ARCHIVED — Special Economic Measures (Iran) Regulations

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Vol. 144, No. 16 — August 4, 2010

Registration

SOR/2010-165 July 22, 2010

SPECIAL ECONOMIC MEASURES ACT

P.C. 2010-952 July 22, 2010

Whereas the Governor in Council is of the opinion that the situation in Iran constitutes a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Foreign Affairs, pursuant to subsections 4(1) to (3) of the Special Economic Measures Act (see footnote a), hereby makes the annexed Special Economic Measures (Iran) Regulations.

SPECIAL ECONOMIC MEASURES (IRAN) REGULATIONS

INTERPRETATION

1. The following definitions apply in these Regulations.

“arms and related material” means any type of weapon, ammunition, military vehicle or military or paramilitary equipment, and includes their spare parts. (armes et matières connexes)

“Canadian financial institution” has the same meaning as in section 2 of the Bank Act. (institution financière canadienne)

“designated person” means a person who is in Iran, or is a national of Iran who does not ordinarily reside in Canada, and whose name is listed in Schedule 1. (personne désignée)

“Guide” has the same meaning as in section 1 of the Export Control List. (Guide)

“Iran” means the Islamic Republic of Iran and includes its political subdivisions. (Iran)

“Iranian financial institution” means a body corporate, trust, partnership, fund, unincorporated association or organization, established under the laws of Iran, that engages, directly or indirectly, in the business of providing financial services. (institution financière iranienne)

“Minister” means the Minister of Foreign Affairs. (ministre)

“pension” means a benefit paid under the Old Age Security Act, the Canada Pension Plan or an Act respecting the Quebec Pension Plan, R.S.Q. c. R-9, any superannuation, pension or benefit paid under or in respect of any retirement savings plan or under any retirement plan, any amount paid under or in respect of the Garnishment, Attachment and Pension Diversion Act or the Pension Benefits Division Act, and any other payment made in respect of disability. (pension)

“significant interest” means, in respect of a Canadian or Iranian financial institution, the beneficial ownership by a person, and any entity controlled by the person, of more than 10 % of a class of outstanding shares of the institution. (intérêt substantiel)

LIST

2. A person whose name is listed in Schedule 1 is a person in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

(a) a person engaged in activities that contribute, or could contribute, to Iran’s proliferation-sensitive nuclear activities, or to Iran’s activities related to the development of chemical, biological or nuclear weapons of mass destruction or delivery systems for such weapons;

(b) a former or current senior official in the Islamic Revolutionary Guard Corps;

(c) an associate or family member of a person set out in paragraph (a) or (b);

(d) an entity owned or controlled by, or acting on behalf of, a person set out in paragraphs (a) or (b); or

(e) a senior official of an entity set out in paragraph (d).

PROHIBITIONS

3. Subject to section 13, it is prohibited for any person in Canada and any Canadian outside Canada to

(a) deal in any property, wherever situated, held by or on behalf of a designated person;

(b) enter into or facilitate, directly or indirectly, any transaction related to a dealing referred to in paragraph (a);

(c) provide any financial or other related service, including insurance or reinsurance, in respect of a dealing referred to in paragraph (a);

(d) make any goods, wherever situated, available to a designated person; or

(e) provide any financial or financial-related service to or for the benefit of a designated person.

4. (1) It is prohibited for any person in Canada and any Canadian outside Canada to export, sell, supply or ship any of the following goods, wherever situated, to Iran or any person in Iran or to deal with any of the following goods destined for Iran or any person in Iran:

(a) any arms and related material the sale, supply or transfer of which is not prohibited by the Regulations Implementing the United Nations Resolutions on Iran;

(b) any goods used in the refining of oil or the liquefaction of natural gas;

(c) any of the goods listed in Schedule 2; or

(d) any item listed in the Guide, with the exception of

(i) items 5001, 5011, 5101, 5102, 5103, 5201 and 5202, and

(ii) item 5400, unless the export, sale, supply or shipment of the good is otherwise prohibited by these Regulations.

(2) It is prohibited for any person in Canada and any Canadian outside Canada to provide or acquire any financial or other services to, from or for the benefit of, or on the direction or order of, any person in Iran in respect of any of the goods listed in subsection (1).

(3) It is prohibited for any person in Canada and any Canadian outside Canada to transfer, provide or communicate to Iran or any person in Iran

(a) any technical data required for the processing, storing or handling of liquid natural gas; or

(b) any technical data related to any of the goods listed in subsection (1).

5. It is prohibited for any person in Canada and any Canadian outside Canada to

(a) provide or acquire financial services or any other services to, from or for the benefit of, or on the direction or order of, any person in Iran for the purpose of

(i) establishing an Iranian financial institution in Canada or a Canadian financial institution in Iran,

(ii) establishing a branch, subsidiary or representative office of an Iranian financial institution in Canada or of a Canadian financial institution in Iran, or

(iii) acquiring a significant interest in an Iranian or Canadian financial institution;

(b) if they are an entity referred to in paragraphs 9(a), (b), (f) or (g), provide or acquire correspondent banking services to, from or for the benefit of, or on the direction or order of, an Iranian financial institution; or

(c) purchase any debt obligation issued by the government of Iran.

6. (1) It is prohibited for any person in Canada and any Canadian outside Canada to make an investment in an entity in Iran that is owned or controlled by another entity in Iran and is engaged in the oil or natural gas industry.

(2) It is prohibited for any person in Canada and any Canadian outside Canada to provide or acquire financial or other services to, from or for the benefit of or on the direction or order of a person in Iran for the purpose of investing in the oil or natural gas industry in Iran.

7. It is prohibited for any person in Canada and any Canadian outside Canada to knowingly provide a vessel that is owned or controlled by, or operating on behalf of, the Islamic Republic of Iran Shipping Lines with insurance services, or stevedoring, bunkering and lighterage and similar services, for the vessel’s operation or maintenance.

8. It is prohibited for any person in Canada and any Canadian outside Canada to do anything that causes, assists or promotes, or is intended to cause, assist or promote, any act or thing prohibited by sections 3 to 7.

DUTY TO DETERMINE

9. Each of the following entities must determine on a continuing basis whether it is in possession or control of property owned or controlled by or on behalf of a designated person:

(a) authorized foreign banks, as defined in section 2 of the Bank Act, in respect of their business in Canada or banks to which that Act applies;

(b) cooperative credit societies, savings and credit unions and caisses populaires regulated by a provincial Act and associations regulated by the Cooperative Credit Associations Act;

(c) foreign companies, as defined in subsection 2(1) of the Insurance Companies Act, in respect of their insurance business in Canada;

(d) companies, provincial companies and societies, as those terms are defined in subsection 2(1) of the Insurance Companies Act;

(e) fraternal benefit societies regulated by a provincial Act in respect of their insurance activities and insurance companies and other entities engaged in the business of insuring risks that are regulated by a provincial Act;

(f) companies to which the Trust and Loan Companies Act applies;

(g) trust companies regulated by a provincial Act;

(h) loan companies regulated by a provincial Act;

(i) entities that engage in any activity described in paragraph 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, if the activity involves the opening of an account for a client; and

(j) entities authorized under provincial legislation to engage in the business of dealing in securities, or to provide portfolio management or investment counselling services.

