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Canada Bans The Export Of Certain Services To Russia – Export Controls & Trade & Investment Sanctions



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Russia’s invasion of Ukraine has surpassed the 100-day mark.
As President Putin continues his offensive, the West continues to
act in close concert, imposing further restrictive measures
pressuring the Putin regime to withdraw from Ukraine. Most
recently, on June 8, 2022, Canada announced new measures
prohibiting the export of 28 services to Russia for the operation
of oil, gas and chemical industries, including technical,
management, accounting and advertising services.

Export ban: restrictions on the provision of identified
services to energy industries

In its most recent action, Canada has announced new measures imposing a ban on the
export of 28 services, insofar as these services are being provided
to Russia or to any person in Russia for use in relation to
specified industries. These measures amend the Special Economic Measures (Russia)
Regulations
(the Russia Regulations) by — among
other things — adding a new schedule (Schedule 8), which
lists the services and industries to which this prohibition
applies. These services, listed in Part 1 of the new Schedule 8,
include

  • construction work

  • retail sales of motor fuel

  • sales on a fee or contract basis of fuels, metals, ores,
    timber, building materials and industrial and technical
    chemicals

  • wholesale trade services of solid, liquid and gaseous fuels and
    related products

  • retail sales of fuel oil, bottled gas, coal and wood

  • repair services of personal and household goods

  • other lodging services not elsewhere classified

  • transportation of petroleum and natural gas

  • water transport services – freight transportation

  • water transport services – towing and pushing
    services

  • bulk storage services of liquids or gases

  • leasing or rental services concerning machinery and equipment
    without operator

  • computer and related services

  • research and development services

  • accounting, auditing and bookkeeping services

  • market research and public opinion polling services

  • management consulting services

  • services related to management consulting services

  • architectural services

  • engineering services

  • integrated engineering services

  • related scientific and technical consulting services

  • technical testing and analysis services

  • advertising services

  • services incidental to mining

  • repair services incidental to metal products, machinery and
    equipment

  • services incidental to energy distribution

  • sewage and refuse disposal, sanitation and other environmental
    protection services

The new measures prohibit Canadians or persons in Canada from
providing the above-noted services to Russia or any person in
Russia in relation to the following industries:

  • mining of coal and lignite

  • extraction of crude petroleum and natural gas

  • mining of metal ores

  • other mining and quarrying

  • mining support service activities

  • manufacture of coke and refined petroleum products

  • manufacture of chemicals and chemical products

These industries are listed in Part 2 of Schedule 8.

It is also prohibited for Canadians or persons in Canada to
knowingly do anything that causes, facilitates or assists in, or is
intended to cause, facilitate or assist in, providing any of these
services in a manner that would contravene the new measures.

The Canadian government has based the industry classifications
set out in Part 2 of Schedule 8 on the United Nations’ International Standard Industrial
Classification of All Economic Activities
[PDF] (ISIC).
The ISIC includes further breakdowns in the classification of these
industries, which can provide some additional guidance on what
types of businesses would be covered by the industries set out in
Part 2 of Schedule 8.

The stated purpose of Canada’s measures is to target the
oil, gas and chemical services sectors — industries which
together account for 50% of Russia’s federal budget revenues.
The measures are intended to reduce Russia’s ability to wage
war and signal to the Russian regime that Canada will continue to
work with like-minded partners in the international community to
coordinate further measures.

These measures follow the imposition of service export
restrictions by the United States, which announced measures [PDF] in early May
restricting the provision of management consulting, trust,
corporate formation and accounting services to any person in
Russia, and the United Kingdom’s similar ban on services exports that prevents
Russian business from using accountancy, management, consultancy
and public relations firms in Britain.

Canada’s measures imposed to date

These amendments follow on other product/sector-specific trade
restrictions on Russia that Canada has imposed recently. Prior
restrictions include prohibitions on the export to Russia or
persons in Russia of goods on the Restricted Goods and Technologies List, those
used in the manufacture of weapons, those requiring export permits
(where any existing export permits were also revoked), and those concerning the import and
export of luxury goods. Canada has also imposed sector-specific
restrictions regarding the import of Russian oil and gas, including
the import ban enacted in response to Russia’s invasion of
Ukraine and existing supply restrictions targeting the Russian oil
and gas sector that have been in place since 2014.

Import and export restrictions are only one element of
Canada’s broader sanctions framework. To date, Canada’s
sanctions enacted in response to Russia’s invasion of Ukraine
also include

  • prohibiting Canadians or persons in Canada from entering into
    any direct or indirect dealings with various designated persons or
    persons acting on their behalf, or knowingly causing, facilitating,
    assisting or intending to cause, facilitate or assist such
    dealings. This includes a prohibition on dealing in any property,
    providing any financial or related services or making any goods
    available to such persons. The lists of designated persons changes
    rapidly; a consolidated list of designated persons subject to the
    Russian Regulations can be found in the Consolidated Canadian Autonomous Sanctions
    List
    , which the Canadian government has kept fairly up-to-date
    through this volatile period.

  • prohibiting Canadians or persons in Canada from engaging in
    various dealings in the Donetsk, Luhansk and Crimea regions, or
    knowingly causing, facilitating, assisting or intending to cause,
    facilitate or assist such dealings.

  • prohibiting Canadians or persons in Canada from buying or
    dealing in most new Russian debt, directly or indirectly.

  • the withdrawal of Most-Favoured Nation tariff treatment for
    goods originating in Russia and Belarus.

  • restrictions on Russian vessels and aircraft from entering
    Canadian airspace or landing in Canada.

  • the de-“SWIFTing” of certain Russian banks.

Individuals and businesses should be mindful that, in many
cases, the restrictions are broad in scope. Canadians and persons
in Canada conducting business in or around this region of the world
should continue to be vigilant and mindful of existing and amended
sanctions.

For more information on these measures, please see our previous
Updates, published in mid-February, late February, March and April.

Anticipated future developments

As the situation in Ukraine continues to develop, Canada and its
allies have shown a clear willingness to impose additional
restrictive measures. Sanctions have continued to be implemented at
a rapid pace; it appears that so long as President Putin continues
with the invasion of Ukraine, Canada and its allies will continue
to respond with sanctions.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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