THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Thursday, December 1, 2022
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 12:30 p.m. [ET] to undertake a comprehensive review of the provisions and operation of the Sergei Magnitsky Law, and the Special Economic Measures Act.
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: My name is Peter Boehm. I am a senator from Ontario and the Chair of the Standing Senate Committee on Foreign Affairs and International Trade.
Before we begin, I wish to invite committee members participating in today’s meeting to introduce themselves, starting on my left.
[English]
Senator Ravalia: Good morning. My name is Mohamed Ravalia, from Newfoundland and Labrador. Thank you and welcome.
Senator Coyle: Good morning. I’m Mary Coyle, and I’m from Antigonish, Nova Scotia.
Senator Greene: Steve Greene, from Nova Scotia.
[Translation]
Senator Gerba: I am Amina Gerba from Quebec.
[English]
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Harder: Good afternoon. Peter Harder, Ontario.
Senator Boniface: Good afternoon. Gwen Boniface, Ontario.
Senator M. Deacon: Good afternoon. Marty Deacon, Ontario.
Senator Richards: Dave Richards, from New Brunswick.
The Chair: I wish to welcome you all, senators, and also those who are watching us across the country on SenVu.
Today, we continue our review of the provisions and operation of the Justice for Victims of Corrupt Foreign Officials Act, also called the Sergei Magnitsky Law, and of the Special Economic Measures Act.
We’re very pleased to welcome two experts, both by video conference.
[Translation]
First, we have Erica Moret, Senior Researcher and Coordinator, Sanction and Sustainable Peace Hub, Geneva Graduate Institute, joining us from Switzerland.
[English]
From Toronto, we welcome Lawrence Herman, Counsel, Herman & Associates.
Welcome to both of you, and thank you for being with us. We’re ready to hear your opening remarks, which will be followed by questions from the senators.
Erica Moret, Senior Researcher and Coordinator, Sanction and Sustainable Peace Hub, Geneva Graduate Institute: Chair and members of the committee, thank you warmly for the opportunity to testify today.
I’ve been working on both multilateral and autonomous sanctions for some 20 years now alongside research into the impacts and effectiveness of various different sanctions regimes. I also coordinate a number of multi-stakeholder initiatives for the European Union, the United Kingdom, Switzerland and United Nations bodies seeking solutions to some of the unintended consequences associated with sanctions, including in relation to financial sector de-risking and private sector overcompliance. I’ll draw on this work today.
In addition, in 2020, I provided policy advice to Global Affairs Canada’s new sanctions unit, including a suggested checklist for Canadian sanctions design and a blueprint for areas where Canada could play a positive leadership role in global sanctions fora, drawing on its unique position in the world.
Sanctions have long represented an important component of Canada’s foreign policy tool kit for maintaining and restoring international peace and security, combating corruption and promoting respect for norms and values, including human rights. Earlier use of Canada’s sanctions were criticized by some, particularly in Canadian circles, regarding areas such as unclear communications of its strategic rationale, insufficient resourcing and capacity, poor enforcement capacities — Canada, of course, lacks the equivalent of the U.S. Treasury’s Office of Foreign Assets Control, or OFAC — its earlier lack of a consolidated list of sanctions targets, and then a number of legal questions as well, including lack of parliamentary oversight.
My observations of Canadian sanctions practice from the outside suggest that some notable steps have been taken and some hard work has gone into meeting some of these criticisms in Global Affairs Canada. This has included the production of a consolidated list of sanctions targets and stepped-up interaction with the NGO and private sectors — although, as we’ve heard from other witnesses, this still leaves room for improvement. The Canadian government has also been active in commissioning a range of studies and supporting initiatives, particularly in relation to human rights and gender, such as one such study to work out the role that sanctions play in supporting media freedoms. They’ve also served as a funder for the UN Sanctions App, which is based at the Graduate Institute in Geneva. In recent months, I understand that their capacity has also been growing in terms of sanctions expertise and capacity. What’s clear, though, is that more can be done, and lots will depend on appropriate resourcing and capacity going forward.
