Foreign Affairs Committee on Oct. 26th, 2016

[The Chair, Liberal, Bob Nault]

Okay, thank you, Mr. Sidhu.

I'm now going to go to Madam Laverdière, please.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much, Mr. Chair.

My thanks to the three witnesses for giving us such interesting presentations.

Mr. Boscariol, we have only just started our study and already we have begun to become aware of the situation you are describing, that is, the few resources provided to companies. We are not just talking about compiling a list of names, but also about the fact that an instruction guide has not been updated by the Office of the Superintendent of Financial Institutions for more than six years. We are realizing that there are flaws in the system that can even lead to a greater adherence to the established standards, just in order to avoid risk.

You spoke specifically about what the Americans are doing.

Is there a model we could consider that is particularly useful and easily applicable to the Canadian system?

[John Boscariol]

Your point about over-compliance is an excellent one. It really is for many companies, including financial institutions, an issue of risk mitigation, Even though there are situations in which they might be able to argue that one could go forward with a transaction under the Canadian legislation, if it's a grey area and they can't get guidance on a rapid basis from the Canadian government, those Canadian companies and institutions, I can tell you, will often refrain from going through with that transaction. Again, as I mentioned earlier, I think this really undermines the policy in this area.

Now, to answer your question about an example we've often raised with the Canadian government, the example or system that they have in the United States with OFAC, the answer that most often comes back is that the U.S. is 10 times our size, that OFAC is a massive department with huge resources, and this is just something that can't be replicated in Canada.

That being said, I would say we should look at the Australians. Now, I'm not an Australian lawyer, but I've signed up to the email lists that the Australian government has. I'm notified every time the Australian government adds a blacklisted entity to its sanctions list. It's very easy to do, and they have at least that aspect of it covered very well in Australia via their website. Something as simple as that could, I think, be easily replicated here in Canada.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

I would like to make a quick comment about this way of avoiding risk. When sanctions were applied against Iran, Iranian students here in Canada saw their bank accounts being closed because the banks did not know how to apply the sanctions.

Mr. Biersteker, sanctions can come in three categories, or have three purposes: to change behaviour, to impose a constraint, or to send a signal.

How would you describe the sanctions against Iran? Where do they fit in those three categories in terms of their effectiveness?

[Dr. Thomas Biersteker]

Thank you very much for that question.

In our assessment we developed an approach to try to assess the effectiveness of sanctions. We differentiate among the various purposes. We evaluate the question. Was Iran coerced to changing its position on the weaponization of its nuclear program? Was Iran constrained, by which we mean, were the costs raised? Did it change its strategy in some way? Was Iran effectively signalled? Was the message clearly articulated? Importantly, was there some degree of stigmatization of Iran? It's not just the clarity of the message, but a sense of some degree of stigmatization in some areas.

The other thing we do when we look at evaluating effectiveness is differentiate country regimes by what we call episodes. In the Iran sanctions regime, we define an episode as a change in the nature of the sanction being applied, the target of the sanction, or the purpose of the sanction.

Over the course of the period from 2006 until the Joint Comprehensive Plan Of Action last year, we identified five different sanctions episodes in Iran. All of this information is available either at sanctionsapp.com or on our app device—which, by the way, I'm not selling; it's free and available. It may not work on BlackBerry, though. That may be a problem in Canada; I'm not sure.

Particularly with regard to the most recent phase, we found and made the argument that the sanctions were effective, but in the following way. They weren't effective on their own. The sanctions were effective in forcing a change in behaviour not because they brought Iran to the bargaining table—Iran had been negotiating through this period. The changes are multiple. I said earlier that sanctions are always applied in conjunction with other policy instruments. I think there are two other significant developments that led to the JCPOA, one of which was a change in the bargaining position of the E3-plus-3, or the P5-plus-1, depending which side of the Atlantic you are looking at the issue from.

