Foreign Affairs Committee on June 1st, 2023

[The Chair, Liberal, Ali Ehsassi]

Welcome to meeting number 68 of the Standing Committee on Foreign Affairs and International Development.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room, as well as remotely using the Zoom application.

I'd like to make a few comments for the benefit of the members and witnesses.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourselves when you are not speaking. Interpretation for those on Zoom is at the bottom of your screen. You have a choice of floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, September 21, 2022, the committee commences its study of Canada's sanctions regime.

It is now my great pleasure to welcome our witnesses today.

From the Department of Foreign Affairs, Trade and Development, we have Alexandre Lévêque, assistant deputy minister, strategic policy; Marie-Josée Langlois, director general, strategic policy branch; and Stephen Burridge, director, sanctions policy and operations coordination.

Mr. Lévêque, I understand you'd like to go first. You have a maximum of five minutes for your remarks, after which we will proceed to questions from the members. When you are getting close to the time limit, I will hold up this sign and we'd be grateful if you could wrap it up as soon as possible.

That having been said, the floor is yours.

[Alexandre Lévêque, Assistant Deputy Minister, Strategic Policy, Department of Foreign Affairs, Trade and Development]

Thank you very much, Mr. Chair.

Honourable members, I'm pleased to appear before the committee for this review.

Given Canada's robust sanctions response to recent and ongoing global events, this is a very timely opportunity to reflect on Canada's sanctions regime.

I was pleased to speak to members of the Senate Standing Committee on Foreign Affairs and International Trade last fall as part of their five-year legislative review of Canada's autonomous sanctions legislation. As you know, that committee very recently published its report and recommendations, which we are reviewing closely. We're keen to build on their work, as well as your own, to best position Canada to effectively and efficiently develop, impose, implement and enforce sanctions.

As you know, Canada has two pieces of legislation for imposing autonomous sanctions. They are the Justice for Victims of Corrupt Foreign Officials Act, or JVCFOA, which is commonly known as the Magnitsky act, and the Special Economic Measures Act, or SEMA.

In the years since 2017, when the committee last studied Canada's sanctions regimes, Global Affairs Canada has introduced important measures to strengthen the administration and coherence of the regimes, such as establishing dedicated capacity for sanctions policy and operations.

This capacity has led to a number of accomplishments. In particular, it has helped to bring stronger coherence and coordination to the Government of Canada's approach to its sanctions policy, and to support Canada's commitment to its key allies.

Furthermore, it has allowed the creation of more streamlined processes for permit, delisting and certificate applications, and their evaluation.

Finally, it has helped raise the awareness of the Canadian public and private sectors regarding how to engage in international business activities in a manner consistent with Canadian sanctions.

While these have been positive developments, the global landscape has changed dramatically, and with it, the sanctions environment has undergone an unprecedented transformation. With this shift, the demands and challenges associated with implementing, enforcing and regulating Canada's sanctions regime have expanded exponentially.

In this way, I would be remiss not to talk specifically about the use of sanctions since February of last year following Russia's unjustifiable invasion of Ukraine. Since that time, Canada has imposed new sanctions on more than 1,900 Russian, Belarusian and Ukrainian individuals and entities under SEMA, through more than 50 sanctions packages. Given the expected protracted nature of the conflict, we anticipate that this will continue.

Since January 2022, Canada has also imposed sanctions to respond to situations in Haiti, Iran, Myanmar and Sri Lanka. Taken together with sanctions related to Russia's war in Ukraine, since the beginning of 2022, Canada has imposed 79 rounds of autonomous sanctions, representing an overall 150% increase in the use of this foreign policy tool over the previous five years combined.

A significant new development came in June of last year, when SEMA and JVCFOA were amended to allow the government to seize, forfeit, dispose of and redistribute assets belonging to sanctioned individuals. Canada is the first—and to this day, the only—country in the world to pass this kind of legislation.

In closing, in many ways, this study could not be more timely. As you know, the events of the last 15 months have taught us a lot and given us more to think about in terms of the future of Canada's sanctions tools.

