Falling Off the Grid – CBSA Launches Anti-dumping Investigation Concerning Certain Small Power Transformers

On April 15, 2021, the Canada Border Services Agency (CBSA) initiated an investigation  concerning the alleged injurious dumping of certain small power transformers from Austria, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), and South Korea (SPT 2021 IN). This investigation was triggered by a formal complaint filed on behalf of a group of Canadian transformer manufacturers, including Transformateurs Delta Star Inc., Northern Transformer Corporation, PTI Transformers Inc., and PTI Transformers L.P.

The CBSA’s Notice of Initiation explains that the subject goods are normally classified under tariff classification numbers 8504.22.00.20 and 8504.23.00.10, although parts and components of small power transformers and incomplete units may also be imported under tariff classification numbers 8504.90.90.10, 8504.90.90.82, and 8504.90.90.90.

According to the CBSA’s investigation schedule, responses to importer request for information (RFI) questionnaire are due by May 10, 2021, whereas responses to the exporter responses to the exporter RFI questionnaire are due by May 25, 2021. The preliminary determination (or termination) of the investigation will be issued on July 14, 2021, with the Statement of Reasons expected to follow on or about July 29, 2021.

This is not the CBSA’s first investigation of imported power transformers. Since November 2012, anti-dumping measures have been applied to large power transformers (i.e., “liquid dielectric transformers having a top power handling capacity equal to or exceeding 60,000 kilovolt amperes (60 megavolt amperes)” from the Republic of Korea).

Tereposky & DeRose regularly provides advice on Canadian anti-dumping and countervailing matters. Should you have any questions regarding this matter or trade remedies issues more generally, 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 announces new sanctions on Russia

On March 24, 2021, Canada’s Minister of Foreign Affairs announced new sanctions against 9 Russian officials under the Special Economic Measures (Russia) Regulations (Russia Regulations or Regulations)in response to “gross and systematic violations” of human rights in Russia. The sanctions come in response to the poisoning and prosecution of Kremlin critic Alexey Navalny, most prominent critic of Russian President Vladimir Putin. The Minister stated that “the Russian government has repeatedly shown its unwillingness to respect the basic rights of its own people and address concerns raised on multiple occasions by the international community.”

Who is targeted?

Those targeted under the Russian Regulations include:

  • Aleksandr Vasilyevich Bortnikov, director of the Federal Security Service, Russia’s principal security and counterintelligence agency;
  • Aleksandr Petrovich Kalashnikov, director of the Russian Penetentiary Service;
  • Sergey Vladilenovich Kiriyenk, the first deputy chief of staff in the Putin administration;
  • Igor Viktorovich Krasnov, Russia’s prosecutor general;
  • Aleksey Yurievich Krivoruchko, a deputy minister of defence in Russia responsible for weapons and military equipment;
  • Sergey Ivanovich Menyaio, the plenipotentiary representative of the President of the Russian Federation in the Siberian Federal District;
  • Pavel Anatolyevich Popov, deputy minister of defence responsible for research;
  • Andrey Veniaminovich Yarin, first deputy chief of staff of the Presidential Executive Office, and
  • Viktor Vasilyevich Zolotov, current Director of the National Guard of Russia and a member of the Security Council of Russia.

Sanctions

In addition to being inadmissible to Canada under the Immigration and Refugee Protection Act, the Russia Regulations impose an asset freeze and dealings prohibition on designated persons listed in Schedule 1. These sanctions are equally applicable to both individuals and entities. Under the Russia Regulations, any Canadian outside Canada or any person in Canada is prohibited from:

  • dealing in any property, regardless of its location, held by or on behalf of a listed person;
  • directly or indirectly entering into or facilitating any transaction related to such a dealing;
  • with respect to such a dealing providing any financial or other related services;
  • making any goods from anywhere available to a listed person, and
  • providing any financial or related service to, or for the benefit of, a listed person.

Financial and Energy Sectors

The Regulations also impose restrictions in connection with certain sectors, such as the financial and energy sectors. Specifically, with certain exceptions, in relation to persons listed in Schedule 2, the Regulations prohibit any person in Canada and Canadians abroad from dealing in new debt of longer than 30 days maturity. The prohibition increases to 90 days maturity in relation to persons listed in Schedule 3. In relation to persons listed in Schedule 2, the Regulations also prohibit any person in Canada or Canadians abroad from dealing in new securities.

