Backgrounder - Sanctions against Iran
Backgrounder
United Nations sanctions against Iran
Between 2006 and 2010, the UN Security Council imposed four rounds of sanctions in response to Iran’s nuclear program. The UN sanctions regime, supplemented by autonomous sanctions applied by a number of countries, including Canada, played a key role in getting Iran to the table on nuclear negotiations. On July 14, 2015, the P5+1 (the five members of the UN Security Council, the United States, the United Kingdom, France, China, Russia, plus Germany), led by the European Union, concluded the Joint Comprehensive Plan of Action (JCPOA) with Iran. This was endorsed by UN Security Council Resolution 2231. Canada will be watching the IAEA monitoring process closely.
Implementation Day for the JCPOA took place on January 16, 2016, following confirmation by the International Atomic Energy Agency (IAEA) that Iran had implemented the prescribed commitments under the agreement. This triggered immediate changes to UN, U.S. and EU sanctions against Iran, resulting in significant nuclear-sanctions relief for Iran.
All UN member states are obliged to implement the terms of UN Security Council Resolution 2231; Canada is amending its Iran UN Regulations under the United Nations Act. The UN has maintained restrictions on the export of certain arms to Iran for five years, on ballistic-missile technologies for eight years, and on nuclear and dual-use items for 10 years. UN Security Council Resolution 2231 also includes a snapback provision whereby sanctions could be reapplied if Iran fails to fulfill its commitments under the agreement.
Canada’s autonomous sanctions against Iran
Canada also imposed sanctions against Iran beyond those required by the UN. These autonomous sanctions, under Canada’s Special Economic Measures Act (SEMA), were based on a finding that Iran’s nuclear program constituted a “grave breach of international peace and security.” The SEMA sanctions were progressively expanded to cover trade, investment and the provision of financial and other services, as well as to freeze the assets of designated Iranian entities and individuals.
Taking account of the JCPOA’s progress in effectively constraining Iran’s nuclear program, as well as of sanctions adjustments by like-minded partners, Canada is amending its autonomous sanctions to replace the broad bans with a set of controls and prohibitions specifically targeting trade with Iran in sensitive products with security implications. Under SEMA (Iran), Canada will continue to maintain a revised list of designated individuals and entities subject to asset freezes and with whom all transactions involving property are prohibited, including six additional individuals related to Iran’s ballistic-missile activities and two additional entities.
Under the Export Control List of the Export and Import Permits Act (EIPA), Canada will continue to restrict the export to Iran of a wide range of sensitive products. Applications for export permits will be considered on a case-by-case basis. A Notice to Exporters identifies a range of the most sensitive items for which export permits normally will be denied (for example, military, nuclear and missile-technology items).
SEMA (Iran) also contains a list of goods, the export of which will be prohibited. These amendments to Canada’s autonomous sanctions regime will enable Canadian companies to compete with their global counterparts in the Iranian market, while ensuring that Iran cannot source from Canada items which may contribute to its military or pose a risk of proliferation.
There are also provisions in the Criminal Code that prohibit certain dealings with listed entities. Canadian companies will need to look closely at their legal obligations and do careful due diligence about prospective partners, customers or suppliers in Iran to ensure that they are not dealing with the Islamic Revolutionary Guards Corps’ Qods Force, which is a listed entity. Canadian companies will need to approach the Iranian market cautiously and guided by the advice of their legal counsel.
The decision today will enable Export Development Canada to resume suspended operations in the market that meet its normal due diligence criteria.
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