Previous to 2015 there was a total prohibition on any enrichment, so the E3-plus-3 changed their negotiating position. The combination of intensified sanctions, and this is the point I made about multilateralizing, brought Europe on board and brought many other countries on board, with even trade reduction from India, from China up to a point, from Korea and Japan. It was a comprehensive strategy. That was very important, but the sanctions alone did not produce the change. It's the change in bargaining position and, I would say, certain elements of luck. The election of President Rouhani in 2013, which was not expected by most specialists of Iranian politics, also created an enabling environment. To make the sanctions effective, you needed to have some degree of luck. You also needed to have it coordinated closely with bargaining and negotiations. I would argue that this, plus sanctions, resulted in an effective outcome.

I'm sorry for the long dissertation on that, but we've thought a lot about this.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

That's very interesting.

Thank you very much.

Do I still...?

[The Chair, Liberal, Bob Nault]

Sure.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you, Mr. Chair.

I understand that you have certain reservations or that you believe that, if some human rights files were included in our program of sanctions, it would have to be done quite prudently, by establishing thresholds, and so on.

Generally speaking, should we make major improvements to our current program of sanctions?

[Dr. Meredith Lilly]

Do you mean under the SEMA legislation?

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

I mean SEMA and the foreign officials....

[Dr. Meredith Lilly]

Actually, I don't have very much to say about FACFOA, mostly because it's a fairly specific act. I think other witnesses spoke about its being a very particular piece of legislation.

It's not that I have hesitations necessarily about the government or Parliament deciding that it wants to add human rights violations to SEMA. I just feel that it's important to be clear about what it necessarily means, if the government decides to go down that route. What it must mean is that the legislation will become de-linked from the idea that an international crisis is imminent. It creates a new test for determining when Canada should or should not intervene in the actions of other sovereign states.

I don't want the moment to pass by without the committee or others stopping to take note of the seriousness of doing this. There are lots of ways by which, if the committee decides that Canada wants to stand up for human rights globally and wants to reach into other states—because that's what SEMA is basically trying to do—and take action against human rights abusers.... That's something that Parliament can by all means decide. It's just that at the same time, legislators need to also decide under what circumstances Canada would do so.

On the one hand, if Canada were to head down that road, there could be a lot of pressure from various groups for Canada to intervene in a whole series of human rights causes around the world. I think it's important to think about the circumstances under which Canada takes a position, via legislation anyway, that this is something the government wants to do.

I hope that's helpful.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Yes, that's quite clear.

[The Chair, Liberal, Bob Nault]

Merci, Madame Laverdière.

We're going to go to Mr. Saini, please.

[Raj Saini, Liberal, Kitchener Centre, ON]

Thank you all for being here today.

Mr. Boscariol, I have a question for you specifically because you mentioned Belarus in your opening comments. I want to ask a specific question because it seemed to me that the intervention we had was different from the intervention of the United States or Europe, in the sense that we didn't have any economic sanctions. We had them on an area control list and we controlled what could be exported to them, but the United States and the European Union had them under a different regime, which caused a lot of difficulty for businesses in Canada and also for foreign subsidiaries that were doing business in Canada.

What can we do as a committee to make sure that our businesses in this country are on the same level playing field to make sure that there's alignment between what we're doing and what the rest of the world is doing?

I use Belarus as a specific example because that situation tended to cause confusion with certain enterprises in Canada.

[John Boscariol]

It's a good point. Our Belarus measures are export controls. They're not economic sanctions. What the U.S. did with Belarus was in large part a list-based sanctions measure. They identified certain parties you couldn't do business with related to Belarus and the Belarus government. In the case of Canada, it was an export control. It didn't really restrict Canadians who were abroad from doing business with Belarus.

However, it was a very aggressive export control. To put a country on the area control list is a massive step, I think. We did it with respect to Burma. North Korea is on that list right now. When Belarus was on it, it meant no exports could go to Belarus. It also meant that no technology transfers could occur, and that tripped up a lot of Canadian companies. Belarus used to be a kind of silicon valley of the old Soviet Union. There are a lot of legacy operations there with computer producers and software developers. There are many software companies in Canada that had been working with software developers in Belarus, and they unknowingly got offside when they were transferring technology to Belarus as part of that software development.