I'm grateful for the opportunity to appear before the committee. I'm following your work with interest. I'm eager to learn the conclusions and, ultimately, read your report.

I look forward to answering your questions.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Mr. Lévêque.

We will now open the floor to questions from the members.

As I understand it, Mr. Chong, you are first.

You have six minutes.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing in front of us today.

I'd like to build on the 2017 report of the foreign affairs committee relating to its recommendations. One of the recommendations was the need for “written guidance to the public and private sectors regarding the interpretation of sanctions regulations” in order to allow individuals and companies to comply with sanctions regulations. Where are we with that recommendation?

When we look at jurisdictions like the United States, for example, the U.S. Treasury's office of foreign assets control, OFAC, publishes detailed interpretive guidance about its sanctions, alongside fact sheets. The European Union publishes customized details through the frequently asked questions section on its websites, including stand-alone documents dealing with the application of measures against, for example, Russia's central bank and many other issues.

Where are we with GAC publishing detailed written guidance, as the Canada Revenue Agency does on interpretation of tax law?

[Alexandre Lévêque]

This is indeed one of the key recommendations that came out of the 2017 report, and I would say that it has been implemented. It is a continued and ongoing effort.

Since that report was issued, Global Affairs Canada did create a stand-alone page, which is connected to the GAC Internet page, and that has detailed Q and A, and some information to help guide stakeholders, companies and private citizens. In addition, there is quite a bit of outreach that takes place, and we target the financial sector, the legal sector, the Canadian Bar Association, etc.

Having said that, it is something that we continue to strive to improve and to build upon. You cited some very good models that we have among our partners.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

The other recommendation raised by the committee's report of 2017 was that the processing of permits under SEMA be transferred to the same unit within GAC that processes permits under the Export and Import Permits Act. Can you tell us whether that has been done?

[Alexandre Lévêque]

No, that has not been done. These remain two separate units.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Okay.

Are there any plans to do that, or are there no plans at present?

[Alexandre Lévêque]

There are no plans at the present time, the goal and the vision being to really consolidate all expertise on sanctions in one unit.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Another recommendation related to that was that there be clearer service level standards established and that applicants be made aware in a timely manner online about the status of their applications.

For example, best practice would be the Australian sanctions office, which has clear information and a portal through which applicants can see the status of their application. They endeavour to process at a service level of six to eight weeks, while the public is told to generally expect three months, and they can also check up through a portal as to what the status of the application is.

Is there any plan for GAC to do something similar with applicants who have made applications for exemptions under SEMA?

[Alexandre Lévêque]

I would say there isn't a specific plan to put in place a specific service standard right now.

We, of course, always strive to turn these around in the best possible time, but I will say that the exponential explosion of permit requests we have received has forced us to prioritize those that are of higher priority and significance.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Perhaps the workload could be reduced if more of this could be put online through a portal. That would reduce the need to interact with applicants to update them on the status of their applications. Maybe that's why these other jurisdictions have done such things, in order to reduce the workload and make things more productive.

I have a final set of questions I'd like to ask. The 2017 report also recommended stronger enforcement of sanctions rules. Last year, in budget 2022, the government announced the creation of a Canada financial crimes agency. The U.K. has announced a similar measure. The U.K. has indicated that part of their new agency would be dedicated to sanctions enforcement.

Is that also the plan of the Government of Canada?

[Alexandre Lévêque]

There is indeed a plan afoot on this. I would not do justice to it if I were the one to reply to this, especially given that a number of my colleagues will be here in the second hour of this committee meeting and will have the expertise required.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

This is not the first time I've asked this question of Global Affairs Canada officials, so perhaps the next time we have a discussion about sanctions enforcement and the sanctions regime in Canada, officials would be able to indicate whether or not this new Canada financial crimes agency will have a unit within it for sanctions enforcement.

I'll finish there, Mr. Chair. Thanks.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Chong.

We next go to Mr. Sarai.

You have six minutes.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair.

