Vol. 147, No. 13 — June 19, 2013

Registration

SOR/2013-108 May 29, 2013

SPECIAL ECONOMIC MEASURES ACT

Regulations Amending the Special Economic Measures (Iran) Regulations

P.C. 2013-599 May 28, 2013

Whereas the Governor in Council is of the opinion that the situation in Iran constitutes a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4(1) to (3) of the Special Economic Measures Act (see footnote a), makes the annexed Regulations Amending the Special Economic Measures (Iran) Regulations.

REGULATIONS AMENDING THE SPECIAL ECONOMIC MEASURES (IRAN) REGULATIONS

AMENDMENTS

1. Section 3.1 of the Special Economic Measures (Iran) Regulations (see footnote 1) is amended by striking out “and” at the end of paragraph (e) and by replacing paragraph (f) with the following:

2. Sections 4 and 4.1 of the Regulations are replaced by the following:

4. (1) It is prohibited for any person in Canada and any Canadian outside Canada to export, sell, supply or ship goods, wherever situated, to Iran, to a person in Iran, or to a person for the purposes of a business carried on in or operated from Iran.

(2) Subsection (1) does not apply to

(3) It is prohibited for any person in Canada and any Canadian outside Canada to transfer, provide or communicate to Iran or any person in Iran the following technical data:

(4) Subsection (3) does not apply to technical data the provision of which is prohibited under section 5 of the Regulations Implementing the United Nations Resolutions on Iran.

4.1. (1) It is prohibited for any person in Canada and any Canadian outside Canada to import, purchase, acquire, ship or tranship any goods that are exported, supplied or shipped from Iran after May 29, 2013, whether the goods originated in Iran or elsewhere.

(2) Subsection (1) does not apply to

(3) It is prohibited for any person in Canada and any Canadian outside Canada to provide or acquire marketing services or any financial or other services to, from or for the benefit of, or on the direction or order of, Iran or any person in Iran in respect of the import, purchase, acquisition or shipment of natural gas, crude oil, or any petroleum or petrochemical products, from Iran.

3. (1) Subparagraph 5(d)(ii) of the Regulations is replaced by the following:

(2) Subparagraph 5(d)(x) of the Regulations is replaced by the following:

4. Section 6 of the Regulations is replaced by the following:

6. It is prohibited for any person in Canada and any Canadian outside Canada to make an investment in an entity in Iran.

5. Section 8.1 of the Regulations is replaced by the following:

8.1 Sections 4 to 8 do not apply to

6. (1) Items 60, 113, 152, 171, 173, 179 and 347 of Part 1 of Schedule 1 to the Regulations are repealed.

(2) Item 86 of Part 1 of Schedule 1 to the Regulations is replaced by the following:

86. Iran Mineral Production and Supply Co. (also known as IMPASCO and Iran Mineral Products Company)

(3) Part 1 of Schedule 1 to the Regulations is amended by adding the following after item 448:

7. (1) Items 47 and 48 of Part 2 of Schedule 1 to the Regulations are repealed.

(2) Part 2 of Schedule 1 to the Regulations is amended by adding the following after item 52:

8. Schedule 3 to the Regulations is amended by adding the following after category code 30:

Column 1

Category Code

Column 2


Category Description

Column 3


Applicable Subcategories

90

Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, parts and accessories thereof

9001.30, 9001.40, 9001.50, 9011.10, 9011.20, 9011.80, 9011.90, 9012.10, 9012.90, 9018.11, 9018.12, 9018.13, 9018.14, 9018.19, 9018.20, 9018.31, 9018.32, 9018.39, 9018.41, 9018.49, 9018.50, 9018.90, 9019.10, 9019.20, 9020.00, 9021.10, 9021.21, 9021.29, 9021.31, 9021.39, 9021.40, 9021.50, 9021.90, 9022.12, 9022.13, 9022.14, 9022.19, 9022.21, 9022.29, 9022.30, 9022.90

APPLICATION BEFORE PUBLICATION

9. For the purposes of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply before they are published in the Canada Gazette.

COMING INTO FORCE

10. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

1. Background

On July 26, 2010, sanctions against Iran were enacted under the Special Economic Measures Act in response to Iran’s nuclear proliferation activities, its violation of multiple United Nations Security Council (UNSC) resolutions and its failure to cooperate with the International Atomic Energy Agency (IAEA). The Special Economic Measures (Iran) Regulations (the Iran 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 United Nations sanctions; prohibited the provision of certain financial services to persons in Iran; and prohibited the export of a long list of goods and related technology that could be used in Iran’s nuclear and missile programs.

The Regulations Amending the Special Economic Measures (Iran) Regulations of October 18, 2011, added five individuals that are senior officials of the Iranian Revolutionary Guards Corps Quds Force, or are associated with such senior officials, to the list of designated persons. These individuals were implicated in the plot to kill the Saudi ambassador in the United States.

The Regulations Amending the Special Economic Measures (Iran) Regulations of November 21, 2011, further amended the Iran Regulations in response to the IAEA’s November 9, 2011, assessment of Iran’s nuclear program. The new sanctions prohibited all financial transactions with Iran, subject to certain exceptions; expanded the list of prohibited goods to include all goods used in the petrochemical, oil and gas industry in Iran; added prohibited goods to include items that could be used in Iran’s nuclear program; added new individuals and entities to the list of designated persons found in Schedule 1 of the Iran Regulations; and removed certain entities that no longer presented a proliferation concern for Canada.