Additionally, the Regulations also prohibit the export, sale, supply or shipping of goods listed in Schedule 4, to Russia or to any person in Russia for their use in offshore oil where the depth is greater than 500m, shale oil or Arctic oil exploration and production. This includes “a ban on the provision of any financial, technical or other services related to the goods subject to this prohibition.”

The Regulations provide some exceptions to the asset freeze and dealing prohibition on persons listed under Schedule 1.

Permits and Certificates

The Special Economic Measures Act under subsection 4(4), authorizes the Minister of Foreign Affairs to issue to any person in Canada or any Canadian outside Canada, a Special Economic Measures (Russia) Permit Authorization Order, to carry out a specified activity or transaction, or any class of activity or transaction, that is restricted or prohibited pursuant to the Regulations.

What’s next?

Taking precautions that will keep your business protected and compliant with the Canadian sanctions regime is extremely important. Businesses should mitigate the risk of corporate criminal liability by having a compliance program in place, including revised screening protocols for purposes of conducting due diligence prior to and throughout a commercial transaction.

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.

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 consultation on trade negotiations with the United Kingdom

On March 19, 2021, Canada’s Minister of International Trade announced that Canada will ratify its Trade Continuity Agreement (TCA) with the United Kingdom. The announcement came after the Canadian Minister held a call with the United Kingdom’s Secretary of State for International Trade, Elizabeth Truss. It is anticipated that Canada and the UK will implement the agreement by April 1, 2021.

On December 9, 2020, Minister Mary Ng introduced Bill C-18: An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland. On March 17, 2021, the Bill received Royal Assent and became law. As Canada and the UK negotiate a more expansive free trade agreement, the TCA is intended to be operate as an interim measure, maintaining preferential market access for Canadian businesses in the UK market and vice versa, including the elimination of tariffs on 98% of trade in goods (see Preparing For Brexit – Canada And the United Kingdom Clinch a Transitional Trade Continuity Deal).

Until the TCA is ratified and implemented, the trade relationship between Canada and the UK is governed by an MOU that provides reciprocal tariff preferences on goods shipped between both countries (see Maintaining the Status Quo – The Canada-United Kingdom Trade Continuity Remission Order, 2021).

On March 12, 2021, the Government of Canada launched public consultations in order to chalk out priorities from the Canadian perspective to shape the future trade negotiations with the UK. The public consultations will remain open until April 27, 2021 (see Canada Launches Public Consultation on Trade Negotiations with the United Kingdom).

Tereposky & DeRose regularly provides advice on the interpretation, application, and implementation of international trade agreements. Should you have any questions regarding the CUKTCA, CETA, CPTPP 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 Announces New Sanctions on China

On March 22, 2021, Canada announced that in response to human rights violations in Xinjiang in China, it will join its international partners in imposing new sanctions. The announcement comes after the European Union (EU) decided to impose the first sanctions against Beijing since an EU arms embargo in 1989. The United Kingdom (UK) and the United States (US) have also declared sanctions against China.  

The U.N. and other rights experts have raised alarm at the extent of human rights abuse in China. Sources indicate that more than 1 million Muslims are being detained in concentration camps in Xinjiang with reports of political re-education, torture, forced labour, and sterilizations.

Under the new measures, Canada has sanctioned 4 officials and 1 entity under the Special Economic Measures (People’s Republic of China) Regulations (China Regulations), based on their participation in what is described as gross and systematic human rights violations in the Xinjiang Uyghur Autonomous Region. Notably, Canada did not impose these sanctions under its Sergei Magnitsky Law or the Justice for Victims of Corrupt Foreign Officials Act, which allows Canada to adopt targeted measures against foreign nationals who are, in the opinion of the Governor in Council, responsible for or complicit in gross violations of human rights.