I wouldn't characterize the measures from the United States or the EU as more aggressive, necessarily; they're different. But I can tell you that putting Belarus on the area control list presented a very difficult situation for Canadians and for Canadian subsidiaries of U.S. companies, because the U.S. didn't implement a measure like that. Many U.S. companies weren't aware that Canada had this measure in place. Their Canadian operations may have gone ahead and done business with Belarus because of that.

A large part of my practice is just what you've identified, which is situations in which the U.S. and Canada are not completely aligned on sanctions measures, and with the EU or Australia and other countries. That creates a lot of difficulty for Canadian companies.

From a policy point of view, I think it's a bit of a different issue. From a policy point of view you may decide that you want to be aligned. It is much easier for Canadian businesses, if we're completely aligned, but that's no longer a made-in-Canada policy. It requires us to align ourselves with the U.S.—I don't think you'd see the reverse case, in which the U.S. would necessarily align themselves with our policies—but it's a more challenging prospect, because I'm not sure it's always the best Canadian policy to just do what the Americans are doing. If that were the case, we'd have no success in Cuba right now.

[Raj Saini, Liberal, Kitchener Centre, ON]

Mr. Biersteker, I have a quick question for you. May I call you Thomas?

[Dr. Thomas Biersteker]

Please. It's easier.

[Raj Saini, Liberal, Kitchener Centre, ON]

One question I have for you concerns judicial review. I know you did some work on the Watson report with the United Nations. Part of Resolutions 1989 and 1904, I believe, involved the fact that you created an ombudsperson to look at whether to retain certain people and entities on a list or to remove them from a list.

Do you think that's an important part, having these sanctions in legislation? What kind of guidance can you give to us as to what we can do here in Canada?

[Dr. Thomas Biersteker]

Thank you very much for that question.

Yes, I worked very closely with a former colleague at the Watson Institute at Brown University, Sue Eckert, who was the assistant secretary for export controls in the Clinton administration.

We made a number of recommendations and suggestions for ways of addressing what was fundamentally a very serious problem, the absence of due process for individuals who were designated, individuals who were put on the list.

When the other nations first started applying individual sanctions, I asked someone at the secretariat who was overseeing the policy, “Did you think about the human rights implications of having the Security Council listing individuals?” At the time, he said, they were so concerned with changing and amending the comprehensive sanctions against Iran that they simply didn't ask this question; no one even thought about it. they thought they might be going after politically exposed persons, but no one thought about due process rights of individuals.

We were commissioned by the governments of Switzerland, Sweden, and Germany to explore different ways of addressing this problem at the UN level. We didn't give policy advice. We simply organized the different options that were on the table and evaluated them in terms of the extent to which these different institutional options would address the fundamental due process violations of notification, access, right to a hearing, and effective remedy.

Ultimately, the Security Council, although there was a lot of opposition in 2006, things changed in 2008 or 2009, probably because of the change in administration in the U.S. particularly. There was the introduction of the office of the ombudsperson. In fact, the first ombudsperson was a Canadian national, I think, Kimberly Prost. She was a former prosecutor at the ICTY.

What Kim did in the office is interesting. I tell this to my students of institutions; it's a very interesting story. She actually, in 18 months, managed to take an office that was strongly opposed by permanent members of the Security Council and in effect give it a reverse veto. That means that recommendations made by the ombudsperson are binding unless all 15 members of the council overturn those recommendations. I talked about the improvement in legal procedures. This is actually quite a dramatic and quite a significant development.

My legal colleagues will not agree that the ombudsperson has effective remedy, because ultimately, the decision remains at the Security Council level. But I argue that not a single one of the ombudsperson's recommendations has ever been overturned by the council, at this point in time. I think it's actually a fairly innovative and important mechanism.

The reason we argued so strongly for it was that the Security Council's individual designations were increasingly being delegitimized by legal suits, particularly in European courts. Even with the EU trying to implement UN sanctions, it was finding it was losing about two-thirds of the cases relating to designations in the European Court of Justice. That has levelled off to about 50% today.