Before considering these points in more detail, I’d argue that consideration of the wider context is important here. Worldwide, a fast-growing number of countries and regional organizations around the world, spanning advanced economies, emerging powers and developing countries, are employing autonomous or unilateral sanctions outside the UN framework in an increasing variety of contexts for an ever-greater assortment of objectives and against a mounting range of targets. This means that there’s a mounting, growing complexity of sanctions and other regulations. We see a rise in multiple sanctions regimes overlapping with one another. That includes those of Canada, often alongside sanctions employed by key allies — the United States, the EU and the U.K. — and sometimes they can also overlap with secondary sanctions of the U.S. with an extraterritorial nature.
Some of these aspects of sanctions use are leading to renewed concerns over their indiscriminate impacts on ordinary civilians and the ability of humanitarian organizations, health workers and medical and food companies to continue operating in poorly banked or financially excluded countries. At the same time, sanctions are becoming an increasingly important tool of foreign and security policy at a time when diplomacy is often reaching its limits and where armed conflict or war is unappealing or not an option. This sophistication in their use is growing, but the compliance complexities require a rethink by those who are using them in terms of how they can be used to best effect while minimizing negative consequences.
What could be done in the Canadian context? What follows is very much from my perspective, being here in Europe and working closely with various European countries imposing sanctions.
First of all, what could be beneficial are mechanisms to assess the impacts and effectiveness of Canada’s autonomous sanctions. To the best of my knowledge, these methodologies — these tools — don’t yet exist, and they would need to be adapted to the Canadian context. There are tools available elsewhere, but work would need to be done to allow Canada to assess its own measures in a comprehensive way. Elsewhere, this hasn’t been done particularly effectively so far. The EU has recently commissioned a major study to allow it to start to assess its own sanctions, impacts and effectiveness, and the U.S. Treasury has also recently appointed a new senior staff member to lead similar research. Canada could consider doing something similar.
The second important point is the clearly defined rationale and objectives, which should be clearly communicated. Thresholds on the degree of alignment with the United States, the EU and others should be carefully considered. What we seem to be seeing is a rise in close collaboration between Canada, the EU, the U.K. and the U.S., and this clearly comes with some careful considerations of the extent to which alignment should take place across all sanctions regimes or not. Important here is having a plan for eventual sanctions lifting. All too often — across the board — this doesn’t happen, and it can lead to the risk of protected sanctions regimes, which can lessen their legitimacy over time and allow for circumvention and evasion or the development of domestic alternatives and the forging of new trade routes by the target.
A third point is mechanisms for collective working. Given the fact that Canada is highly likely to continue working very closely with its other partners and potentially an expanding group of countries, the need for formalized structures and processes to allow for this type of collaboration to happen in as streamlined a manner as possible is essential. I think we’ve seen some positive steps on this front in recent times with regard to Russia’s sanctions that could potentially be expanded elsewhere.
A particular question here is how the various Magnitsky-style human rights sanctions that have been adopted by over 30 countries around the world can be coordinated to best effect. If I may, I will take the example of the use of sanctions to tackle modern slavery and human trafficking because, while it’s a growing area, it’s one that hasn’t been the focus of much consideration to date.
Canada, along with the U.S., the EU, the U.K. and Australia has made use of some autonomous sanctions under its human rights thematic sanctions regimes, but they’re not clearly coordinated and not clearly communicated so far, so it’s unclear to those outside whether the measures are being used to tackle other areas of human rights or how exactly they are being used to address crimes and activities linked to modern slavery and human trafficking, as a reason —
The Chair: Excuse me, Dr. Moret. You’ve gone over your allotted time. I’ve been a little generous, but I do have limitations in terms of time allocation here.
Ms. Moret: I apologize. Thank you very much.
The Chair: I know you had other things to say that were in your statement, because we have a copy here. Thank you for sending it. Maybe that can come up in your answers to questions as they come along.
Ms. Moret: Thank you.
Lawrence L. Herman, Counsel, Herman & Associates: It’s a pleasure to appear before this committee, and it’s a special pleasure because I’ve known Senator Boehm and Senator Harder for a number of years. It gives me great pleasure to be able to provide you some insights.
I’ll pick up on some of the points that Ms. Moret made. I have some general points, which I think you understand because you’ve been looking at the two pieces of legislation for a while and you have a lot of information to digest.
There’s no doubt that sanctions are now an embedded weapon in the international trading environment. They will not go away. They are now an integral part of the trading regime. They are applied unilaterally. They’re not, in any real way, subject to WTO discipline. We’ve entered a new era in international trade because sanctions — and not only sanctions. You’re looking at two pieces of legislation, but the Export and Import Permits Act provides for export control. Senators Boehm and Harder know that piece of legislation very well. That’s also an element that is of great importance, but you’re looking at two pieces of legislation, and I’m going to confine my comments to those acts.
