Bans to Cover Luxury Goods, Commercial, Industrial, Medical and Laboratory Equipment and Materials
Written By George Reid, Jessica Horwitz and Mitchell Dorbyk
On Friday May 20, 2022, Canada announced amendments to the Special Economic Measures (Russia) Regulations, which were registered and entered into force on May 18, 2022. Notably, these amendments substantially expand the scope of purchase and sale restrictions imposed on Russia to broader categories of goods and new industries. A detailed summary of current sanctions related to the Russia/Ukraine conflict can be found in our previous insight, "Canadian Sanctions Targeting Russia, Belarus and Separatist Territories in Ukraine Expanded in Response to the Russian Invasion of Ukraine."
Along with some additions to the designated persons lists and non-substantive drafting revisions, this latest round of amendments introduce the following new sanction measures related to trade in goods:
- Exports or supply of goods used in the manufacture of weapons: Canada prohibited Canadians or persons in Canada from exporting, selling, supplying, or shipping to Russia or to any person in Russia certain goods that may have applications in the manufacture of weapons. However, the New Schedule 7, which sets out the goods subject to this prohibition, goes well beyond equipment and materials traditionally associated with weapons manufacturing. Schedule 7 includes, for example, raw materials such as tungsten and aluminum, several types of pumps, parts of motor vehicles, construction equipment such as bulldozers and pile-drivers, watercraft, cinematography 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 Schedule 7 does not currently include technology), certain ship and aircraft stores, and mass-market consumer communication devices. This measure is subject to a 60-day wind-down clause and comes into effect July 17, 2022. Exporters have until that date to ensure that their activities comply with these restrictions.
- Exports or supply of "luxury" goods: Starting July 17, 2022, it will be prohibited for Canadians or any person in Canada to export, sell, supply, or ship certain luxury (i.e., discretionary consumer) goods to Russia listed in 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, housewares, motor vehicles and parts, motorcycles, marine engines and motors, sails, pianos, watches, artwork and antiquities. This measure is also subject to a 60-day wind down period and comes into effect on July 17, 2022.
- Imports or acquisition of "luxury" goods: Canada also prohibited the import, purchase or acquisition by Canadians of certain Russian luxury goods. The list of banned Russian goods shorter than the export ban list and consists principally of food and beverage items. Goods prohibited from being imported into Canada from Russia or otherwise purchased or acquired by Canadians include fish, crustaceans, caviar, certain alcoholic beverages and diamonds cut for jewelry. Collectively, these products represented $75.7 million worth of goods imported into Canada in 2021. This prohibition is also subject to a 60-day wind down period, and comes into effect on July 17, 2022.
These amendments join other product-specific trade restrictions on Russia that Canada has imposed in recent weeks which banned the supply of export-controlled goods and technology (including software and technical data) and goods and technology listed on the Restricted Goods and Technologies List, 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 varied array of products covered by Canada's trade prohibitions it is strongly advised that any company trading goods with entities in Russia review the schedules of products affected and verify that their trading activities comply with Canadian law. The Bennett Jones International Trade and Investment group can provide specific advice related to goods you may be supplying to or acquiring from Russia or Russian counterparties.