DISCLOSURE

10. (1) Every person in Canada and every Canadian outside Canada must disclose without delay to the Commissioner of the Royal Canadian Mounted Police

(a) the existence of property in their possession or control that they have reason to believe is owned or controlled, directly or indirectly, by a designated person or by an entity owned or controlled by a designated person; and

(b) information about a transaction or proposed transaction in respect of property referred to in paragraph (a).

(2) No person contravenes subsection (1) by disclosing in good faith under that subsection.

APPLICATION TO NO LONGER BE A DESIGNATED PERSON

11. (1) A designated person may apply to the Minister in writing to have their name removed from Schedule 1.

(2) On receipt of an application, the Minister must decide whether there are reasonable grounds to recommend to the Governor in Council that the applicant’s name be removed from the schedule.

(3) The Minister must make a decision on the application within 90 days after the day on which the application is received.

(4) The Minister must give notice without delay to the applicant of the decision taken.

(5) If there has been a material change in circumstances since the last petition was submitted, a person may submit another application under subsection (1).

APPLICATION FOR A CERTIFICATE

12. (1) A person claiming not to be a designated person may apply to the Minister for a certificate stating that they are not the person who has been designated under section 2.

(2) If it is established that the person is not a designated person, the Minister must issue a certificate to the applicant within 30 days after the day on which the application is received.

EXCLUSIONS

13. Section 3 does not apply in respect of

(a) any dealing with the Islamic Republic of Iran Shipping Lines (IRISL) or an entity owned or controlled by it, or operating on its behalf, that has as its purpose the shipment of agricultural commodities from Canada to Iran, provided that the commodities are shipped in bulk carriers that carry only agricultural commodities;

(b) loan repayments to any person in Canada, or any Canadian abroad, in respect of loans entered into before the coming into force of these Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans;

(c) pension payments to any person in Canada or any Canadian abroad;

(d) any transaction in respect of the accounts at a Canadian financial institution that are used for the regular business of the Embassy of Iran or its consular missions in Canada;

(e) any transaction in respect of the accounts at an Iranian financial institution that are used for the regular business of the Embassy of Canada or its consular missions in Iran;

(f) any transaction to international organizations with diplomatic status, United Nations agencies, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with the Department of Foreign Affairs and International Trade and the Canadian International Development Agency, for the purpose of pursuing humanitarian relief work in Iran; and

(g) any transactions necessary for a Canadian to transfer any existing accounts, funds or investments of a Canadian held with a designated person to a non-designated person.

14. The prohibitions in sections 4 to 8 do not apply with respect to an activity that has as its purpose the safeguarding of human life, disaster relief or the providing of food or medicine.

APPLICATION BEFORE PUBLICATION

15. For the purpose of paragraph 11(2)(a) of the Statutory Instruments Act, these Regulations apply before they are published in the Canada Gazette.

COMING INTO FORCE

16. These Regulations come into force on the day on which they are registered.

SCHEDULE 1
(Section 2)