Generally, my view of both the Magnitsky Act and SEMA are that they are in conformity with measures that have been enacted by our closest allies. There are some subtleties here and there, but the scope is generally pretty close to what the Europeans, the Australians and, with certain caveats, what the Americans are doing. I don’t see a difficulty in terms of conformity with what our allies are doing.
When Bill Browder was in town, he commented that we weren’t using sanctions under the Magnitsky Act. I think the better view, at least from my perspective, is that the sanctions we apply under SEMA are in conformity with whatever we might do under the Magnitsky Act. In other words, it is not an issue that we haven’t issued sets of sanctions under the Magnitsky Act. We’ve covered the sanctions regimes very well under those sanctions that we have issued under SEMA.
I want to raise a particular point which I think is vital for your committee to look at.
The Commons committee reviewed SEMA five years ago. Among the recommendations they made was that the government, particularly Global Affairs Canada, should issue policy guidance and some form of answers to specific questions by the users or stakeholders involved. There is nothing to speak of under our system at the present time; we don’t have what the Office of Foreign Assets Control has, which is a program for providing guidance and rulings on terms, conditions, et cetera, in our sanctions regime.
You probably know this, but we do have some guidance issued, importantly, by the Office of the Superintendent of Financial Institutions and FINTRAC, but those guidance policy documents — alerts — are applicable to the financial sector. There is no general set of guidance available to the private sector generally. The FINTRAC alerts and bulletins, et cetera, as I’ve said, are confined to the financial institutions that are subject to their jurisdiction in dealing with terrorist financing, money laundering and all that.
We have had some intermittent advisories from Global Affairs Canada with respect to doing business in Myanmar and Xinjiang in China, but those are not comprehensive; they’re not part of a regular comprehensive procedure for providing policy guidance. In other words, how are certain terms to be interpreted? How are elements of due diligence to be undertaken by companies? That is not specific legal advice; rather, it’s guidance to ensure that the companies caught up in the sanctions regime have a bit of direction in terms of what they should be doing.
Even with C-19, the Budget Implementation Act amendments, which have expanded the scope of sanctions considerably, nothing has really been done in furtherance of the 2017 Commons committee recommendations. I would urge you to take a look at the Commons committee report.
Coming back to what Global Affairs Canada provides, as I’ve said, there is some intermittent guidance, for example, with respect to Myanmar and Xinjiang in China, but nothing is done comprehensively. There’s no regime for policy guidance, unlike OFAC, the U.K. treasury and the Australian Department of Foreign Affairs, which do have a system of guidance for companies — stakeholders — involved in international trade and potentially caught up in sanctions regimes.
Global Affairs says:
For specific information about the sanctions regime imposed against countries or individuals, consult the relevant regulations.
Big deal. That’s not particularly helpful: “Consult the regulations.”
Then they say on the Global Affairs website:
Please be advised that Global Affairs Canada cannot provide legal advice to members of the public. For this reason, we cannot deliver an opinion as to whether or not a specific activity or transaction would contravene sanctions legislation. You should consider seeking legal advice in relation to an activity that may contravene a Canadian sanction law.
In other words, the department is saying, “Run to your lawyer if you need help.”
I’m not suggesting — and this is important — that the Government of Canada, whether it be Global Affairs Canada or any of the other departments, provide legal advice, but guidance would be very important. I would urge —
The Chair: Mr. Herman, I’m sorry to interrupt you. I’ve also let you run over your allotted time, just so you’re on par with Dr. Moret.
Mr. Herman: I thought I had 10 minutes, sir.
The Chair: No. We look at five to seven, and we’re at eight.
Mr. Herman: My apologies.
The Chair: It’s quite all right. I’m sure the other points will come forward during the question-and-answer period.
[Translation]
Honourable senators, before we proceed to questions and answers, I wish to ask members in the room to please refrain from leaning in too closely to their microphone or removing their earpiece when doing so. This will avoid any sound feedback that could negatively impact committee staff and others in the room who might be wearing their earpiece for interpretation.
[English]
I wish to inform members that you will each have a maximum of five minutes for the first round. That includes both questions and answers. Therefore, the usual advisory to both the members of the committee and witnesses is this: Please be concise. If we have time, we will move to a round two, but I’m not sure we will.
