Sanctions entail some obvious consequences for the target state, but also for the sending state, the state that's using these sanctions. From the target state perspective, obviously there's loss of commerce. There's adverse effect on civilians, in terms of lost jobs and economic hardship.
But in terms of the implications for Canada, and for any country imposing sanctions, there are foregone business opportunities for our firms. That can have lasting effects, insofar as a target state could implement import substitution measures. This creates restrictions on what Canadians can do in terms of remittances, and we know that remittances are important flows between Canada and other countries, and of course, there's exposure to retaliation by the other country.
With respect to the private sector, obviously the more their economic ties are deep, the greater the potential for lost business and investment. In addition to that, you could say that navigating compliance has a higher implication for them.
As the committee heard from a number of witnesses, there is some evidence out there, in academic journals, of the chilling effects on trade and investment. That's because firms, banks in particular, might take a more cautious approach to compliance. From that perspective, when it comes to using this measure, these are reasons why we look at this as a last resort, that we use it as a complement to a series of other diplomatic measures that would be deployed at the same time.
To the second part of your question, which is how do we balance the issue of the implications for Canada, we'll look at a range of information. As you heard, whether that's open source or classified information, that enables us to balance the foreign policy objectives associated with the use of the sanctions, with the implications for Canadian stakeholders, Canadian businesses, and Canadians more generally.
These include the actions of our allies, of the UN; the scope and severity of the offending state's actions; the impact of other diplomatic engagement actions to persuade a change in behaviour; and the possible impact sanctions would have on Canadian firms and citizens. In doing so, we'll take a look at not only what our people say on the ground and what our allies say, but obviously, also, what other departments would say, and how they might inform our decision-making.
That's a very theoretical, high-level answer. In the end, all of these instances—and I think the open remarks and some of the answers speak to this—depend on who you're targeting and the context within which you're targeting them. Generally speaking, though, we stay at a fairly high level. We tend to not get into the details of how we would do that, because we'd like to preserve the integrity of the details of our approach and very much deal with these issues behind closed doors.