Thank you for joining us today. It's a very timely discussion to be having right now.

Can you describe, in the most concise manner possible, the Government of Canada's current sanctions regime and the process by which individuals are sanctioned, from start to finish? When we sanction either an entity or a country, what's the process that the Government of Canada uses?

[Alexandre Lévêque]

Thank you for the question.

It is indeed something I could spend a few hours explaining—

[Randeep Sarai, Liberal, Surrey Centre, BC]

I only have a few minutes.

[Alexandre Lévêque]

—but I will do my best at being very concise.

Essentially, as I said in my remarks, the autonomous sanctions regime is composed of two pieces of legislation that are similar but complementary: SEMA and JVCFOA. When one of the triggers included in those two pieces of legislation gets tripped up—and here I would refer to when an international actor is seen to be in contravention of...gross and systemic human rights violations, having committed grave breach of international peace and security, or having committed acts of significant corruption, as well as when an international organization of which Canada is part calls on its members to impose sanctions—we are able to list individuals through a regulatory process under these pieces of legislation.

It is important to note that what we need to do is ensure that we have sufficient evidence obtained through open sources to provide a package that respects due process and the rights of individuals. When we are able to accumulate such evidence, we put through the regulatory system an order in council that, once in effect, blocks individuals from having personal financial dealings with Canadians. Effectively, it freezes their ability to interact economically with any entity in Canada or any Canadian abroad.

Of course, the first institutions that are seized with acting on this are the financial institutions, which follow this very closely, and that usually leads to an immediate freezing of these individuals' financial assets.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Who decides to impose the sanctions, and what type of sanctions can be imposed?

[Alexandre Lévêque]

The decision is that of the Governor in Council, on the recommendation on an application from the Minister of Foreign Affairs. Of course, we provide advice and considerations in this term.

For the second part of your question, if you look at SEMA, the types of prohibitions can be anything: asset freezes, dealings prohibitions, import and export restrictions, imposing limitations on financial services and air travel, shipping bans, arms embargoes and, of course, inadmissibility into the country.

[Randeep Sarai, Liberal, Surrey Centre, BC]

How effective have these sanctions been in achieving their objectives?

[Alexandre Lévêque]

That is a question that is actually the object of some dissertations in the academic world, because the definition of “effectiveness” is not a single one. There are various levels of objectives when a country imposes autonomous sanctions.

Of course, the ultimate and final objective is to effect a change in the behaviour of the offending party. It is not the only objective. There are many interim objectives that could be obtained—for example, constricting the ability to act financially and economically. However, it is also an important signal our government can send: These actions of malicious individuals or entities are unacceptable in a global context. There are, of course, other ways to signal this. This is a pretty powerful and clear one. There is a bit of a shaming factor that comes with it, as well. It also helps by sending a dissuading element to other potential malicious actors. Finally, I would say it serves as a bit of an inspiration for other countries with autonomous sanctions legislation to follow us and join in our actions. There is a multiplicity of potential effects that we would need to assess at any given time.

Let's take the case of Russia, for example. Have sanctions been effective? Depending on which of these definitions you observe, I would say yes. Russia's ability to wage its war has been significantly reduced. Russia's economy has shrunk. Over 1,000 international companies have left Russia. Through very strict export controls on dual-use technology, Russia's ability to integrate computer chips and highly sophisticated material into its weapons supply chain has been significantly reduced, limiting, over the long term, its capacity to wage the kind of brutal war it is waging in Ukraine.

[Randeep Sarai, Liberal, Surrey Centre, BC]

What are the potential consequences of sanctions? There are obviously some consequences that come with them.

[Alexandre Lévêque]

There are the known and intended consequences, and, of course, the unintended consequences.

One of the consequences we always expect is reciprocity: We do something to them, so they do something to us. There is an impact on our companies. That is why, when permit requests are made, we have to look at the full spectrum of impacts.

Then there are the things we haven't quite thought of, because we can't think of everything when sanctions are imposed and we discover things after they are imposed. That's how we—