Canada has adopted these new measures in coordination with the UK and the US. In addition to addressing human rights violations, the new sanctions aim to prevent the entry of goods that are produced from forced labour into “Canadian and the wider global supply chains and to protect Canadian businesses from becoming unknowingly complicit.” On a previous occasion, the Government of Canada laid out its seven-pronged approach to the Beijing sanctions regime:

  • The Prohibition of imports of goods produced wholly or in part by forced labour;
  • A Xinjiang Integrity Declaration for Canadian companies;
  • A Business Advisory on Xinjiang-related entities;
  • Enhanced advice to Canadian businesses;
  • Export controls;
  • Increasing awareness for Responsible Business Conduct linked to Xinjiang; and
  • A Study on forced labour and supply chain risks

The China Regulations prohibit any transaction akin to an asset freeze with listed individuals by prohibiting persons in Canada, and Canadians outside Canada, from engaging in any activity related to any property of these individuals or providing financial or related services to them. 

To avoid breaching these latest sanctions, including the ones announced by Canada on January 12, 2021, businesses with a trading relationship with China should have in place a compliance programme based around a robust policy on sanctions and adopt comprehensive systems to implement the policy effectively. Tereposky & DeRose regularly assists with such compliance programs.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

The European Union Takes a Jab at COVID-19 Vaccine Exports

On March 17, 2021, the European Union (EU) flexed its muscle by threatening to curb vaccine exports by banning them to certain countries. Canada, although not specifically targeted by the EU’s newest overture in the COVID-19 vaccine saga, could experience a spillover effect with disruptions in the vaccine supply. In the first quarter of this year, Canada relied heavily on assurances provided by the EU for securing the Covid-19 vaccine without formalizing the agreement (See A Friend in Need is A Friend Indeed – European Union Provides Verbal Assurances To Canada Against its Vaccine Export Controls).

The European Commission President, Von der Leyen, said that the COVID-19 action of export controls “is about making sure that Europe gets its fair share.” This announcement comes at a time when Canada is bolstering its efforts to secure a steady supply of COVID-19 vaccines after a slower than the anticipated start. She added that “all options are on the table” and the EU could invoke its emergency article 122 of the Treaty on the Functioning of The European Union “if severe difficulties arise in the supply of certain products” to member states allowing the EU to take exceptional measures such as seizing production of vaccines and suspending intellectual property rights.

Meanwhile, on March 16, 2021, the Canadian Minister of Public Services and Procurement, Anita Anand, stated that there will be no reduction in Canada’s supply of doses as the country is receiving over 2 million doses next week and a cumulative total of 8 million doses by the end of March. The White House confirmed on March 17, 2021, that Canada has asked the United States for help in procuring the Covid-19 vaccine. This was followed by another announcement by the Canadian Minister on March 18, 2021:

After numerous discussions with the Biden administration, Canada is in the process of finalizing an exchange agreement to receive 1.5 million doses of the AstraZeneca vaccine from the U.S. We look forward to providing an update to Canadians once the details are finalized.

On March 19, 2021, Canadian Prime Minister Justin Trudeau announced that starting March 22, 2021, Canada will receive at least a million doses of Pfizer’s vaccine each week to the end of May. Canada approved AstraZeneca’s shot and ordered 20 million doses of it directly from the company while some European countries, including Germany, France, Italy, and Spain suspended its use. The suspension was a result of reports that the AstraZeneca vaccine caused a dangerous blood clot in recipients. The EU regulator announced on March 18, 2021, that there was “no indication” the shot was responsible for the condition.

The logistical hurdles and the rising post-Brexit tension between the EU and the United Kingdom as Canada braces for a third wave of the pandemic could jeopardise plans to roll out the already delayed vaccination supply from the EU. Having secured, under a loan agreement, 1.5 million doses of the AstraZeneca vaccine from the US and two million doses from the Serum Institute in India, Canada should have a total of 9.5 million doses, up from the previously projected 8 million doses.

Tereposky & DeRose regularly provides advice on Canadian trade matters, including procurement,  safeguard actions, and export controls. Should you have any questions regarding this matter, we are at your disposal.

Vince DeRose
613.237.8862
vderose@tradeisds.com

Jennifer Radford
613.237.9777
jradford@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Vince DeRose appointed as Managing Partner

The partners of Tereposky & DeRose are pleased to announce the appointment of Vince DeRose as the firm’s inaugural Managing Partner. Vince is a  founding partner of the firm. Over the course of his 20-year career, Vince has represented government and private sector clients in high-stakes matters concerning public procurement, trade and investor-state dispute settlement and has appeared as counsel before courts, tribunals, arbitrators and administrative agencies.  Since the firm’s inception, Vince has undertaken a leadership role in the management and direction of the firm. That role has now been formalized.