Senator MacDonald: Thank you to the witnesses.
I’ll turn first to Ms. Moret and pick up on some of the things she was discussing just before she prematurely finished.
In the article you published in May of this year, you mentioned that EU sanctions on Russia “appear to mark a turning point for the EU in its use of sanctions.” According to your paper, for more than 20 years, the EU had tended to use autonomous sanctions as “a softer, and more dovish, counterpoint to the U.S.’s more assertive sanctions stance.” You also noted that the EU today “appears to be aligning more closely with the U.S.’s trajectory, marking a return to measures that approximate full-blown embargoes but with a modern twist.”
What is the modern twist you’re referring to? And what concerns, if any, do you have about the impact that current sanctions imposed by the EU, U.S. and other countries on Russia may be having on civilians in those countries?
Ms. Moret: Thank you, senator, for the questions.
The modern twist I was referring to is the fact that although about 20 years ago we saw the creation of targeted sanctions through the various processes that were sponsored by the Swiss, German and Swedish governments at the time, since that time, over the past two decades, we now see a set of sanctions around the world that are so complex in nature — the multiple overlapping sanctions regimes, the interaction with other policy instruments and regulations and so on — that certain countries, I would argue, now fall into a category that we might define as de facto comprehensive sanctions. Examples here I would say are Syria, Iran and North Korea, where the central bank of the country is sanctioned alongside the majority of public and private banks and strategically important sectors such as oil and gas. In such instances, I would also include the U.S. financial sanctions against Venezuela in that category. We see countries that find it incredibly difficult to engage in global trade and finance, and often their citizens also struggle to access bank accounts and so on. It can impede humanitarian assistance, and it has notable impacts on supply chains of essential goods, and so on. That’s in other contexts.
In the case of Russia, I would say there has been a very understandable strong response from a set of countries and international organizations around the world, with a strong emphasis on a punitive side of the house. Where the EU in the past has certainly seemed to try to temper a more hawkish approach from the U.S. in sanctions — such as in the case of the Iran nuclear talks, and some may say in terms of having that bad cop/good cop role. It played a successful diplomatic role in a number of fora, including in the Joint Comprehensive Plan of Action in the Iranian case. But I think in the Russian case recently, what we’ve seen is the European Commission president calling for maximum pressure against Russia and measures that will strangle the country’s economy. I think this response is highly understandable, but it is not typical of the narratives that the European Union has used in the past, and it would really approximate the kind of language that the Trump administration was using in its maximum pressure campaign against a number of countries. I would say we’re probably seeing a shift toward broader, harder-hitting, sweeping sanctions regimes in a number of contexts around the world.
What’s also happening, I should add, are some very proactive, strong attempts by the European Union and its partners to try to mitigate any negative impacts. There is a lot going on behind the scenes. I’m sure many of you will be aware of it. There are various initiatives under way to try to minimize negative impacts on civilians, supply chains and humanitarian action. I think the governments, and the European Union itself, should be commended for these efforts that have taken place in recent times in spite of these narratives that we’re seeing towards a much more punitive direction.
[Translation]
Senator Gerba: Thank you to the witnesses for being here. Ms. Moret, thank you for your recommendations. I know that you didn’t get to finish what you were saying, but could you talk about the Office of Financial Sanctions Implementation, in the U.K.? Do you think Canada could create a similar body?
Ms. Moret: Thank you for your question, senator. Do you mind if I answer in English?
Senator Gerba: No, of course not.
[English]
Ms. Moret: Thank you.
The developments in the U.K. would be very interesting for Canada, of course, given the very close relationship on sanctions across the board in terms of planning and execution. As you will know, the capacities and capabilities of the Office of Financial Sanctions Implementation in the U.K. Treasury have been bolstered and expanded in recent years, of course, since the U.K.’s departure from the EU. I understand that since the increased pressures in relation to Russia’s invasion of Ukraine, the number of teams there have grown exponentially as well. It’s a dramatic expansion. That brings opportunities and it also brings challenges, of course, to get things right. I know that the need for pedagogy, training and capacity to retain the institutional knowledge is very much on their minds.
They’re doing some quite useful things in terms of trying to put together something of a sanctions cadre to retain the institutional knowledge and what ultimately is a very technical set of topics that we work on in the sanctions world. There will also be a kind of sanctions school to assist in this. This again is important because all too often what we see is that people working on sanctions may come into it from completely different areas, work on it for a couple of years and then do something else. This retention of knowledge is important.
