Foreign Affairs Committee on Sept. 25th, 2023

[Lawrence Herman]

Mr. Bergeron, those are complex questions that I would be hard-pressed to answer in a few minutes.

First of all, imposing sanctions to freeze assets, whether real or financial, is one thing, but using those assets to compensate others is another. That's the hard part. In my opinion, we need to coordinate with our allies because Canada can't jump ahead of what its allies have agreed to. It's a very complicated question. I think the best course of action is to keep working with our allies to reach an agreement. It's very complicated, though. It's one thing to freeze assets, but it's another to use them for other purposes.

I agree with you that the burden is currently on private companies, bankers, airports, and so on. We have to keep working with our allies to find a joint solution.

I don't know if I answered all the questions you raised, but that's my general answer.

[Stéphane Bergeron, Bloc, Montarville, QC]

Yes, you answered in part—

[The Chair, Liberal, Ali Ehsassi]

You have 15 seconds remaining.

[Stéphane Bergeron, Bloc, Montarville, QC]

Then I'll come back to it later.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Bergeron.

We will now go to Ms. McPherson.

You have five minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair.

Thank you to the witnesses for being here today. It's a very interesting conversation and I'm glad we're all back to look at this.

I have a question for you, Mr. Herman, if I may. One of the things we heard previously is that there were some deep concerns with how the implementation was happening with regard to CBSA, RCMP and Global Affairs Canada: that there was no coordinated effort and there was no understanding of who was the lead in these situations.

I'm hearing from you that we don't have the resources. We don't have the transparency. The government has not allocated what is necessary to make the sanctions regime work adequately. We've seen other countries doing a much better job of that.

I'm just wondering, from your perspective, what would it look like if we did have sufficient resources? Who should be the lead in this? What lessons can we learn from other countries with regard to how this could be implemented? Right now, I think, we've heard from all of our colleagues that there's a real problem with how this is being implemented.

[Lawrence Herman]

Well, Ms. McPherson, again, you've raised a number of issues.

Look, the government is doing a reasonable job in attempting to coordinate the application of sanctions. It's not perfect, but I think there's a sensitivity within government to the need for a more comprehensive approach.

The resources issue is a little different. I was really addressing the resources that CBSA has to deal with imports of, say, goods from regimes like China in the Xinjiang area. That's a little different. That concerns CBSA.

I don't know what the answer is in terms of a much more comprehensive approach. In the U.S., for example, they have extensive inter-agency arrangements so that OFAC, the Office of Foreign Assets Control, which enforces sanctions in the United States and is part of the treasury department, coordinates with the commerce department and the State Department in a better way than we do in Canada.

One of the problems—and it's a practical problem—is that sanctions have really emerged as a major factor in our international business relations within the last number of years. The war in Ukraine has brought out all of these things. In recent years, China as well has been the focus of Canadian sanctions. My sense is that government is a bit behind the curve in bringing up to date its system for the enforcement of sanctions, export controls and all of those things that affect the business community in a major way.

In my view, that's why this committee is vital in terms of addressing those aspects of the 2017 report, such as providing guidance, more transparency and better coordination than we have. I see this committee as performing a very important job. As well, again, I have to emphasize that the Senate report addresses a lot of these points as well. It was issued in May and details how the government could do a better job.

My approach is that those in the private sector are the ones who bear the burden of these sanctions, and they need to be better informed—not in terms of legal advice, because you can't do that in government, but in policy advice, how the government approaches its sanctions regime. That would be my answer. I'm hoping the committee can address some of these points in its report.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I expect that many of the recommendations that come forward from this study will echo the recommendations we saw in 2017 and again from the Senate committee.

One of the things you also spoke about is that Canada can't take the lead and that we actually have to work with our allies, but in fact, in terms of the seizing of assets and reusing them for those harmed, Canada has taken the lead or has said that it has taken the lead. One of our challenges, of course, is that what the government is saying with regard to who is being sanctioned and what's being seized doesn't actually result in those actions.

When we were in Europe, this committee visited with others. We were in Belgium, and folks were talking about how they were watching Canada to see how Canada was doing this. From my perspective, we haven't done a very good job of that. Is that because we have stepped out or is that because we just haven't set up the systems in place to make that an effective program?

[The Chair, Liberal, Ali Ehsassi]

Could I ask for a very brief response? I'd be very grateful. We're over the time.

[Lawrence Herman]

Yes. I'm sorry, Mr. Chairman.

I think it's a question of coordinating with our allies and, frankly, the United States is the critical ally when it comes to sanctions.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We now go to Mr. Aboultaif.

For this round, you will each have three minutes, with the exception of the Bloc member and the NDP.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you, Chair.

Thanks to the witnesses.

I have a quick question. Mr. Herman, you mentioned a “system”. Do we have a system for sanctions in Canada? If so, how do you understand it? Can you explain to us the system we have? Sanctions can be on an economics base, a financial base, a security base and a diplomatic base. I think it would be beneficial to understand if we really have a system in place on sanctions.

[Lawrence Herman]

Absolutely, we have a system in place. The legislation you're looking at is our sanctions regime.

Our sanctions policy, including our export controls policy, is pretty sound. It's consistent with what our allies are doing. What we need to do a better job of is providing clarification, in my view—clarification from government on some of the elements of sanctions that may not be clearly understood by the general public and by the business community.

It's not that we don't have the systems in place. We have systems. They're good. They're robust. They're strong. They implement Canada's international obligations, as I said in my paper, but there's a weak spot, and the weak spot, in my view, is the failure of the government to fully implement the recommendations in your committee's report six years ago on guidance, and in the Senate committee's report a few months ago on the need for greater transparency and greater policy guidance to the benefit of the business community and to the benefit of Canada's foreign trade.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Sanctions have become a very important tool and have been widely used for the last two decades at least. How can we make the best of that to make sure they are effective, since the legislation and the system are in place?

[Lawrence Herman]

Again, I think transparency and policy guidance are important. I think the government is doing a pretty good job in many respects, but I come back to the major point I'm making. I think a better job could be done in providing guidance to the business community, the stakeholders, the people who are directly involved in sanctions internationally.

The point that the committee must understand is that sanctions are now a major factor in international trade relations. They weren't 10 or 15 or 20 years ago, but going forward I think we're going to be increasingly involved in a complex world of economic sanctions, and it behooves the government to help the business community understand all of this. You can't just say, “Run to your lawyer if you have a problem.” That's not good enough.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We now go to Mr. Oliphant.

You have three minutes, Mr. Oliphant.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you, Chair. I want to ask a quick question of both witnesses.

Thank you for your presentation and for the work the group did leading to those first sanctions that happened. It was important and I think effective. Can you tell me the state of sanctions against those individuals or others from other jurisdictions, other countries? Have they matched ours? Were we behind or ahead?

[Katpana Nagendra]

In some jurisdictions, they match, but in others there are other individuals who have been identified—for example, in the United States. That's why we're saying that there needs to be a coordinated effort, because in the case of these economic sanctions, if those individuals are sanctioned in Canada but they're not sanctioned in Germany, they can easily just transfer their assets to another country. They're not mirrored in all—

[Rob Oliphant, Liberal, Don Valley West, ON]

Are they sanctioned?

[Katpana Nagendra]

They are not. Canada—

[Rob Oliphant, Liberal, Don Valley West, ON]

We led the way on that.

[Katpana Nagendra]

Yes, we did.

[Rob Oliphant, Liberal, Don Valley West, ON]

I wanted to get that into the record. I believe we were way out in front, and now our job is to pull our allies to catch up to Canada.

[Katpana Nagendra]

Exactly.