In the EU, of course, it's handled differently. Here in Switzerland we're not in the EU, but in the European Union, it's handled through the court system.

I think it's important that when making individual designations, these questions be addressed and taken seriously; otherwise there are fundamental due process violations. All I would argue—this is perhaps a [Inaudible—Editor statement—is that all individuals have rights, even individuals charged with committing war crimes and other criminal activities of [Inaudible—Editor] terrorism cell. I think it's important to introduce these kinds of measures and to take this as seriously as it deserves.

Our current campaign is to some extent to get the UN to extend the mandate of the ombudsperson from the counterterrorism committee under Resolution 1267 to other committees, because the issues are fundamentally the same.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Saini.

Colleagues, that's the end of the first round. We have a significant amount of time left, so we'll be able to get through the second round easily and maybe go beyond that.

We'll go to Mr. Miller.

[Marc Miller, Liberal, Ville-Marie—Le Sud-Ouest—Île-des-Soeurs, QC]

Ms. Lilly and gentlemen, thank you for appearing and thank you for taking what is a broad approach to this panel and the examination at hand. What has become evident in a number of the appearances of witnesses before us with respect to the legislation and its operationalization is that we started out thinking about where the holes are in this legislation and where we can fill them and how it can be put in place in the most desirable way as part of Canadian policy and effective enforcement of these legislative tools, and quickly we've gotten into a few observations that are rather surprising. One is the inability to impose them in an effective way, and another is the potentially perverse effects that imposing them has, absent a broad multilateral approach.

I'm glad you've raised that point, because as we look at potentially putting in place something that would address gross violations of human rights, the issues you raise today are particularly important in making sure that this legislative tool, if deemed desirable by Parliament, actually works.

The current legislation, which is supposed to deal with something equally if not more grave, you've said either doesn't work, is very difficult to put into place, or creates disincentives or perverse effects on Canadian business, as Mr. Boscariol stated. It's particularly intriguing—and it won't be part of my intervention, but as we start to engage more with Iran—that what you've seemed to suggest is that Canadian business is at a disadvantage compared with partners who can react more quickly.

The question I have is with respect to gross violations of human rights and what we need to do; with where you see an opportunity for Canada to act, and—any one of you can answer this—with a focus on the potential countermeasures facing a country that is much more powerful than us both on an economic level and a political level and potentially a partner, whether acting unilaterally for a country like ours.... One, is such an approach desirable from a legal and political perspective? Two, would it actually work? Three, one of you gentlemen raised the rule of law—condemning people essentially before they're judged—but also the perverse effect that it can have on Canadian citizens as a result.

I know that's a long statement, but go at it as you see fit.

[Dr. Meredith Lilly]

Thanks for the question.

Whether gross violation of human rights should be added to the act or not is a decision that you're going to have to make, but I guess I would say that it's important to bear in mind that there are already lots of ways that gross violations of human rights could be acted upon under SEMA today, provided that there's a view that an international crisis is imminent.

In the example of—

[Marc Miller, Liberal, Ville-Marie—Le Sud-Ouest—Île-des-Soeurs, QC]

—under that threshold.

[Dr. Meredith Lilly]

Okay. Under that threshold, I'm not a big proponent of Canada's acting unilaterally in this way through the use of SEMA, although I think there are many things that Canada could do unilaterally outside of SEMA, including such things as travel bans, which fall entirely under Canada's authority. The difference between travel bans and economic measures is that it's entirely, I think, within Canada's right, and Canada absolutely should make decisions about who comes and goes from our country. We're a sovereign state, and if we don't want gross human rights violators coming here, they shouldn't come. IRPA already allows for that.

In taking actions against a foreign state about human rights violations that occur outside of Canada, it's very much my view that it's something that, if Canada wants to go down that road, it should be doing on a multilateral basis through SEMA. Otherwise, there are all kinds of other foreign policy tools available, including doing things such as supporting human rights groups on the ground who publicize a lot of this stuff and help it to see the light of day.

Others may have views.

[The Chair, Liberal, Bob Nault]

The gentlemen who are with us by teleconference, do you have anything you'd like to say?