The fact that it’s going to start working in a way that’s similar to OFAC is, of course, very important. The collaboration between the two departments or bodies is something that’s happening recently. The idea is to pool expertise, to think strategically across the two organizations about common challenges, to work out closer areas for alignment and to really think about collaboration across the full sanctions design cycle. This is quite an important model that we might see happening eventually also with the EU and Canada, because my prediction would be that we’re probably going to see an increasingly closer relationship between those four partners when it comes to autonomous sanctions going forward.
[Translation]
Senator Gerba: Thank you for that information. If I understand correctly, the office also provides compliance guidance to businesses. Is that correct?
Ms. Moret: Yes, absolutely.
[English]
Efforts were already under way in the U.K. to address overcompliance and de-risking. There has been the existence of the U.K. tri-sector group, which brings together relevant parts of the U.K. government, the NGO community and banks to try to seek solutions to some of the problems associated with sanctions compliance and de-risking — in particular, the withdrawal of banks and financial institutions from heavily sanctioned countries. I think this stepped-up work between OFSI and OFAC will also be important for that area. They’ve said that one of their objectives will be to ensure that the sanctions don’t prevent humanitarian trade and assistance from reaching those in need.
Notwithstanding this, I think there’s still a lot of work to be done, not only in the U.K. but elsewhere as well. If we look across Europe, the Netherlands has a similar group, France has recently set one up, but others don’t have them. It’s really important that the interaction and provision of guidance and supports, particularly to the private sector and NGOs, is prioritized in Canada and across the range of countries that are making use of autonomous sanctions.
The Chair: Thank you, Dr. Moret.
Just as an advisory here from the chair, I’d like to see Mr. Herman get in on some of these as well.
Senator Coyle: Thank you to our two witnesses for your excellent presentations.
In fact, my two questions have been taken by the two previous questioners, but that’s all right. I’ll turn to Mr. Herman. This last point that was under discussion between Ms. Moret and Senator Gerba is something that you had raised in your presentation — the issue of guidance and support, particularly for the private sector, around compliance. I want to ask you, Mr. Herman, if you have anything further to add on that in terms of recommendations for the Canadian government on how that could be handled better as opposed to people, as you had said, going to the website and seeing, “Get some legal advice.” Is there something further you would like to add to that?
Mr. Herman: The first point is that the Government of Canada should have a system of comprehensive guidance and possibly rulings for the private sector. When we talk about the private sector, let’s be clear. We’re talking about, in my view, companies that export. Those are the entities that get caught up in sanctions. I know we have broader issues, human rights issues and other things, on the agenda, but when we talk about how the sanctions work, they apply to companies, enterprises and businesses trading abroad. The question is how they guide themselves and how they find their way through a very complex, increasingly complex, system of sanctions.
I think we have already heard this in testimony, but one of the things that the U.K. has is that the Office of Financial Sanctions Implementation and the treasury have a very robust system of providing general guidance, but nothing compares to what the Office of Foreign Assets Control does in the U.S. treasury. They have a very vigorous and robust system of providing general policy guidance. What do we mean by “due diligence”? What do we mean by “documentation”? What should companies do in terms of ensuring that they navigate appropriately through these, as I said, increasingly complex rules?
It’s not a question of providing legal advice on a specific transaction but providing a way in which companies can navigate through very treacherous, increasingly treacherous, complex and dangerous waters. The first point is we need a system. The second point is what the ingredients of that system of guidance should be.
Senator Woo: Thank you to the witnesses.
Professor Moret, you make the case that there should be a more systematic and rigorous evaluation of sanctions, particularly given that the West is talking about its sanctions being more comprehensive and severe and so on. In our hearings, we have learned that the three principal reasons for sanctions are, first of all, to change behaviour; second, to deter bad acts that may follow; and the third is to punish. The first part of my question is whether you agree that these are the three metrics which we should use to measure the effect and success of sanctions. Then we learned that there is a fourth criterion for imposing sanctions, and that is that we do it because we don’t want to be offside with the principal sanctioner — typically the United States — or more broadly with our allies. Should that also be a criterion to measure the success of sanctions?
Ms. Moret: Thank you, senator.