PERSONS

PART 1

ENTITIES

1. Aban Commercial and Industrial Group

2. Advanced Manufacturing Research Centre

3. Aerospace Industries Organization (AIO)

4. Aerospace Research Institute

5. Agriculture Engineering Research Institute in the Ministry of Jahad

6. Ahran Tejarat Co.

7. Ahwaz Electric Power Generation

8. Akbarieh Co.

9. Alp Company (PJS)

10. AMA Industrial Company

11. Ana Trading Company

12. Armed Forces Geographical Organization

13. ASALIB Co.

14. Asia Marine Network Pte. Ltd.

15. Asia Pearlite Casting Industries Co.

16. Baharan Factory Group

17. Bahrain Paint and Resin MFG Co. Ltd.

18. Bakhtaran Refinery

19. Bam Food Industry Development Co.

20. Bandar Abbas Refining Co.

21. Bank Mellat

22. Bank Melli

23. Bank Saderat

24. Bashir Industrial Complex

25. Bina Corrosion Consultants

26. Boweir Sanaat

27. Building and Housing Research Center (BHRC)

28. Burgman-Pars

29. Butane Company

30. Carbide Die Manufacturing

31. Caspian Industrial Research Laboratory

32. Cement Investment and Development Company

33. Charkheshgar

34. Chemical Equipment Ind. Inc.

35. Chemical Industries Group

36. Chemical Research and Development Company (CRDC)

37. CISCO Shipping Co. Ltd.

38. Daghigh Farayand Control Company

39. Daghigh Rizan Paya Hadid

40. Danesh Azmoon Teb Company

41. Davar Moharek Co.

42. Defence Industries Organization Training and Research Institute

43. Delijan Tube Rolling Company

44. DEMCO, Designing Engineering & Manufacturing Co.

45. Design Engineering Centre

46. Designing, Engineering & Manufacturing Development of Iran Khodro Co. (DEMICO) Heavy Metal Industries (HMI)

47. Djahantab Chemical Company

48. Ecxir Trading Company (ETC)

49. Electric Power Research Centre

50. Esfahan Chemical Industries

51. Esfahan Steel

52. Ettehad Aluminat Industrial Production Co.

53. Everend Asia Co. Machines & Indus. Services

54. Exir Pharmaceutical Co.

55. Export Development Bank of Iran

56. Fam Gostar Mahan Co.

57. Fan Pardazan

58. Faranir

59. Faranooran Research and Engineering Co.

60. Farasakht Industries

61. Farayaz Company

62. Farj Marine Industries

63. Fars Cement Co.

64. Fartash Sanat Pars Co.

65. Felezkar Heat Treating Co.

66. Ghavifekr Technical and Industrial Group

67. GIEC

68. Hara Institute

69. Harris Co. (Iran)

70. Helal Company

71. Hormozgan Regional Electricity Co.

72. Imaco Ltd.

73. Iman Hossein University

74. Industrial Machine Tools Fab. Mort Kort Machine Co.

75. Industrial SCG Limited

76. Institute of Applied Physics

77. Iran Aircraft Industries (IACI)

78. Iran Aircraft Manufacturing Industries (IAMI/IAMCO/HESA/HASA)

79. Iran Central Oil Fields Co.

80. Iran Chemical Industries

81. Iran Communications Industries (ICI)

82. Iran Electronics Industries (IEI)

83. Iran Felez Co.

84. Iran Galvano Technic Co. Ltd.

85. Iran Khodro Company

86. Iran Mineral Production and Supply Co.

87. Iran National Nanotechnology Council

88. Iran o Misr Shipping Company, Tehran Office

89. Iran Pan Am Co. Ltd.

90. Iran Pharmaceutical Development and Investment Company (IPDIC)

91. Iran Powder Metallurgy Complex

92. Iran Sanitary & Industrial Valves (ISIV) Co.

93. Iran Tablo Co.

94. Iran Tohid Co.

95. Iran Tractor Manufacturing Company

96. Iran Transfo Company

97. Iran Uranium Enrichment Company

98. Iran Zahion Company

99. Iranian Army

100. Iranian Blood Research and Fractionation Co.

101. Iranian Committee for the Reconstruction of Lebanon

102. Iranian Gas Engineering and Development Co.

103. Iranian Helicopter Company

104. Iranian Navy

105. Iranian Panam Interscience Systems Co. Limited

106. Iranian Research Organization for Science and Technology (IROST)

107. Iranian Space Agency

108. Iranian Veterinary Org.

109. IRGC Air Force (and IRGC Air Force Missile Command)

110. IRGC Logistics and Procurement

111. IRGC Missile Command

112. IRGC Navy

113. IRGC Qods Force

114. Islamic Republic of Iran Shipping Lines (IRISL)

115. IRISL Marine Services & Engineering Company

116. IRISL Multimodal Transport Co.

117. Isfahan Cement Co

118. Isfahan Optics Industry (EOI) (IOI)

119. Islamic Republic of Iran Air Force

120. Islamic Republic of Iran Broadcasting

121. Iston Manufacturing

122. Jahad Engineering Services Co.

123. Jahan Kimia Company

124. Jam Ara Co.

125. Jam Petrochemical

126. Javedan Mehr Toos

127. Kala Naft

128. Kamal Sanat Co.

129. Kanavaran Mining And Industrial Co

130. Kar-o-andisheh Engineers Corp.

131. Karoon Joint Venture Company

132. Karoon Petrochemical Co.

133. Kaveh Cutting Tools Company

134. Kavian Baris

135. Kavoush Joush Iran Co

136. Kayson Co.

137. Kermanshah Oil Refinery

138. Khatem-ol Anbiya Construction Organisation

139. Khazar Sea Shipping Lines

140. Khishavand Tasisat Co.

141. Khodrowsazan Iran Co.

142. Khorasan Science & Technology Park (KSTP)

143. Khouzestan Steel Co.

144. KIMIA RAZI CO. PJS

145. Kimia Terasheh Co.

146. Kooshkan Transformers

147. Khosh Paint and Resin Manufacturing Co.

148. Labopharm Co. Ltd.

149. M/S Iran Electromotor

150. Machine Sazi Arak (MSA)

151. Mahestan Import and Export

152. Malek Ashtar University

153. Mapna Co.

154. Marestan

155. Marestan Co. Ltd.

156. Marine Industries Organization (MIO)

157. Matin Foulad Sepahan Company

158. Matin Print Factory

159. Mavadkaran Jahed Noavar Co.

160. Mechanic Industries Group

161. Medical Products Distribution Co.

162. Medical Science Technology of Tehran

163. Megamotor Company

164. Mehr Engineering and Industrial Group

165. Mehrabad Industrial Co. (MIC)

166. Mehrasa-Sanat

167. Meisami Research and Development Complex

168. Meysami Research Centre

169. Mineral Export Company

170. Ministry of Defence Armed Forces Logistics (MODAFL)

171. Ministry of Defence Logistics Export

172. Missile Industries Group

173. Mizan Machine Manufacturing Group

174. Mouteh Gold Plant

175. N.A.B. Export Co.

176. Nafis Fanavaran Industrial Company

177. Naserin Vahid

178. National Iranian Copper Ind. Company

179. Naval Defence Missile Industry Group

180. Noavar Hava

181. Noavin Ltd.

182. Nouavar Shad Co Ltd

183. Novar Company

184. Nuclear Fuel Production and Procurement Company

185. Nuclear Industry Waste Management Company of Iran

186. Oil Industries Engineering and Construction

187. Oil Turbocompressor Engineering Co. (OTEC)

188. Omid Sanat Company

189. Otamach Ltd, Mantaghe Azad Ghabahar, Objective Technology and Machinery

190. Pak Shoo Chemical and Manufacturing Company

191. Palayesh Niroo

192. Parashnoor Photonics Co. (a.k.a. Parashnoor Laser & Electro-Optic Co.)

193. Pardis Engineering Group

194. Pars Khodro Ltd.

195. Pars MCS

196. Pars Pardad Company

197. Pars Switch Co.

198. Pars Tablo

199. Parsian Gas Field Maintenance Office

200. Passive Defence Organization

201. Pasteur Institute of Iran

202. Patent Co. Ltd.

203. Perse Sanco Ltd.

204. Peymab Company

205. Physics Research Center (PHRC)

206. Piston Manufacturing Company

207. Pouya Aflak Sepher

208. Poyeshar Ltd.

209. Proton Co.

210. Puladgaran Babol Khojasteh Alley

211. RAFIZCO

212. Rasa V. Asia

213. Razi Vaccine and Serum Research Institute in the Ministry of Jahad

214. Research and Development Group

215. Rey Power Generation Management Co.

216. Rolling Mill and Steel Production Co.

217. Rose Polymer Co.

218. SABA Battery Mfg. Co.

219. SABA Machinery Supplying Co.

220. Saba Niroo

221. Saba Power and Electricity Industries

222. Sabine Sard Khazar Co.

223. Sadid Pipe & Profile Co.

224. Saipa Wheel Manufacturing Co.

225. Samen Sanam

226. SANAM Electronics Co. (Shahid Shahabady Industrial Complex)

227. Sanka CNG Cylinders Factory