With this new appointment, Tereposky & DeRose’s team of committed professionals and staff members will further develop its leading position in international trade, investor-state dispute settlement, government procurement and related practice areas.

 

Canada launches public consultation on trade negotiations with the United Kingdom

On March 12, 2021, the Government of Canada announced that it is launching public consultations as it ramps up its efforts on new trade negotiations with the United Kingdom. Further to the United Kingdom’s withdrawal from the European Union, Canada and the United Kingdom committed to continue their trade relationship, as established under the Canada-EU Comprehensive Economic and Trade Agreement (CETA), pursuant to the Canada-United Kingdom Trade Continuity Agreement (TCA) (see “Preparing for Brexit – Canada and the United Kingdom Clinch a Transitional Trade Continuity Deal”). While steps are taken to implement the TCA, interim measures agreed under a Memorandum of Understanding (MOU) have ensured that goods traded between Canada and the UK continue to enjoy uninterrupted preferential tariff treatment. The interim measure implemented in Canada is the United Kingdom Trade Continuity Remission Order, 2021 (see “Maintaining the Status Quo – The Canada-United Kingdom Trade Continuity Remission Order, 2021”).

Key provisions in Article IV of the TCA (i) require Canada and the UK to commence negotiations on a more permanent regional trade agreement (RTA) within one year of the TCA’s entry into force, and (ii) establish the objective of concluding those negotiations within three years of the TCA’s entry into force.

In addition to concluding a bilateral trade agreement with Canada, the United Kingdom has taken steps to begin the process of negotiating its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a plurilateral RTA to which Canada is already a party. The United Kingdom submitted a notification of intent letter to begin the CPTPP accession process on February 1, 2021..

The purpose of the Government of Canada’s consultations is to provide the Canadian public and other interested stakeholders (e.g., industry associations, enterprises, and other organizations) with an opportunity to submit information, views, requests, and questions that will help to shape Canada’s priorities in the trade negotiations with the United Kingdom.

More information on the consultation process and how to make submissions is provided on the dedicated Global Affairs Canada website. Canadians anywhere in the world can participate in the public consultations process, which will remain open until April 27, 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, CPTPP or any other trade matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Greg Tereposky
613.237.1210
gtereposky@tradeisds.com

Dinner is served – Food importers in Canada must apply for Canadian food inspection agency’s licence

The Canadian Food Inspection Agency (CFIA) has announced that as of March 15, 2021, importers must possess a valid Safe Food for Canadians (SFC) licence before importing food products that are covered under the Safe Food for Canadians Regulations. The announcement explains that (i) unless importers enter a valid SFC licence into their import declaration, the CFIA will reject their imports of meat, fish, eggs, dairy products, fruits, vegetables, honey, or maple products, and (ii) importers will not be able to obtain SFC licences for their shipments at the border.

The CFIA’s announcement should be read together with the new Customs Notice 20-01, which was issued by the Canadian Border Services Agency (CBSA) on January 6, 2021 (replacing the previous Customs Notice CN 19-01 concerning SFC requirements). The new customs notice explains the importance of obtaining new SFC licences, as licences and registrations issued under previous CFIA food legislation (e.g. the Fresh Fruit and Vegetable Regulations, or the Dairy Products Regulations) are no longer valid for registered foods. Rather, SFC licences are now mandatory for commercial importers of covered foods. The new customs notice also explains that “[s]hipments without an SFC licence may experience delays or refusal of entry at the border, and importers may be subject to enforcement actions”.

Under normal circumstances, SFC licence applications normally take up to 15 business days to process. If a pre-licence inspection is required, the process can take longer. Importers requiring an SFC licence are encouraged to submit their application as soon as possible to avoid delays or rejection of shipments at the border.

The SCFR identifies general exemptions from licensing requirements for certain categories of food imports. However, even if exempted from the SFCR requirements, food imports remain subject to CFIA requirements under the Health of Animals Act, Plant Protection Act and their associated regulations, as well as all other relevant Canadian legislation and regulations.

