Canada extends import and export bans on Russia

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Prohibitions on covering luxury goods, commercial, industrial, medical and laboratory equipment and materials

On Friday, May 20, 2022, Canada announced changes to the Special Economic Measures (Russia) Regulations, which were registered and entered into force on May 18, 2022. Notably, these amendments significantly expand the scope of the buying and selling restrictions imposed on Russia to broader categories of goods and new industries. A detailed summary of current sanctions related to the Russian-Ukrainian conflict can be found in our previous overview, “Canadian sanctions on Russia, Belarus and separatist territories in Ukraine expanded in response to Russian invasion of Ukraine.

In addition to a few additions to the Designated Persons Lists and non-substantial editorial revisions, this latest set of amendments introduces the following new sanctions related to trade in goods:

  • Exports or supply of goods used in the manufacture of weapons: Canada has prohibited Canadians or persons in Canada from exporting, selling, supplying or shipping to Russia or to any person in Russia certain goods which may have applications in the manufacture of weapons. However, the new Annex 7, which sets out the goods covered by this prohibition, goes well beyond the equipment and materials traditionally associated with the manufacture of weapons. Annex 7 includes, for example, raw materials such as tungsten and aluminum, several types of pumps, motor vehicle parts, construction equipment such as bulldozers and jackhammers, boats, cinematographic equipment, thermostats, medical, dental and surgical equipment. Certain exemptions apply, including personal effects, software updates for civilian end users that are owned by a Canadian entity or an entity from a “like-minded” country (although Annex 7 does not does not currently include technology), certain ship and aircraft stores, and consumer consumer communication devices. This measure is subject to a 60-day wind-up clause and comes into effect on July 17, 2022. Exporters have until this date to ensure that their activities comply with these restrictions.
  • Exports or supply of “luxury” goods: Effective July 17, 2022, Canadians or anyone in Canada will be prohibited from exporting, selling, supplying or shipping certain luxury (i.e. consumer discretionary) goods to Russia listed in the new Schedule 6. The list covers a wide range of products, including alcoholic beverages, tobacco and vaping products, cosmetics, an assortment of clothing, footwear, luggage and accessories, furs, silks and textiles, ceramics, jewelry, precious metals and diamonds, household goods, motor vehicles and parts, motorcycles, marine engines and motors, sails, pianos, watches, works of art and antiques. This measure is also subject to a 60-day phase-out period and comes into effect on July 17, 2022.
  • Imports or acquisition of “luxury” goods: Canada has also banned the import, purchase or acquisition by Canadians of certain Russian luxury goods. The list of prohibited Russian products is shorter than the list of export prohibitions and consists mainly of food and beverages. Goods prohibited for importation into Canada from Russia or otherwise purchased or acquired by Canadians include fish, shellfish, caviar, certain alcoholic beverages and cut diamonds for jewellery. Collectively, these products accounted for $75.7 million in goods imported into Canada in 2021. This ban is also subject to a 60-day wind-down period and comes into effect July 17, 2022.

These changes are in addition to other Russia-specific product trade restrictions that Canada has imposed in recent weeks, which prohibited the supply of export-controlled goods and technology (including software and technical data) and goods and technologies on the list of restricted goods and technologies, as well as certain previously existing supply restrictions targeting the Russian oil and gas sector that have been in place since 2014.

Given the wide and increasingly diverse range of products covered by Canada’s trade bans, any company trading goods with entities in Russia is strongly advised to review the lists of affected products and verify that their business activities comply with Canadian law.

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