228. Savings Investment of Behshahr Industries Development

229. Scientific Medical Technology LLC

230. Sepidaj Co. Ltd.

231. Shafa-e-Sari Company

232. Shahfa Antibiotic Producing Co.

233. Shahid Beheshti University, Department of Engineering

234. Shahid Modarres Pharmaceutical Industries Co. (SMPI)

235. Shahid Sattari Air Force University

236. Shayan Company

237. Shayeganrahavard Co.

238. Sherkat Emha Pars Ltd.

239. Sherkate Sazandeye Makahazene Taht Pheshare Kawosh

240. Shian Co.

241. Shiller Novin

242. Shiroudi Industries

243. Shiveh Tolid Company Ltd.

244. Simin Godaz Khavar

245. Sino Darou Lab

246. Society Farayaz Chemical Research and Development Company

247. Sohban Pharmaceutical Co.

248. Soroush Sarzamin Asatir SSA, Tehran Office

249. South Industrial Power

250. State Purchasing Organization

251. Tabriz Petrochemical Company

252. Tabriz Tolid Mill Lang (T.M.T.) Co.

253. Tajhiz Gama Co.

254. Tajhiz Novin Tous

255. Talah Sanat

256. Tammam Engineering Services, Tehran Office

257. Tara Zob Manufacturing Co.

258. Tavator Sepahan

259. Technical & Engineering Nikan Group (TENG)

260. Tehran Padena Co.

261. Tehran SEI

262. Tehran University of Medical Sciences

263. Temad Co. Active Pharm. Ingredients

264. Teta Company

265. Three Star Services Co. (T.S.S. Co.)

266. TSI Co.

267. TSS Co.

268. Tunnel Boresh Machine

269. Turbine Blade Engineering and Manufacturing Co. (PARTO)

270. Turbine Engine Manufacturing Industries (TEM)

271. Turbo Compressor Manufacturer (JSC) Head Office

272. Urum Pooya Control Co.

273. Valfajr 8th Shipping Line Co. SSK

274. Vehicle and Equipment Industries Group (VEIG)

275. West Chemical Researching Co.

276. Yazd Science & Technology Park

277. Zanjan Cement Co.

278. Zolal Iran Co.

279. ZOUCHAN MfG. Co.

PART 2

INDIVIDUALS

1. Abdolreza Abedzadeh

2. Al Akbar Salehi

3. Ali Akbarpour Jamshidian

4. Ali Fazli

5. Ali Saeedi Shahroudi

6. Amir Ali Hajizadeh

7. Bahman Reyhani

8. Behrouz Esbati

9. Farhoud Masoumian

10. Gholam Reza Jalali Farahani

11. Gholamhossein Ramezani

12. H. Afariden

13. Heydar Moslehi

14. Hossein Firuzabadi

15. Hossein Ghadyani

16. Hossein Hamadani

17. Hossein Nejat

18. Hossein Taeb

19. Javad Darvish-Vand

20. Javedan Mehr Toos

21. Kamran Daneshju

22. M. Shahriari

23. Mahmood Jannatian

24. Majid Fathinezhad

25. Manouchehr Foruzandeh

26. Mehdi Sa’adati

27. Mohammad Ali Jafari

28. Mohammad Baqer Zolqadr

29. Mohammad Hossein Saffar Harandi

30. Mohammad Pakpour

31. Mohammad Shafi’i Rudsari

32. Mohammad Yusef Shakeri

33. Mostafa Mohammad Najjar

34. Nima Alazdeh Tabari

35. Qassem Kargar

36. Qolam Reza Ahmadi

37. Rostam Qasemi

38. S.A.H. Feghhi

39. Said Esmail Khalilipour

40. Sekhavatmand Davudi

41. Seyyed Mahdi Farahi

42. Yadollah Javani

Schedule 2
(Section 4)

GOODS

Item

Column 1

Goods

Column 2

Description

 1.

Aerodynamic particle size measuring equipment

Any equipment designed to measure in real time the aerodynamic particle size of aerosols in the range of 0.1 to 50 micrometers

 2.

Aerosol generators

Any equipment capable of producing aerosols of radioactive, chemical or biological materials with aerodynamic particle sizes in the range of 0.1 to 50 micrometres.

 3.

Aluminum or stainless steel alloy valves, piping, tubing and fittings

Bellows-sealed valves made of aluminium alloy or stainless steel type 304 or 316 L, that are not specified in the Export Control List.

 4.

Aluminium alloy and its products: piping, tubing, fittings, flanges, forging, castings and other unfinished products in any form, and any waste or scrap

Aluminium and its alloys that are not specified in the Export Control List and that

(a) are capable of an ultimate tensile strength of 460 MPa or more at 293 K (20°C); or

(b) have a tensile strength of 415 MPa or more at 298 K (25°C).

 5.

Argon ion lasers

Argon ion lasers that are not specified in the Export Control List and have an average output power equal to or greater than 5 W.

 6.

Autoclaves (double-ended)

Double-ended or pass-through autoclaves with internal volume greater than 1m3, bioseal, interlocking doors, and/or warning lights or audible alarms.

 7.

Automated take-off or landing systems

Systems that are usable in the systems specified in entry 6-1.A.2 of the Guide and are capable of operating vehicles with a stall speed in excess of 30 knots.

 8.

Batch centrifuges

Batch centrifuges with a rotor capacity of 25 L or greater, usable with biological material.

 9.

Bellows-sealed scroll compressors and vacuum pumps

(1) The following vacuum pumps:

(a) turbomolecular pumps having a flow-rate equal to or greater than 400 l/s;

(b) roots-type roughing pumps having a volumetric aspiration flow-rate greater than 200 m³/hr;

(c) bellows-sealed, scroll, dry pumps; and

(d) bellows-sealed, scroll, dry compressor pumps.

(2) Vacuum pumps that are not specified in the Export Control List and that:

(a) are suitable for corrosive fluids; and

(b) have a maximum flow-rate greater than 5 m³/hr, measured under standard temperature and pressure conditions of 273 K (0°C) and 101.3 kPa, respectively; and

(c) are pumps in which all surfaces that may come into direct contact with fluids consist of stainless steel, aluminium alloy or a combination of the two.

10.

Chlorine Trifluoride

Chemical Abstracts Service registry number 7790-91-2

11.

Clean rooms

Class 1000 to 10000

12.

Chromium and nickel alloy and its products: chemical process equipment, specially designed parts for that equipment, forging, castings and other unfinished products in any form, and waste or scrap made from nickel and chromium alloys

Chemical process equipment including reaction vessels, reactors or agitators, storage tanks, containers or receivers, heat exchangers or condensers, distillation, or absorption columns, valves, pumps, piping, tubings, fittings, flanges, plates, coils.

Chromium and nickel alloys made or lined with more than 4% by weight of nickel and with more than 13% by weight of chromium that are not specified in the Export Control List.

 

13.

Contamination monitors

Any portable, transportable or handheld equipment designed to detect the presence of chemical warfare agents in real time, as listed in the Annexes to the Chemical Weapons Convention.

14.

Cooling systems (freon or chilled water) and heat exchangers

Cooling systems with capacities exceeding 350 kW.

15.

Copper-beryllium alloy parts, plates, sheets or rods

Metal alloys, metal alloy powder and alloyed materials as follows:

Copper–beryllium alloys, with

(a) thermal conductivity in excess of 100 W/m K at 25° C;

(b) tensile strength in excess of 400 MPa; or

(c) low cycle fatigue life of 10,000 cycles or more at 125° C at a maximum stress of 100 MPa.

16.

Cryogenic ultramicrotome and parts of it

Cryogenic ultramicrotones capable of sectioning materials to a thickness of 1 micrometre or less, and replacement parts for them.

17.

Cyclone separators

Cyclone separator systems, including their parts, software and technology, using a linear or circular flow of gases or mixtures of gases that are capable of sorting particulate matter with an average diameter greater than or equal to 5 micrometres and less than or equal to 600 micrometres.

18.

Decanning and decladding equipment

Mechanical equipment designed or usable for decanning or decladding spent nuclear reactor fuel as part of a fuel processing process.

19.

Drum drying equipment

Any drum drying equipment capable of producing dry particles of radioactive, chemical or biological materials with aerodynamic particle sizes in the range of 0.1 to 50 micrometres.

20.