That’s an excellent question, and it’s very much on our minds as sanctions specialists as well, because for many decades, there have been attempts to assess impacts using a variety of different methods, and of course, it’s extremely difficult to demonstrate causality as opposed to correlation in many instances. Of course, it’s also a topic that can be exploited for political ends. It’s the focus of a great deal of disinformation and propaganda, particularly by targeted countries and governments as well.
Having said that, there are some excellent tools out there that allow us to think about assessing impacts. I already mentioned the UN Sanctions Act, and that actually bases the three categories of signalling. If we take the case of Russia, the sanctions are used to signal to the Ukrainian people that we’re in solidarity with their struggle. It can be a strong signal to Russia and to other would-be detractors who attempted to do something similar that the international community does not accept this behaviour. It can also be very important to signal to domestic audiences that something is being done. There is even some subcategories there, I think.
My good colleague, Francesco Gemelli, termed these next two categories around a decade ago. The other two categories that the Sanctions Act uses are that they coerce a change in behaviour and constrain access to resources. That’s a really important one. If we take the Russia example again, the sanctions that limit access to, for example, internet platforms or vital financial resources or weapons systems or dual-use goods, they all play a role in slowing down the war effort in Russia. It’s really important to keep this very nuanced understanding. You are right there, that the influence over allies is one that is often overlooked, but it’s a really important one.
Some would debate whether the punishing side should be an aim or an objective of sanctions. Most sanctioning powers or actors would claim that their sanctions are not intended to punish. If we look again at the case of Russia, there does seem to be the very strong punitive function there.
It’s really important, when we’re thinking of assessing the sanctions, that we disaggregate the idea that economic pain is a measure of success. If we’re thinking about punishing a target, then yes, it is, but it doesn’t mean that we are any more likely to reach stated policy aims of the sanctions if there is a strong degree of economic pain. There needs to be an understanding that economic damage is not necessarily the same as bringing about political change on the ground.
Senator Woo: Professor Herman, in what category of sanctions would you place the American prohibition of advanced semiconductor chips to China? What basis in international law or international thinking about sanctions does that action fit into?
Mr. Herman: It fits into national security, which is untroubled by WTO and international disciplines. National security, in the U.S. context, tops every other issue, and national security vis-à-vis China is top of mind in Washington. You just have to talk to some people in the U.S. Congress. You’ll find that out very quickly, senator.
Senator Ravalia: Thank you to our witnesses.
The Raoul Wallenberg Centre for Human Rights, in their 2022 report, concluded that Western allies are paying too little attention to potential sanction targets in certain regions such as south-central Asia and Africa. I would appreciate your opinion on the points of multilateralizing Magnitsky-sanctioned targets, and furthermore, is it important that humanitarian safeguards be incorporated into sanctions regimes? The question is for either of you, but Professor Herman, did you want to start?
Mr. Herman: You have raised a very good question, senator. These are difficult issues.
I think, on your first question, that our Magnitsky Act sanctions are in general conformity with the same sets of sanctions implemented by the United States, the EU, the U.K. and Australia. To that extent, the Magnitsky sanctions have, if you like, an international framework — maybe not a fully multilateral framework, but an international framework. I think it should be borne in mind that we don’t use the Magnitsky Act in our sanctions regime. The Government of Canada has not issued sanctions under the Magnitsky Act. They have used the Special Economic Measures Act for our sanctions regime.
As to the humanitarian aspect, that’s a very difficult issue, and it requires consolidation, cooperation and collaboration among Canada and its allies. I don’t have any other answer for that, but you have raised very complex, delicate and important issues.
Senator Ravalia: Thank you.
Ms. Moret, did you have any comments on that?
Ms. Moret: Thank you, senator, for the great question.
I would say that the question of whether the United Nations Security Council is able to arrive at any new sanctions listings related to human rights-related questions is quite a thorny one, because, with the exception of the recent creation of the Haiti sanctions regime, we had a number of years where very little new sanctions adoption had happened at the Security Council because of an inability of the P5 members to reach agreements. I think human rights is one of those topics which is particularly difficult for the P5 to agree on.
Having said that, in a study that I did recently on the role of sanctions to tackle modern slavery and human trafficking, for example, which, of course, can fall under the various human rights domestic sanctions regimes, what I found was that a number of the UN’s country-based sanctions regimes contain listings that relate to various human rights abuses, including the use of child soldiers and various other angles in relation to modern slavery and human trafficking.
