SOR/2016-15: Regulations Amending the Special Economic Measures (Iran) Regulations
REGISTRATION OF FEDERAL REGULATION - VIA OIC DATABASE, PRIOR TO PART II OF THE GAZETTE
February 5, 2016
REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues In 2010, Canada imposed sanctions against Iran under the Special Economic Measures Act (SEMA). The Special Economic Measures (Iran) Regulations (Iran SEMA Regulations) were adopted and enhanced in response to the Government of Iran’s successive violations of its nuclear-related international obligations u... (Click for more)
Published on February 5, 2016
SOR/2016-15: Regulations Amending the Special Economic Measures (Iran) Regulations
REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues In 2010, Canada imposed sanctions against Iran under the Special Economic Measures Act (SEMA). The Special Economic Measures (Iran) Regulations (Iran SEMA Regulations) were adopted and enhanced in response to the Government of Iran’s successive violations of its nuclear-related international obligations under United Nations (UN) Security Council resolutions (Security Council) and its refusal to cooperate fully with the International Atomic Energy Agency (IAEA) and suspend its enrichment-related activities. Canada’s autonomous sanctions under SEMA were imposed in addition to existing Security Council sanctions against Iran, implemented in Canada under the United Nations Act. On July 20, 2015, the Security Council adopted Resolution 2231, under Chapter VII of the UN Charter, endorsing the agreement known as the Joint Comprehensive Plan of Action (JCPOA) reached between the five permanent members of the Security Council (China, France, Russia, the United Kingdom, and the United States), Germany (P5+1) and Iran to ensure that Iran’s nuclear program would be exclusively peaceful. The agreement provides Iran with substantial international sanctions relief in return for Iran fulfilling its commitments to significantly roll back and constrain its nuclear program. Under the JCPOA, the European Union (EU) and the United States (U.S.) have also relaxed some of their sanctions against Iran to varying degrees, beginning on January 16, 2016, known as “Implementation Day” of the JCPOA. The Regulations Amending the Special Economic Measures (Iran) Regulations (the Regulations) will broadly align the Iran SEMA Regulations with the sanctions regimes of the majority of Canada’s like-minded countries, including EU member states, following the implementation of the JCPOA. The Regulations withdraw some of the broad restrictions on trade and financial transactions with Iran and maintain controls on the flow of sensitive goods, reflecting the consensus that, if effectively and verifiably implemented, the nuclear agreement has and will continue to reduce the threat posed by Iran’s nuclear program. Background On July 26, 2010, the Iran SEMA Regulations were enacted in response to Iran’s nuclear proliferation activities, its violation of multiple Security Council resolutions and its failure to cooperate with the IAEA. The Iran SEMA Regulations prohibited dealings with a list of designated persons; banned the export of goods used in the liquefaction of gas or the refining of oil, as well as the export of arms and related material not already prohibited under existing Security Council resolutions; prohibited the provision of certain financial services to persons in Iran; and prohibited the export of a list of goods and related technology that could be used in Iran’s nuclear and missile programs enumerated in Schedule 2 of the Regulations. On October 18, 2011, amendments to the Iran SEMA Regulations added five individuals, either senior officials of the Islamic Revolutionary Guards Corps Qods Force or individuals associated with them, to the list of designated persons. On November 21, 2011, amendments to the Iran SEMA Regulations added new sanctions in response to the IAEA’s November 9, 2011, assessment of Iran’s nuclear program. The amendments prohibited all financial transactions with Iran, subject to limited certain exceptions; expanded the list of prohibited goods to all goods used in the petrochemical, oil and gas industry in Iran; added items that could be used in Iran’s nuclear program to the list of prohibited goods; added new individuals and entities to the list of designated persons; and removed certain entities that no longer presented a proliferation concern for Canada. On January 31, 2012, amendments to the Iran SEMA Regulations added three individuals and five entities to the list of designated persons. These individuals were listed in order to align Canadian sanctions with measures adopted by the EU. On December 12, 2012, amendments to the Iran SEMA Regulations sought to further align Canadian sanctions with measures adopted by like-minded countries as a result of Iran’s continued refusal to engage meaningfully with the international community. The amendments added export restrictions on vessels designed to transport or store crude oil, petroleum and petrochemical products, goods used to build or maintain ships, goods used in the mining industry, and shipments of hard currency valued at greater than $40,000. Eighty-nine additional entities and one individual were also listed as designated persons. An exemption was introduced to facilitate activities with the purpose of safeguarding human life, disaster relief, and the provision of food, medicine and medical supplies. On May 29, 2013, amendments to the Iran SEMA Regulations introduced a broad ban on imports from Iran and exports to Iran and provided the addition of 82 new entities and 32 