Electrical power generators

Electrical power generators having a maximum generation rating greater than 1 MW.

21.

Eddy current test instruments and parts

Eddy current test instruments and replacement parts for them capable of operating with a near gap of less than or equal to 2.0 mm and whose resolution is better than 1.5 micrometres (RMS) or whose bandwidth is in excess of 100 Hz.

22.

Electrical power supply units and transformers

High voltage direct current power supplies that are not specified in the Export Control List and

(a) are capable of continuously producing 10 kV or more over a period of 8 hours, with output power of 5 kW or more with or without sweeping; and

(b) have current or voltage stability better than 0.1% over a period of 4 hours.

23.

Electrolytic cells for fluorine products

Electrolytic cells that are not specified in the Export Control List that

(a) are used for flourine production; and

(b) have an output capacity greater than 100 g of fluorine per hour.

24.

Fibrous or filamentary materials

The following fibrous or filamentary materials or prepregs that are not specified in the Export Control List:

(a) carbon or aramid fibrous or filamentary materials having either

(i) a specific modulus exceeding 10 x 10^6 m, or

(ii) a specific tensile strength exceeding 17 x 10^4 m;

(b) glass fibrous or filamentary materials having either

(i) a specific modulus exceeding 3.18 x 10^6 m, or

(ii) a specific tensile strength exceeding 76.2 x 10^3 m; and

(c) thermoset resin-impregnated continuous yarns, rovings, tows and tapes with a width of 15 mm or less (prepregs), made for carbon or glass fibrous or filamentary materials.

25.

Filament winding machines and related equipment

(1) Filament winding machines and related equipment that

(a) have motions for positioning, wrapping and winding fibres coordinated and programmed in two or more axes;

(b) are specially designed to fabricate composite structures of laminates from “fibrous or filamentary materials; and

(c) are capable of winding cylindrical rotors of diameter between 75 and 400 mm and lengths of 300 mm or greater.

(2) Coordinating and programming controls for filament winding machines specified in subsection (1).

(3) Mandrels for filament winding machines specified in subsection (1).

26.

Flow-forming machines

Flow-forming machines and/or spin-forming machines capable of flow-forming functions and mandrels, as follows:

(a) machines that have three or more rollers and that can be equipped with numerical control units or a computer control.

(b) rotor-forming mandrels designed to form cylindrical rotors with an inside diameter between 75 and 400 mm.

27.

Frequency changers (inverters) and specially designed software for them

(1) Frequency changers that

(a) have multiphase frequency output;

(b) are capable of providing power of 40W or greater;

(c) are capable of operating anywhere between 600 and 2000 Hz; and

(d) have frequency control less than 0.2%.

(2) Specially designed software for these frequency changers.

28.

Gaskets and O-rings

Seals and gaskets made of

(a) copolymers of vinylidene fluoride having 75% or more beta crystalline structure without stretching;

(b) fluorinated polyimides containing 10% by weight or more of combined fluorine;

(c) fluorinated phosphazene elastomers containing 30% by weight or more of combined fluorine;

(d) polychlorotrifluoroethylene (PCTFE);

(e) viton fluoro-elastomers; or

(f) polytetrafluoroethylene (PTFE).

29.

Glove boxes

Any glove boxes or similar devices with remote manipulators that can provide the operator with protection from radiation or radioactive materials.

30.

Grinding equipment

Machine tools for grinding that have positioning accuracies which, all compensations available, are equal to or less than 15 μm along any linear axis according to ISO 230/2 (1988), that are not specified in the Export Control List.

31.

Heat exchangers

Heat exchangers or condensers that are not specified in the Export Control List with a heat transfer surface area greater than 0.05 m² and less than 30 m², if all surfaces that may come into direct contact with fluids consist of

(a) alloys having, by weight:

(i) more than 25% nickel, and

(ii) more than 20% chromium;

(b) fluoropolymers;

(c) glass (including vitrified or enamelled coatings or glass lining);

(d) graphite or carbon graphite;

(e) nickel or alloys with more than 40% nickel by weight;

(f) tantalum or tantalum alloys;

(g) titanium or titanium alloys;

(h) zirconium or zirconium alloys;

(i) silicon carbide;

(j) titanium carbide;

(k) stainless steel; or

(l) a combination of the materials specified in paragraphs (a) to (k).

32.

Heat treatment and sintering furnaces

Controlled-atmosphere heat treatment furnaces capable of operation at temperatures above 400°C.

33.

HEPA filters

HEPA filters of a frame area of 0.0625m2 or larger with a DOP rating of 99.997% (at 0.3 micron) or higher.

34.

High-speed balancing equipment, technology and software

The following balancing machines and related equipment:

(a) balancing machines that are

(i) not designed or modified for dental or other medical equipment,

(ii) not capable of balancing rotors or assemblies which have a mass greater than 3 kg,

(iii) capable of balancing rotors or assemblies at speeds greater than 12 500 rpm,

(iv) capable of correcting imbalance in two planes or more, and

(v) capable of balancing to a residual specific imbalance of 0.2 g mm/kg of rotor mass; and

(b) indicator heads usable with machines specified in paragraph (a).

35.

High speed cameras

Electronic framing cameras having a speed exceeding 1000 frames per second.

36.

Lead in sheets or blocks/bricks

Must be suitable for use in shielding.

37.

Liquid pumps

Multiple-seal and seal-less pumps that are not specified in the Export Control List

(a) that are suitable for corrosive fluids; and

(b) that have a maximum flow-rate greater than 0.1 m³/hr; and

(c) in which all surfaces that may come into direct contact with fluids consist of

(i) stainless steel,

(ii) aluminium alloy, or

(iii) a combination of the materials specified in subparagraphs (i) and (ii).

38.

Magnetic Alloys in thin strip form

Magnetic alloy materials in sheet or thin strip form with a thickness of 0.1 mm or less, made of iron-chromium-cobalt, iron-cobalt-vanadium, iron-chromium-cobalt-vanadium or iron-chromium.

39.

Mass spectrometers

The following mass spectrometers that are not specified in the Export Control List that are capable of measuring ions of 200 atomic mass units or more and have a resolution of better than 2 parts in 200:

(a) inductively coupled plasma mass spectrometers (ICP/MS);

(b) glow discharge mass spectrometers (GDMS);

(c) thermal ionization mass spectrometers (TIMS);

(d) electron bombardment mass spectrometers with a source chamber constructed from, lined with or plated with, materials resistant to corrosion by UF6;

(e) molecular beam mass spectrometers with either

(i) a source chamber constructed from, lined with or plated with, stainless steel or molybdenum and equipped with a cold trap capable of cooling to 193 K (– 80°C) or less, or

(ii) a source chamber constructed from, lined with or plated with, materials resistant to corrosion by UF6; and

(f) mass spectrometers equipped with a microfluorination ion source usable with actinides or actinide fluorides;

40.