My prediction would be that the adoption of more human rights-related designations could potentially happen, but probably under those existing country-based sanctions regimes we have already, that is to say, the ones that are already mainly in the sub-Saharan African context, with a few exceptions under the counterterrorism sanctions regimes. I think it’s very unlikely we would see an expansion elsewhere, particularly because of interests of the P5.
If I may turn to the question of safeguards, I think this is a really important one that all sanctioning powers are giving very careful thought to at the moment. The humanitarian community is, of course, pushing for the use of standing humanitarian exemptions across as many sanction regimes as possible. It’s actually the United States together with Ireland that are pushing for this at the United Nations Security Council right now on UN sanctions, but I think that it would be very much welcomed by the humanitarian community if Canada, along with its partners, would consider doing the same for as many as possible of its existing sanctions regimes.
Senator Ravalia: Thank you so much.
Senator M. Deacon: Thank you to our witnesses today and to my colleagues for the questions that have been asked. I wanted to delve a little bit deeper into the unilateral versus bilateral sanctions, but I’m going to jump ahead from that and ask you both a different question.
Dr. Moret, you have done quite a bit of work with the Geneva International Sanctions Network, no question. As I was looking through some of that work, there were some presentations and sharing that you did on the interaction between sanctions, mediation and peacekeeping. We don’t address that directly — peacekeeping — at this moment in this bill, but I’m interested for you to share your perspective on that at a high level.
Ms. Moret: Thank you, senator. That’s a very topical and timely question.
Some of my colleagues back at the Graduate Institute and also at United Nations University Centre for Policy Research have been engaging together on a project on sanctions and mediation in recent years, and I would encourage the people here today to consult those studies.
I think some of the key takeaways, at least from how I understand it, is that there needs to be far greater collaboration between these different worlds. When sanctions are being planned, what they found is that, in the past, sanctions could somehow undermine mediation efforts or peacekeeping efforts, and vice versa, partly because they weren’t being very closely coordinated. This is often that there is simply a lack of channels to enable for communication, strategic planning and so on, so it can benefit from a degree of capacity building and awareness raising.
Also, they advocated even the training of mediators on sanctions and the training of sanctions practitioners on mediation, and I think the same would be true to say of peacekeeping as well. The effectiveness of, for example, conflict resolution can be heightened by the closer combination of policy tools and the closer work in between relevant departments across governments.
Senator M. Deacon: Thank you. That is very topical. Thank you very much. Interesting.
Mr. Herman, you indicated you have certainly been around the block, and if you know both Peters on our committee, you certainly have experience around the block. I think that is awesome for everybody. That is a compliment in the highest of ways.
Mr. Herman: It was a very good ride around the block, I must say.
Senator M. Deacon: A really big one and a long one, and I think with that comes candour and being really open and honest. I’m wondering, if you had to say, “Look, come on, Canada; get on this, and get with the program here. Here is one thing that you should be doing immediately to help improve this area of this work and sanctions and access and process,” what would you say? “Canada, get on board with —” blank.
Mr. Herman: That’s your job, I think, not mine.
I just want to go back a bit. Bear in mind, in answer to previous questions about human rights, the Special Economic Measures Act does have a provision — a very important one — for Canada to apply sanctions for gross abuse of human rights, and we do that. Our sanctions in respect of Sudan and in respect of Syria, for example, are based on human rights factors. We have built into our legislative framework human rights abuses. That, I think, has to be clarified.
To your question, senator, as I said in my opening remarks, I think the Government of Canada needs to look closely at what the U.K., the U.S. and Australia are doing in providing policy guidance. It’s not enough to say, “If you think you have a problem with our sanctions, consult your lawyer.” I think there needs to be an institution set up that gives ongoing comprehensive guidance on policy matters, much like FINTRAC does for the financial community, for those federally regulated financial institutions. This is where I think advances need to be made.
The Chair: Thank you very much, Mr. Herman.
Senator Deacon, thank you for your question and usual candour. Much appreciated.
Senator Harder: Larry, it’s good to be on the block with you.
Your career has been about trade promotion and making sure the trade system works. When you look at the sanctions regime over the last 20 years, there has been a lot of mission creep. I’m wondering what your reflections are, as an advocate of trade, to that prospect of mission creep. In that context, we have been better at adding sanctions than taking them off, and I wonder if you could comment in your reflections on that as well.