individuals to the list of designated persons. They also introduced an exemption aimed at increasing the availability of consumer communication technologies that contribute to Internet freedom, and an exemption for goods used to purify water for civilian and public health purposes. On July 14, 2015, the P5+1 reached an agreement with Iran on the JCPOA. The Security Council endorsed the deal by adopting Resolution 2231 (2015). Under the JCPOA, Iran accepted long-term restrictions on its nuclear program, combined with extensive international verification, aimed at preventing Iran from being able to produce a nuclear weapon. In return, Iran received significant relief from sanctions imposed for its past non-compliance with international obligations in regard to its nuclear program. Under the JCPOA, the U.S. and the EU have committed to suspending or withdrawing some of their sanctions against Iran. Implementation of this commitment began on “Implementation Day,” when the IAEA presented its report that Iran had implemented a first tranche of its commitments under the JCPOA. A full overview of EU and U.S. sanctions relief can be found in Annex II of the JCPOA. Objectives The Regulations allow Canada to broadly align its SEMA sanctions against Iran with those of the majority of its like-minded countries including the EU member states. The amendments aim to contribute to international efforts by like-minded countries to recognize the steps taken under the JCPOA, while continuing to pressure its government to make additional reforms and restrict its access to sensitive goods. Description The Regulations remove the blanket prohibitions on imports and exports to and from Iran; remove the prohibition on the transfer, provision or communication of certain technical data to Iran, except for technical data related to goods listed in Schedule 2; remove broad prohibitions on providing or acquiring financial or other services to or from Iran; remove the prohibition on making investments in entities in Iran; remove the prohibitions related to the provision of services to vessels owned or operated by Islamic Republic of Iran Shipping Lines, or to Iranian oil takers or cargo vessels; remove 43 individuals and 349 entities from the Schedule 1 list of designated persons; add six individuals and two entities to the Schedule 1 list of designated persons; and modify the list of items prohibited for export to Iran, as listed in Schedule 2 in order to continue prohibiting the export of potentially proliferation sensitive items to Iran by individuals in Canada or Canadians abroad, especially with respect to nuclear proliferation and ballistic missiles. The Regulations will continue to authorize the Minister of Foreign Affairs to issue to any person in Canada, or any Canadian outside of Canada, a permit to carry out a specific activity or transaction restricted under the Iran SEMA Regulations, including the export to Iran of items listed under Schedule 2. Finally, the language is updated throughout the Regulations to give effect to certain recommendations made by the Standing Joint Committee for the Scrutiny of Regulations, to clarify intent, and to ensure consistency across Canada’s economic sanctions regulations. “One-for-One” Rule The “One-for-One” Rule applies to this proposal, as there are minimal administrative costs to business, because of the reporting requirement. However, the administrative burden associated with the proposed Regulations is carved out from the “One-for-One” Rule, as they address unique, exceptional circumstances. Small business lens The small business lens does not apply to this proposal, as there are no costs (or insignificant costs) on small business, and small business would not be disproportionately affected. Consultation Foreign Affairs, Trade and Development Canada drafted the Regulations in consultation with the Department of Justice, the Department of National Defence, the Canadian Nuclear Safety Commission, and the Canadian Security Intelligence Service. Rationale The implementation of the JCPOA will help to ensure that Iran cannot build a nuclear weapon and that its nuclear program is exclusively for peaceful purposes. It will also reduce the risk of a destabilizing nuclear arms race in the region. However, Canada remains concerned about Iran’s nuclear ambitions and will continue to pay close attention to developments relating to Iran’s nuclear program, including Iran’s implementation of the measures agreed under the JCPOA and its respect for its international non-proliferation obligations. The amendments to the Iran SEMA Regulations aim to reinforce international efforts to recognize the steps taken under the JCPOA, which have reduced the threat posed by Iran’s nuclear program, while continuing to pressure the government of Iran to make further reforms and restrict its access to sensitive goods. The amendments are consistent with the approaches taken by many of Canada’s like-minded partners. Implementation, enforcement and service standards Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 8 of the Special Economic Measures Act (SEMA), every person who wilfully convenes the Iran Regulations under the SEMA is liable on summary conviction to a fine of not more than $25,000 or to imprisonment for a term of not more than five years. Contact Emmanuelle Lamoureux Director Gulf States Relations Division Global Affairs Canada 125 Sussex Drive Ottawa, Ontario K1A 0G2 Telephone: 343-203-3293 Email: [email protected] Footnote a S.C. 1992, c. 17 Footnote 1 SOR/2010-165
This Bill does not amend any statutes.
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