Metal powder production equipment of spherical or atomised materials and specially designed components not specified in the Export Control List

Includes but is not limited to the following equipment:

(a) plasma generators (high frequency arc jet) usable for obtaining sputtered or spherical metallic powders; and

(b) electroburst equipment usable for obtaining sputtered or spherical metallic powders.

41.

Nanopowder synthesis equipment and specially designed components for it

Equipment capable of synthesizing ceramics and metallic powders to produce nanoparticles from 20 nm to 100 nm.

42.

Nickel and nickel alloys: chemical process equipment, specially designed parts for that equipment, forging, casting and other unfinished products in any form, and waste or scrap made from nickel and nickel alloys

Includes but is not limited to reaction vessels, reactors, agitators, storage tanks, containers or receivers, heat exchangers or condensers, distillation or absorption columns, valves, pumps, piping, tubing, fittings, flanges, blocks, plates and coils that are made or lined with nickel or nickel alloys with more than 30% by weight of nickel and not specified in the Export Control List.

43.

Nucleic acid synthesisers

Any device designed to produce oligonucleotides from nucleic acids or derivatives.

44.

Orbital or reciprocal shakers

Orbital or reciprocal shakers with a total flask capacity greater than 250 L, usable for use with biological materials.

45.

Oxidation furnaces

Furnaces capable of operation at temperatures over 400° C.

46.

Perfluourinated lubricants

Perfluoroaliphatic ethers in monomeric or polymeric form.

47.

Pressure transducers with wetted ends that include 316 stainless steel and ceramic

Pressure transducers that are not specified in the Export Control List

(a) with pressure-sensing elements made of, or protected by, materials resistant to corrosion by UF6, including stainless steel or ceramics;

(b) capable of measuring absolute pressures of up to 200 kPa; and

(c) having either

(i) a full scale of less than 200 kPa and an accuracy of better than ± 1% of full scale; or

(ii) a full scale of 200 kPa or greater and an accuracy of better than 2 kPa.

48.

Ring magnets

Permanent magnetic materials in the shape of rings that

(a) have an outside diameter between 30mm and 90mm; and

(b) are made of aluminium-nickel-cobalt, ferrites, samarium-cobalt, or neodymium-iron-boron.

49.

Riot gear

Riot helmets and associated equipment, balaclavas, flashbangs, sting-ball grenades, impact munitions, chemical munitions, clothing specifically used for physical protection in riot control situations, batons and paintball guns.

50.

Shaking incubators

Shaking incubators with a total flask capacity greater than 250 L, usable with biological materials.

51.

Sintered metal filters employing monel or other high nickel content alloys

Sintered metal filters made of

(a) nickel; or

(b) nickel alloy with a nickel content of 40% or more by weight.

52.

Sintering presses

Sintering systems, including parts, software and technology for them, capable of generating a temperature in excess of 999° C or atmospheric pressure of less than 2 atmospheres.

53.

Spray drying equipment

Spray drying equipment usable with biological material capable of producing a mean particle size of 15 microns or less, and the following components: spray/atomizer units, cyclones, classifiers, and electronic control units.

54.

Sulphuric acid and Vanadium Pentoxide

Chemical Abstract Service registry number 7664-93-9 and Chemical Abstract Service registry number 1314-62-1, respectively.

55.

Thermal spraying systems or equipment for coating substrates and specially designed software and technology

(1) Thermal spraying systems or equipment that

(a) are designed or modified to coat substrates with any of the following:

(i) alloys having, by weight

(A) more than 25% nickel, and

(B) more than 20% chromium,

(ii) fluoropolymers,

(iii) glass (including vitrified or enamelled coatings or glass lining),

(iv) graphite or carbon graphite,

(v) nickel or alloys with more than 40% nickel by weight,

(vi) tantalum or tantalum alloys,

(vii) titanium or titanium alloys,

(viii) zirconium or zirconium alloys,

(ix) silicon carbide,

(x) titanium carbide,

(xi) stainless steel,

(xii) ceramics, and

(xiii) a combination of the materials specified in paragraphs (a) to (k); and

(b) use any of the following techniques:

(i) wire arc spray,

(ii) flame spray (wire or powder),

(iii) atmospheric and vacuum plasma spray,

(iv) high velocity oxy fuel,

(v) cold spray,

(vi) warm spray, and

(vii) detonation.

(2) Specially designed software and technology for that thermal spraying systems or equipment.

56.

Tissue culture vessel

Tissue culture cultivation vessels in which each vessel has an effect growth surface area of 450 cm^2 or greater.

57.

Titanium, titanium alloys and their products

Titanium alloy and its products: piping, tubing, fittings, flanges, forging, castings and other unfinished products in any form, and waste or scrap.

58.

Tributyl phosphate (TBP)

Chemical Abstract Service registry number 126-73-8

59.

Tunnel boring equipment and specially designed components

Includes tunnel-boring, tunnel-excavating machines, earth pressure balance machines, slurry shield machines, drill faces and roadheader tunnel excavating machines.

60.

Vibration monitoring and analysis equipment, including accelerometers, signal conditioning amplifiers and vibration analysis software

The following vibration test systems and equipment that are not specified in the Export Control List:

(a) vibration test systems employing feedback or closed loop techniques and incorporating a digital controller, capable of vibrating a system at an acceleration equal to or greater than 10 g rms between 20 Hz and 2 kHz and imparting forces equal to or greater than 50 kN, measured bare table;

(b) digital controllers, combined with vibration test software, with a real-time bandwidth greater than 5 kHz usable with vibration test systems specified in paragraph (a);

(c) vibration thrusters (shaker units), with or without associated amplifiers, capable of imparting a force equal to or greater than 50 kN, measured bare table, and usable in vibration test systems specified in paragraph (a);

(d) test piece support structures and electronic units usable with multiple shaker units in a system capable of providing an effective combined force of 50 kN or greater, measured bare table, and usable in vibration systems specified in paragraph (a); and

(e) components for those vibration test systems and equipment.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations or the Order.)

Issue: Due to Iran’s continued refusal to abide by its international obligations with respect to its nuclear program, the Government of Canada has decided to join with like-minded countries to impose additional sanctions above and beyond those imposed by the United Nations Security Council (the UNSC) in order to hamper the growth of Iran’s nuclear program to the greatest possible extent, and persuade Iran’s leadership to resume negotiations with respect to its nuclear program.

Description: The Special Economic Measures (Iran) Regulations (the Regulations) will prohibit dealings with persons designated under the Regulations; ban trade in goods and technology related to the development of nuclear weapons and other weapons of mass destruction, and the delivery systems for such weapons, as well as goods needed for refining oil and gas; limit financial transactions between Iran and Canada; and prevent the supply of support services to the Islamic Republic of Iran Shipping Lines. This will make it difficult for proliferators within Iran to access the funds and materials necessary to build their nuclear program, and is intended to persuade Iran’s leadership to resume negotiations with the five permanent members of the UN Security Council plus Germany regarding its nuclear program.

