, electronic commerce, intellectual property, and worker mobility. There are chapters addressing SPS measures, technical regulations, trade remedies, and competition, as well as chapters concerning small and medium-sized enterprises (SMEs), customs procedures and trade facilitation, and economic and technical cooperation. However, the RCEP is not as comprehensive in its coverage as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which also addresses a number of other subject matters.

There are five countries who are party to both the RECP and the CPTPP: Australia, Japan, New Zealand, Singapore, and Vietnam (Brunei and Malaysia are also signatories to both agreements, but have not yet ratified or implemented the CPTPP). It will be interesting to see how suppliers in these countries leverage the overlap between these agreements to enhance their market access advantages in each regional trade area.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the RCEP, the CPTPP, or any other trade matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

 

Farewell to the NAFTA and Welcome to the USMCA/CUSMA/T-MEC

After more then twenty-five years, the highly successful North American Free Trade Agreement (NAFTA) will enter into retirement on July 1st, 2020, as it is replaced and superseded by the new regional trade agreement between Canada, Mexico, and the United States.

The NAFTA has been an important source of stability and opportunity for businesses throughout North America, establishing a system of rights, obligations and rules that have liberalized cross-border trade and investment in a predictable manner, reflecting the negotiated outcomes of its members. Although the NAFTA has not been without its challenges, including the adverse effects of supply chain consolidations as an integrated North American market emerged, it has generally enhanced the competitiveness and profitability of the stakeholders that have leveraged its benefits. It remains one of the earliest and most successful examples of a modern regional trade agreement.

This is by no means the end of an era. The NAFTA has established the very foundation of the new agreement, which is variously referred to as the “USMCA” in the United States, the “CUSMA” in Canada, and the “T-MEC” in Mexico.

That said, there are many new provisions and changes that will enter into force with the new agreement, and some of these differences — as well as how they will interact with one another — will not become fully apparent to stakeholders until they are encountered in practice. For all market participants, there are bound to be some interesting times ahead.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the CUSMA/USMCA/T-MEC or any other trade matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Farewell to the NAFTA (30 June 2020)

Canadian Parliament Passes Legislation to Implement the CUSMA

On Friday 13th March 2020, the Canadian Parliament passed Bill C-100, granting royal assent to “An Act to implement the Agreement between Canada, the United States of America and the United Mexican States” (the “CUSMA Implementation Act”). The legislative process was completed on a highly expedited basis, much earlier than expected, before Canada’s Parliament adjourned itself for a five-week period (until 20th April) in response to the COVID-19 coronavirus pandemic.

With the passage of the CUSMA Implementation Act into law, Canada has paved the way for the new North American free trade agreement to enter into force.

Under paragraph 2 of the Protocol replacing the NAFTA with the CUSMA, Canada, (i) Mexico, and the United States must notify each other, in writing, when they have completed their internal implementation procedures, and (ii) the new agreement shall enter into force (and the NAFTA shall be terminated) on the first day of the third month following the last written notification. Assuming that Canada tenders its notification by the end of March, the CUSMA could enter into force as early as 1st June 2020.

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international agreements. Should you have any questions regarding this matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Canadian Parliament Passes Legislation to Implement the CUSMA (13 March 2020)

Canada Expands Economic Sanctions Against Ukraine

On January 29, 2020, Canada amended the list of designated persons under the Special Economic Measures (Ukraine) Regulations (“the Ukraine Regulations”) adding 6 individuals. As a result, Canada now imposes an asset freeze and dealings prohibition on 202 individuals under the updated Ukraine Regulations.

Since entering into force on March 17, 2014, the Ukraine Regulations have been amended fourteen times. Enacted as part of Canada’s response to Russia’s illegal annexation of Crimea, the Ukraine Regulations are aimed at responding to violations of Ukraine’s constitution, sovereignty and territorial integrity. While the Canadian Government’s Regulatory Impact Analysis Statement explaining the policy rationale behind the new designations has not yet been published in the Canada Gazette, Global Affairs Canada has declared that the new designations are related to the recent illegitimate elections in Crimea in September 2019.

The imposition of economic sanctions does not mean that Canadians must cease business with Ukraine. Ongoing business is permitted so long as it does not involve, directly or indirectly, a designated person. The expansion of economic sanctions does, however, impose on Canadians conducting business with Ukraine further obligations to scrutinize ongoing business transactions to ensure compliance.

The lawyers at Tereposky & DeRose have significant experience in the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada.

If you would like to discuss any aspect of the Canadian sanctions regime, contact Vince DeRose or Jennifer Radford at:

Vincent DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Canada Expands Economic Sanctions Against Ukraine (18 February 2020)

The United Kingdom’s Withdrawal Agreement with the European Union Enters into Force

At midnight Central European Time on Friday 31st January 2020, the United Kingdom will formally withdraw from the European Union. At the same time, the UK-EU Withdrawal Agreement, which was passed into UK law as the European Union (Withdrawal Agreement) Act 2020 on Thursday 23rd January and approved by the European Union on Wednesday 29th January, will enter into force.

A key feature of the Withdrawal Agreement is the transitional “implementation period” that will initially run until 31st December 2020, but may be extended for a further one-year or two-year period. During this transitional period, the UK will continue to be bound by its prior obligations under international agreements as if it were still an EU member state, and the status quo between the UK and the EU will generally be preserved. This will provide stability, allowing business to continue more or less as usual, while the UK and the EU continue to negotiate the terms of their new relationship.

While these steps are essential for an orderly “Brexit” process, the cooperation of third countries like Canada will also be required. With respect to international agreements between the EU and other countries around the world, it is not enough for the EU, the member states of the EU-27, and the UK to continue to observe their rights and obligations as the EU-28. It is also necessary for the other countries with whom those rights and obligations were established to agree to recognize and abide by this arrangement.

To this end, Global Affairs Canada has issued a notice in today’s publication of the Canada Gazette, Part I (Vol. 154, No. 5, dated 1st February 2020) of Canada’s agreement, by way of a decision taken by the Minister of Foreign Affairs, “to continue to interpret its agreements with the European Union as applying to the United Kingdom as though the United Kingdom were still a member state of the European Union for the duration of the transition period as defined in the Withdrawal Agreement”. This means that, for the duration of the transition period, Canada will maintain its relationship with the UK as if it were an EU member state for the purposes of the WTO agreements, the Canada-EU Comprehensive Economic and Trade Agreement (CETA), and the other bilateral, regional, and multilateral agreements involving both Canada and the EU.

Tereposky & DeRose regularly provides advice on the interpretation, application and implementation of international agreements. Should you have any questions regarding this matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com