Tereposky & DeRose LLP regularly provides advice on the interpretation, application, and implementation of customs notices and provides representation to Canadian and international businesses at the CBSA. Should you have any questions regarding the CFIA requirements for a new SFC licence, or any other trade matter, we are at your disposal.

Daniel Hohnstein
613.237.9005
dhohnstein@tradeisds.com

Umair Azam
613.237.1208
uazam@tradeisds.com

Canada Imposes Sanctions on Myanmar Military Officials

Canada’s Minister of Foreign Affairs, The Honourable Marc Garneau announced that  effective February 18, 2021, Canada is imposing sanctions against 9 Myanmar military officials, under the Special Economic Measures (Burma) Regulations (“Regulations”). This action is followed by the coup d’état perpetrated by the Myanmar Armed Forces. Earlier this month on February 3, 2021, the G7 Foreign Ministers made the following statement:

            We, the G7 Foreign Ministers of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America and the High Representative of the European Union, are united in condemning the coup in Myanmar.

While the specific prohibitions are set out in the regulations, the names of the individuals added to the schedule of these regulations are:

  • Min Aung Hlaing
  • Soe Win
  • Sein Win
  • Soe Htut
  • Ye Aung
  • Mya Tun Oo
  • Tin Aung San
  • Aung Lin Dwe
  • Ye Win Oo

The current measures under the Regulations impose on listed individuals a prohibition on dealings (effectively an asset freeze) by prohibiting persons in Canada and Canadians outside Canada from dealing in any property of these individuals or providing financial or related services to them.

The sanctions against Myanmar were enacted under the Special Economic Measures Act to respond to the ongoing human rights and humanitarian situation in Myanmar. On December 13, 2007, the Special Economic Measures (Burma) Regulations came into force.

The measures implemented by the Regulations, as amended, include:

  • a freeze on assets in Canada of any designated Myanmar nationals connected with the Myanmar State, as well as prohibitions on several categories of transactions, services and dealings involving property of designated persons, wherever situated; and
  • an arms embargo, including prohibitions on exporting and importing arms and related material to and from Myanmar, on communicating technical data related to military activities or arms and related material, and on financial services related to military activities or arms and related material.

A separate Special Economic Measures (Burma) Permit Authorization Order (SOR/2007-286), made pursuant to subsection 4(4) of the Special Economic Measures Act, authorizes the Minister of Foreign Affairs to issue to any person in Canada and any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is restricted or prohibited pursuant to the Regulations.

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

 

A Friend in Need is a Friend Indeed – European Union Provides Verbal Assurances to Canada Against its Vaccine Export Controls

Canada’s doses of COVID-19 vaccines from Pfizer-BioNTech and Moderna are made in and shipped from Europe. With AstraZeneca being unable to fill Europe’s contract for its vaccine in the first three months of the year, the European Union (EU) issued its temporary Transparency and Authorization Mechanism on 29 January 2021. One of the key highlights of the mechanism is the export authorization scheme that provides for authorizations of exports outside the EU of COVID-19 vaccines until the end of March 2021. As such, the vaccine exports will be subject to an early notification and authorization before they are effectively shipped outside the EU.

Recently, the President of the European Commission (EC) provided assurances to the Canadian Prime Minister that the proposed European Union vaccine export transparency mechanism is not intended to disrupt exports of vaccines to Canada. On Monday, the Canadian Minister of International Trade, Mary Ng, said she and the Prime Minister had received several verbal assurances from European officials that Canada’s vaccine orders would not be affected by the controls. While Canada is not on the list of countries exempted from the controls under the Transparency and Authorization Mechanism, the European Commission’s declaration states:

           The Commission is mindful of APAs [Advanced Purchase Agreement] contracted by third countries, and will endeavour to ensure that the expectations of these countries to obtain their deliveries will be met.