Cost-benefit statement: The economic measures imposed by the Regulations ban trade in more goods and services than are prohibited by the UNSC in its sanctions against Iran. While Canada is implementing these additional measures in consultation with like-minded countries, in order to ensure the greatest effectiveness possible, there are many countries that trade with Iran that will not be subject to the same restrictions. Thus, trade in goods that once came from Canada will be sourced from other countries. As a result, Canada will lose some of its trade in what will now become prohibited goods to other countries that will not be imposing additional sanctions.

Business and consumer impacts: Several government departments will face an increased administrative burden due to the Regulations. The Canada Border Services Agency will have a greater investigative and reporting burden; the RCMP will face increased investigations for prosecutions; and the Department of Foreign Affairs and International Trade will have to receive and process a large number of permits requesting exemptions from the Regulations. Businesses in the manufacturing sector may experience a negative impact from the sanctions if they produce equipment required in the refining sector of the Iranian oil and gas industry. It will also be difficult for those businesses that may have previously dealt with designated persons to continue to do business. However, these persons may apply to the Minister of Foreign Affairs for a permit to allow transactions with such persons, if, for example, businesses can demonstrate that the transactions are not connected to Iran’s nuclear proliferation activities, programs relating to weapons of mass destruction or their delivery systems. Businesses should be aware, however, that the Minister will make decisions on such applications on a case-by-case basis. Furthermore, the application of additional measures on Iran may have an impact on areas of trade that are expressly permitted under the Regulations — such as trade in wheat, pulses and vaccines, of which Canada is historically a large supplier — which fall under the exemption for the provision of food and medicines, if Iran decides to retaliate for the additional measures imposed by choosing alternative suppliers for these goods.

Domestic and international coordination and cooperation: Following the imposition of sanctions on Iran by the United Nations Security Council, in Resolution 1929 (2010), a number of like-minded countries agreed to implement additional sanctions on Iran. The United States has already announced additional measures against Iran, and the European Union and Australia have also announced their intention to do so. By acting in coordination and cooperation with international partners, the sanctions imposed in the Regulations will be more effective in achieving the objectives of the Regulations.

Issue

The Iranian nuclear program has been a matter of grave concern to the international community for several years. Iran signed the Nuclear Non-Proliferation Treaty (NPT) in 1968 and has claimed consistently that its nuclear activities are peaceful in nature. Between 2003 and 2005, following revelations about secret nuclear sites, the International Atomic Energy Agency (IAEA) conducted intensive inspections that uncovered that, for almost 20 years, Iran had engaged in a range of undeclared nuclear activities, including the enrichment of uranium and separation of plutonium.

In September 2005, the IAEA Board of Governors found Iran to be in non-compliance with its Safeguards Agreement with the IAEA, and in February 2006 it reported Iran’s case to the UN Security Council, leading to Resolution 1696 demanding that Iran cease its enrichment and reprocessing efforts. The Security Council has passed four more resolutions imposing sanctions (UNSCR 1737, 1747, 1803, 1929 [2010]) and one that does not impose sanctions (UNSCR 1835), for Iran’s failure to comply with Resolution 1696.

Iran has continued to ignore its international legal obligations. On September 21, 2009, in a letter to IAEA Director General Mohamed El Baradei, Iran revealed the existence of a new, previously undeclared facility to enrich uranium. The plant is not yet complete, nor has any significant amount of nuclear material been introduced to the facility. Iran was legally obligated to declare the existence of the facility before beginning construction, but failed to do so.

The latest IAEA report on Iran, dated May 31, 2010, notes that Iran has accumulated 2 550 kg of low-enriched uranium hexafluoride (UF6) since its Fuel Enrichment Plant began operation in 2007. Production levels are at the point where Iran has sufficient nuclear material to develop two nuclear weapons, if further enriched; however, the production itself is under IAEA safeguards. Under the pretext of providing fuel for the Tehran Research Reactor, Iran has already begun to upgrade its low-enriched UF6 from 3.5% to 19.8%, just under the legal threshold for “high-enriched nuclear material.”

Consequently, on June 9, 2010, the UN Security Council, acting under Chapter VII of the Charter of the United Nations, adopted Resolution 1929 (2010) noting that Iran has not established full suspension of all enrichment-related and reprocessing activities and heavy water-related projects as set out in resolutions 1696 (2006), 1737 (2006), 1747 (2007) and 1803 (2008) nor resumed its cooperation with the IAEA. The Security Council also noted that Iran has constructed an enrichment facility at Qom in breach of its obligations to suspend all enrichment-related activities and that Iran has enriched uranium to near 20%, and did so without notifying the IAEA with sufficient time for it to adjust the existing safeguards procedures.

Resolution 1929 (2010) imposes sanctions against Iran and persons designated by a committee of the UNSC. These sanctions are binding upon all states pursuant to Article 25 of the Charter of the United Nations and, therefore, Canada was required to implement them domestically. On June 17, 2010, Canada incorporated the UNSC’s decisions into Canadian domestic law under the Regulations Amending the Regulations Implementing the United Nations Resolutions on Iran, which came into force under the legislative authority of the United Nations Act.

Objectives

The Special Economic Measures (Iran) Regulations (the Regulations) have been drafted to implement many of the measures that the UNSC called upon member states to implement under Resolution 1929 (2010).

The objectives of the Regulations are to add further obstacles to Iran’s efforts to build its nuclear program, and to persuade Iran’s leadership to resume negotiations with respect to its nuclear program.

Description

The Regulations will impose the following measures:

  • Restrictions on dealings with designated persons who are connected to the development of Iran’s nuclear activities, or to the development of chemical, biological or nuclear weapons of mass destruction, or the delivery systems for such weapons;
  • Restrictions on the export, sale or other provision of arms and related materials, items required for the weapons and delivery systems mentioned above, and items required for the refining sector of Iran’s oil and gas industry;
  • Restrictions on the provisions of certain financial services to and from Iran;
  • Restrictions on new direct investment in the oil and gas sector in Iran; and
  • Restrictions on shipping services to the Islamic Republic of Iran Shipping Lines, such as are required for the operation or maintenance of its vessels.

Exemptions are provided for all of the prohibitions except that of dealing with designated persons for humanitarian purposes, which is defined as “for the purpose of providing food and medicine, including through commercial transactions; providing disaster relief; or safeguarding human life.”

The restriction on dealings with designated persons does not apply to the shipment of bulk agricultural commodities by the Islamic Republic of Iran Shipping Lines; loan repayments; pension payments; transactions with the Iranian and Canadian embassies; transactions with certain organizations such as the Red Cross or Red Crescent and non-governmental organizations; and transactions necessary to transfer an account held with a designated person.

The Regulations come into force upon their registration, and will be tabled before Parliament as is required under the Special Economic Measures Act.

Regulatory and non-regulatory options considered

The imposition of sanctions can only be accomplished via legislation. The Special Economic Measures Act is the appropriate legislative authority for the implementation of sanctions where the Governor in Council has determined that there has been a grave breach of international peace and security that has resulted in, or is likely to result in, an international crisis.