The Regulations Amending the Special Economic Measures (Iran) Regulations of January 31, 2012, added three individuals and five entities to the list of designated persons. These individuals were listed in order to maintain unity with measures adopted by the European Union. The Regulations Amending the Special Economic Measures (Iran) Regulations of December 12, 2012, 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 by adding 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. Additional entities and individuals were also listed as designated persons.

Iran’s failure to respond in April 2013 to the international community’s offer of confidence-building measures proposed by the P5+1 group (the five permanent members of the UNSC plus Germany) in the Almaty, Kazakhstan, talks, and the resulting absence of progress with both the P5+1 and the IAEA led Canada to take further action by expanding the Iran Regulations.

The latest amendments introduce the following:

In order to ensure consistency with Canada’s like-minded allies, existing humanitarian exemptions have been maintained.

The Iran Regulations also remove names of entities that are considered designated persons under the Regulations Implementing the United Nations Resolutions on Iran.

2. Issue

The latest Regulations Amending the Special Economic Measures (Iran) Regulations respond to continued concerns regarding Iran’s nuclear program and its nuclear enrichment activities, as they are reported by successive reports from the IAEA. Iran is required by binding resolutions of the Board of Governors of the IAEA and the UNSC to take steps towards the full implementation of its Safeguards Agreement (refers to the Application of safeguards in connection with the Treaty on Non-Proliferation of Nuclear Weapons [NTP] which was signed by the IAEA and Iran in 1974) and other related obligations, including implementation of an Additional Protocol (AP) [the AP is meant to grant IAEA inspectors greater authority in verifying the country’s nuclear programme. Though it was signed by Iran in December 2003, Iran has failed to implement it]. The IAEA, and the P5+1, as the political negotiating body, pursue their efforts to obtain Iran’s cooperation in achieving a comprehensive, long-standing and peaceful settlement regarding Iran’s nuclear program, with proper safeguard measures and transparency.

Despite positive confidence-building proposals presented to Iran by the P5+1 group in the course of the Almaty, Kazakhstan, talks of April 5–6, 2013, Iran has failed to respond with any concrete actions.

Canada therefore believes that further economic sanctions are required to pressure Iran into urgent compliance, consistent with the dual-track approach of engagement supported by economic pressure.

3. Objectives

These new amendments to the Iran Regulations aim at further constraining Iran’s determination to pursue a nuclear program with possible military dimensions by demonstrating the resolve of Canada, in support of like-minded countries, in pursuing a shared approach of engagement and economic pressure. At the same time, consistent with measures adopted by like-minded countries, the amendments introduce exemptions aimed at relieving the pressure on average Iranians.

The most recent amendments seek to

4. Description

The latest Regulations Amending the Special Economic Measures (Iran) Regulations prohibit imports from Iran and exports to Iran, and add 30 individuals and 82 entities to the list of designated persons subject to a prohibition on dealings under the Iran Regulations. Activities that have as their purpose the safeguarding of human life, disaster relief, or the providing of medicine or medical supplies, are exempted from most sanctions, as are certain communications technologies that support Internet freedom, and goods used to purify water for civilian and public health purposes.The Minister of Foreign Affairs is authorized to issue permits to allow those affected by the Iran Regulations to undertake activities that would otherwise be prohibited.

5. Consultation

The Department of Foreign Affairs and International Trade drafted the amendments to the Regulations following consultations with the Department of Justice, theCanada Border Services Agency, the Department of Finance Canada, the Office of the Superintendent of Financial Institutions, the Department of Citizenship and Immigration, the Department of Public Safety and Emergency Preparedness, the Canadian Security Intelligence Service, the Treasury Board Secretariat, the Department of Agriculture and Agri-Food and the Privy Council Office. All departments and agencies consented to this action.

6. Small business lens

The new measures are expected to have an impact on Canadian companies doing trade with Iran, with the exception of those active in exempted sectors. Those include activities that have as their purpose the safeguarding of human life, disaster relief, or the providing of medicine or medical supplies, which are exempted from most of the sanctions, as are the supply of goods and technology that support Internet freedom, and goods used to purify water for civilian and public health purposes. The impacts are expected to be limited, however, as trade activities with Iran have decreased significantly in recent years. The Minister of Foreign Affairs is authorized to issue permits to allow those affected by the Iran Regulations to undertake activities that would otherwise be prohibited.

7. Rationale

The provisions of the Iran Regulations were implemented to put pressure on the Government of Iran to urgently comply with UNSC resolutions and other legal obligations regarding its nuclear program and to halt its proliferation activities. The measures contained in the amendments to the Iran Regulations are the best available options to limit Iran’s access to sensitive goods and resources that may support Iran’s non-compliant nuclear activities. The international community seeks to achieve a comprehensive, longstanding and peaceful settlement with Iran, with proper safeguard measures and transparency, in a way that would restore confidence in the exclusively peaceful nature of Iran’s nuclear program. Canada supports efforts to seek a diplomatic settlement to the Iranian crisis.

8. Implementation, enforcement and service standards

Provisions of Canada’s sanctions are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency.

9. Contacts

Cheryl Cruz
Deputy Director
United Nations, Human Rights and Economic Law Division (JLH)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-944-1599
Fax: 613-992-2467
Email: cheryl.cruz@international.gc.ca

Daniel Maksymiuk
Deputy Director (Iran, Iraq)
Gulf Countries and Regional Trade Division
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-944-3022
Fax: 613-944-7975
Email: daniel.maksymiuk@international.gc.ca