Mr. Herman: Well, Senator Harder, that’s a good question, and I will try to be frank about this.
The capital of global sanctions is Washington. Washington institutes the broadest set of sanctions in an aggressive way. Somebody raised the microchip sanctions that the U.S. Department of Commerce’s new rule deals with. There is an example of an aggressive approach to sanctions based on national security interests. It is very hard for Canada to roll any of that back. Whatever we may think, we and the Western democracies tend to follow the United States in many ways. Why? Because with their extraterritorial reach and their application of secondary sanctions, Canadian companies can be caught up, even if they are operating outside of Canada, with U.S. sanctions laws.
The practical answer, really, is that Canada must be in close consultation and collaboration with the United States, notwithstanding the importance of Brussels and the EU and our other allies. It’s the United States that sets the rules, and it’ll always be that way.
Senator Harder: Aren’t you concerned that the United States’ national security concern can be a disguise for standard American protectionism? We certainly saw that historically in, let’s say, Cuba.
Mr. Herman: Indeed, that’s the case. I deal in the practical world, and I have to say that we always look to see what Washington is doing, even when it’s the case of how Canadian sanctions might apply in a particular instance. Where a given company is potentially exposed to U.S. sanctions, we always look to what the U.S. is doing.
That being said, I still think it’s vital — vital — for the Government of Canada, through Global Affairs and its processes, to provide a greater degree of guidance to Canadian companies, even advising about the potential application of American sanctions in given cases. I say that without suggesting that legal advice should be provided. That can’t be done, but policy guidance and some general approach to navigating the sanctions regime is important.
Your point, senator, is a vital one. The rules of international trade now have embedded not only sanctions but export controls. Export controls in some ways are much more powerful than sanctions. We should be talking about export controls and how those might apply. But the international trading regime that we used to know in our day, under the GATT, is long gone. It’s long gone.
Senator Harder: Thank you.
The Chair: Okay. Colleagues, we will not have time for a second round. I will give the last question to Senator Boniface.
Senator Boniface: I’ll try to be brief.
To both of you, at our last meeting on this topic, we heard from Bill Browder. You mentioned that as well, Mr. Herman. He said, and I’m paraphrasing, that Canada is often seen as a great place to hide assets because of Canada’s difficulty in targeting the actual value of the assets. Do you agree with Mr. Browder? And if you do, what can we do to ensure that Canada can target all assets in Canada?
Mr. Herman: Well, I don’t know if this answers your question. It’s a very important one, and what Browder said is very important and very useful.
What I find missing in our sanctions regime is a reference to national security. We have a whole set of conditions under the Special Economic Measures Act, leaving aside the Magnitsky Act for a moment. Under the Special Economic Measures Act, we have a lot of conditions under which Canada can apply autonomous sanctions. What is missing, in my view, is any reference to national security. I don’t know if that answers your question, but I think national security is an issue that has to be addressed in terms of how we administer our sanctions regime. That would allow us to look more closely at those countries that have been engaged in activities detrimental to our national security. Quite apart from violating international trade law and upsetting peace and security internationally, there is a vital national security interest that needs to be addressed in our sanctions regime, and I think it’s absent.
Senator Boniface: Ms. Moret, do you have anything to add?
Ms. Moret: It’s difficult to follow from Mr. Herman’s excellent points. I would say that the ability to go after targets and actually investigate the locations of assets and so on will require, I imagine, resourcing capacity expertise. The good thing, though, is that there are some really useful lessons that can be drawn from elsewhere, from close partners, and I think that is readily available.
I would conclude by saying that Canada, as a keen humanitarian actor, has a very strong moral authority on human rights, and it also has a really strong tech and innovation sector. More could be done to harness that uniqueness that Canada has and actually potentially draw more from the technological sectors, from fintech and so on, to improve sanctions enforcement while also helping the private sector and NGOs with their due diligence requirements and compliance and minimize some of the unintended consequences.
The Chair: Thank you very much. On behalf of the committee, I would like to thank Erica Moret, Senior Researcher and Coordinator at the Sanction and Sustainable Peace Hub, Geneva Graduate Institute, and from Toronto, Larry Herman of Herman & Associates, a well-known trade policy icon in Canada, yes, who has been around the block. It’s true. Our thanks for enriching our deliberations on this important matter.
(The committee adjourned.)