The only other regulatory option available for imposing restrictions on Iran is the Area Control List. Countries on this list are subject to a complete ban on the export of all items to that country. However, this does not allow for Canada to impose any other restrictions beyond the ban on the export of goods. Adopting regulations under the Special Economic Measures Act allows Canada to respond to the grave breach of international peace and security presented by Iran’s actions with respect to its nuclear program by imposing a variety of additional measures on Iran that send a clear message to the leadership of Iran that Canada does not approve of its continued intransigence with respect to its nuclear program, and that it desires Iran to return to negotiations regarding its nuclear program.

Benefits and costs

Trade impact (sectors)

The Canadian agriculture and agri-food sector provides one in eight jobs and employs nearly 2.1 million people. It is the principal Canadian exporter to Iran. Of the $284 million exported to Iran by this sector in 2009, the majority was wheat ($218 million) followed by soya beans ($62 million). The amount of agricultural exports to Iran depends greatly on the local yield of crops in Iran and, therefore, varies greatly from year to year. However, in five of the ten years between 2000 and 2009, Canadian cereals exports surpassed $100 million.

Canadian exporters will be subject to these fluctuations regardless of the new Regulations. Nonetheless, this sector stands to be affected by the new conditions stemming from the Regulations. While agricultural exports are specifically excluded from the sanctions, indirect measures placing restrictions on Iranian vessels and on financing can adversely affect the volume of the trade.

The manufacturing sector is the second contributor to Canadian exports to Iran. Categories 84 and 85 of the Harmonized Commodity Description and Coding System capture a lot of Canada’s equipment supplies to the Iranian oil and gas industry, plus other industrial uses. These two categories accounted for more than $50 million in Canadian exports in nine of the ten years between 2000 and 2009. Measures that prohibit trade in the oil and gas sector will directly affect existing Canadian exporters.

The amount of exports in the manufacturing sector has varied over the 10 years prior to 2010, but it has consistently been second to the agricultural sector, once surpassing it in 2004 when cereals exports were only $9.7 million. The market potential for further expansion of manufactured exports to Iran would be significant, given the size of Iran’s economy and its population in excess of 72 million. In addition, the effect of implementing the Regulations could cause Canadian businesses and financial institutions to conclude that the compliance costs and reputational risks of engaging in transactions with Iran are too high to continue their current activities, thereby diminishing trade with Iran.

At $15.9 million in 2009, pharmaceutical products constitute the fourth stand-alone category of exports to Iran — placing after cereals, oil seeds, and machinery and mechanical appliances. The overall trend in the export of these products over the 10 years leading up to 2009 has been upward. This increase corresponds to expansion of the Iranian economy and should continue, barring adverse effects stemming from the Regulations. While the measures will not directly target this sector, shipping restrictions may adversely affect the ability of Iranian importers to deal with Canadian companies.

Trade impact (regional)

The Prairies supply the bulk of exports to Iran. In 2009, wheat exports comprised $218 million of $267 million of the total exports from that region. However, sizeable industrial exports also originate from this area, and these can be hampered if the oil and gas sector is targeted. Central Canada leads in pharmaceutical and manufacturing exports, with $12 million and $42 million respectively. This region also provides all of the $62 million exports of soya beans. The Regulations will have smaller impacts on Atlantic Canada, the territories and British Columbia. The latter supplies Iran with modest exports of paper and pharmaceuticals, $4 million and $2 million respectively.

Administrative burden and foreign competition

The Regulations target a number of listed entities and expand the list of exported goods to be controlled. Consequently, businesses and governmental bodies that conduct and oversee the trade with Iran will witness increased and more complicated administrative processes. Canadian exporters may face additional administrative costs as a result of having to move their business away from designated Iranian financial institutions.

Canadian financial institutions will face a higher administrative burden stemming from their obligation to determine on a continuing basis whether they are in possession of property owned or controlled by designated persons, and to verify that any financial transactions they carry out are not in violation of the goods-based financial prohibitions.

Federal departments, particularly Foreign Affairs and International Trade Canada, will witness an increased demand for the issuance of exemptions and permits. These complications may persuade Iranian importers to find alternative suppliers. As many of the goods and products that Canada exports to Iran are not uniquely Canadian, trade may shift to countries with fewer implemented restrictions.

Rationale

The measures contained in the Regulations are the best options available for containing Iran’s nuclear program and the development of other weapons of mass destruction. They have been drafted with interdepartmental consultation in order to minimize the effect on legitimate trade between Iran and Canada; to allow for dual citizens to conduct their affairs with as little interference as possible; and to minimize the impact on the Iranian people. A Permit Authorization Order has been drafted to accompany the Regulations, so that persons can apply to the Minister of Foreign Affairs for authorization to conduct an activity that would otherwise be prohibited by the Regulations. Finally, the measures have been drafted in consultation with like-minded countries, in order to ensure that they are as similar as possible, in order to increase their effectiveness.

Consultation

The Department of Foreign Affairs and International Trade drafted the Regulations having consulted the Department of Justice, the Canada Border Services Agency, the Department of Finance Canada, the Office of the Superintendent of Financial Institutions Canada, Citizenship and Immigration Canada, Export Development Canada, the Department of National Defence, the Royal Canadian Mounted Police, the Canadian Security Intelligence Service, Transport Canada, the Treasury Board of Canada, Public Safety Canada, Agriculture Canada, the Financial Transactions Reports Analysis Centre of Canada and the Canadian Nuclear Safety Commission. All departments and agencies consented to this action.

Implementation, enforcement and service standards

Compliance is ensured by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 3 of the United Nations Act, any person who contravenes the Regulations is liable upon summary conviction to a fine of not more than $100,000 or to imprisonment for a term of not more than one year or to both, or upon conviction on indictment, to imprisonment for a term of not more than 10 years.

Performance measurement and evaluation

Canada is implementing the Regulations as part of a collective effort with other countries. Our sanctions, and those that will be implemented by our international partners, are intended to hinder the development of Iran’s nuclear program and any development of weapons of mass destruction, and are engineered to persuade Iran to return to negotiations regarding its nuclear program. The success of these measures will be difficult to measure; as a collective, these measures will hopefully produce a slowing of Iran’s nuclear program and perhaps a return to negotiations.

Contacts

Teresa Crockett
Legal Officer
United Nations, Human Rights and Economic Law Division (JLH)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-995-1108
Fax: 613-992-2467
Email: Teresa.Crockett@international.gc.ca

Audrey Loney
Commercial Officer — Iran
Middle East and Maghreb Commercial Relations Division (GMC)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-944-6590
Email: Audrey.Loney@international.gc.ca

Hamza Abdulbasit
Political Officer — Iran
Gulf and Maghreb Relations Division (GMA)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-944-1096
Fax: 613-944-7431
Email: Hamza.Abdulbasit@international.gc.ca

Footnote a
S.C. 1992, c. 17