Although the measure states that the export authorization mechanism is not an export ban, concerns were raised in Canada that Canada’s Advanced Purchase Agreements may not be honoured. However, the Canadian Prime Minister assured that should the EU go forward with the controls, he had ‘strong assurances’ from EU leadership that Canada would not be impacted. A news source reported that the Assistant Deputy Minister for trade policy and negotiations at Global Affairs Canada, Steve Verheul told the House of Commons Trade Committee that Canada’s first goal is to ensure Europe lives up to its promise. Without any further elaboration he added, “We’re waiting to see if the EU process is going to pose any interruptions or not,” said Verheul. He went on to state “But we’re certainly prepared that if this process does start to create problems, we will have steps we can take in light of that.” Currently, with no domestic COVID-19 vaccine production, the Canadian government has signed a “memorandum of understanding” with Novavax to produce its COVID-19 vaccine in Canada. However, it is not expected to roll out production until fall.

The EU has invested a total of €2.7 billion to produce several vaccines against COVID-19. While the EU claims that its measures are in line with all its international obligations under WTO and G20 commitments, Canada does not have many mechanisms to challenge the new controls under the Comprehensive Economic and Trade Agreement (CETA), Canada’s free trade agreement with the European Union.

Tereposky & DeRose regularly provides advice on Canadian trade matters, including safeguard actions and export control. Should you have any questions regarding this matter, we would be pleased to speak with you.

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’s Economic Sanctions: All Bark no Bite? Charges Dropped Against Halifax Man Accused of Violating Syrian Sanctions

Under Canada’s regime of economic sanctions, Nader Kalai, a businessman from Halifax was expected to be the first person to face a trial after violating Canada’s sanctions in Syria. However, the trial ended abruptly in January 2021 as the Crown declined to offer any evidence and asked the Court for an acquittal.

On May 24, 2011, Canada announced that targeted sanctions, in response to the humanitarian crises and resulting breach of international peace and security in the region, would be imposed against members of the current Syrian regime under the Special Economic Measures Act (SEMA). The Special Economic Measures (Syria) Regulations impose sanctions against members of the current Syrian regime. In addition to the restrictions on dealings with designated persons, the Regulations prohibit any person in Canada and any Canadian outside Canada to:

  • Import, purchase, acquire, carry or ship any goods, excluding food for human consumption, from Syria;
  • Provide or acquire financial services to, from or for the for the benefit of or on the direction or order of Syria or any person in Syria;
  • Invest in Syria;
  • Export, sell, supply or ship to Syria of goods, including technical data, used for monitoring telecommunications;
  • Export, sell, supply or ship luxury goods to Syria;
  • Export, sell, supply or ship goods listed in Schedule 2 of the Regulations, including any technical data related to such goods;
  • Causing, assisting or promoting prohibited activities is likewise prohibited.

As a backgrounder to the proceeding, Kalai was accused of violating SEMA and initially, his trial was set for May 2020. The hearing was then delayed to the following month as a result of the COVID-19 pandemic. The three-day trial starting on August 18, 2020, was to be judge-alone and much of it was to be done by video-conferencing. The trial was expected to be unique as only one person has been prosecuted under SEMA since its introduction in 1992 which at the time resulted in a guilty plea and a small fine for the accused, a company.

The accusations against Kalai of violating the measures imposed on Syria included making a payment of 15 million Syrian pounds (approximately C$140,000) to a company called Syrialink, a Syrian company, on November 27, 2013. The Crown alleged that the transaction took place when Kalai was in Canada.

An earlier ruling by the Supreme Court of Nova Scotia shows that the presiding judge held that while the evidence before the Court was admissible, Crown had produced little or no evidence in support of the documents being admitted for the truth of their contents and the Crown did not meet the threshold for substantive reliability.

In June 2018, the Canada Border Services Agency (CBSA) laid the charges against Kalai for violating the Canadian sanctions regime. After a two-year-long investigation into Kalai, the CBSA claimed that he had misled Citizenship and Immigration Canada in acquisition of his status as a Canadian permanent resident. Had he been convicted, Kalai would have faced up to five years in prison.

Kalai, who has been placed under the European Union sanctions regime, was described by a European court as being a “leading businessperson operating in Syria with significant investments in the construction industry.”

The efficacy of the Canadian sanctions regime appears to be in stark contrast with respect to its American counterpart. The United States Department of Justice laid charges against three individuals, including two residents of Ontario, Canada in an indictment with conspiracy to export U.S. goods to Iran resulting in extra-territorial arrests (See, International Sanctions lead to charges being laid in Canada and Iran by US Authorities).

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