ARCHIVED — Vol. 146, No. 6 — March 14, 2012

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Registration

SOR/2012-35 March 5, 2012

SPECIAL ECONOMIC MEASURES ACT

Regulations Amending the Special Economic Measures (Syria) Regulations

P.C. 2012-255 March 5, 2012

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

Therefore, His 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 Regulations Amending the Special Economic Measures (Syria) Regulations.

REGULATIONS AMENDING THE SPECIAL ECONOMIC
MEASURES (SYRIA) REGULATIONS

AMENDMENTS

1. Section 3.1 of the Special Economic Measures (Syria) Regulations (see footnote 1) is amended by striking out “or” at the end of paragraph (d), by adding “or” at the end of paragraph (e) and by adding the following after paragraph (e):

  1. (f) provide or acquire financial or other related services — other than those whose provision or acquisition is otherwise prohibited by these Regulations — to, from or for the benefit of or on the direction or order of Syria or any person in Syria.

2. Paragraph 3.2(h) of the Regulations is replaced by the following:

  1. (h) pension payments to any person in Canada, any Canadian abroad or any person in Syria;

3. The Regulations are amended by adding the following after section 3.2:

3.3 In addition to the matters referred to in section 3.2, the prohibition set out in paragraph 3.1(f) does not apply in respect of

  1. (a) loan repayments to any person in Canada, or any Canadian abroad, in respect of loans entered into before March 5, 2012, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans;

  2. (b) financial services that are required to be provided or acquired further to a contract entered into before March 5, 2012; and

  3. (c) financial services in respect of non-commercial remittances of $40,000 or less sent to or from Syria, or any person in Syria, if the person providing the financial services keeps a record of the transaction.

4. Part 1 of the schedule to the Regulations is amended by adding the following after item 38:

39. Central Bank of Syria

5. Part 2 of the schedule to the Regulations is amended by adding the following after item 111:

112. Dr. Wael Nader Al-Halqi

113. Mansour Fadlallah Azzam

114. Dr. Emad Abdul-Ghani Sabouni

115. Sufian Allaw

116. Dr. Adnan Slakho

117. Dr. Saleh Al-Rashed

118. Dr. Fayssal Abbas

APPLICATION BEFORE PUBLICATION

6. 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

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

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Background

The Special Economic Measures (Syria) Regulations of May 24, 2011, were enacted by the Governor in Council under the under the Special Economic Measures Act (SEMA). These measures prohibited persons in Canada and Canadians abroad from dealing in the property of designated persons.

The Regulations Amending the Special Economic Measures (Syria) Regulations of August 13, 2011, added further individuals and entities to the list of designated persons and amended the spelling of several names already listed.

The Regulations Amending the Special Economic Measures (Syria) Regulations of October 4, 2011, added further individuals and entities to the list of designated persons, prohibited any purchase and transportation of petroleum products from Syria, prohibited Canadian persons from making new investments in the Syrian petroleum sector, and prohibited the provision of financial services for the purpose of investing in the oil industry or facilitating the importation of petroleum and petroleum products.

The Regulations Amending the Special Economic Measures (Syria) Regulations of December 23, 2011, added further individuals and entities to the list of designated persons; prohibited imports from Syria; prohibited new investment in Syria; and prohibited the export to Syria of equipment, including software, for the monitoring of telephone and Internet communications.

The Regulations Amending the Special Economic Measures (Syria) Regulations of January 25, 2012, added further individuals and entities to the list of designated persons, while providing for new exemptions to minimize the impact on ordinary citizens.

Issue

The latest Regulations Amending the Special Economic Measures (Syria) Regulations respond to the continued gravity of the situation in Syria, which, in the Governor in Council’s opinion, constitutes a grave breach of international peace and security that has resulted or is likely to result in a serious international crisis. The peaceful, pro-democracy protests that erupted on March 15, 2011, in cities across Syria have been met with escalating repression. The United Nations (UN) Human Rights Council Commission of Inquiry has found evidence of widespread, systematic and gross violations of human rights committed with the apparent knowledge and consent of the highest levels of state. According to the UN, “well over 7 500” Syrians have been killed, and thousands more have been internally displaced or forced to flee to neighbouring countries. The Syrian government has also denied access to most international humanitarian organizations, raising serious protection concerns.

A resolution of the crisis remains elusive. In an effort to placate both the domestic opposition and the international community, President Bashar al-Assad has gradually unveiled a series of concessions, including a constitutional referendum on February 26, 2012. However, these measures remain limited in both scope and implementation, and the actions of Syria’s security forces belie any genuine commitment to reform. An Arab League proposal to end the violence was accepted by Syria on November 2, 2011, but its provisions continue to be violated by the Syrian regime. An Arab League observer mission entered the country on December 26, 2011, but the Syrian regime obstructed its activities, and the mission suspended its activities as a result of the escalating violence on January 28, 2012. The UN Security Council has twice considered resolutions to address the crisis. On both occasions, they were vetoed by Russia and China. An Arab League plan for a peaceful democratic transition — supported by the UN General Assembly (February 16, 2012) and the Friends of Syria (February 24, 2012) — has not been accepted by Syria.

Objectives

The regulatory action aims to

  • contribute to concerted international efforts to further isolate and exert pressure on the Syrian regime to end the violence, while signalling Canada’s support for the people of Syria.

Description

The latest Regulations Amending the Special Economic Measures (Syria) Regulations add further seven individuals and one entity (Central Bank of Syria) to the list of designated persons, and introduce a complete ban on the provision or acquisition of financial or other related services to, from or for the benefit of, or on the direction or order of, Syria or any person in Syria. These amendments may affect Canadians or Canadian companies that conduct business with the designated individuals and entity, or that engage in financial transactions with Syria or persons in Syria. However, the financial services prohibition is subject to several exemptions, including humanitarian activities, activities of the Canadian embassy, the payment of pensions, the repayment of pre-existing loans and non-commercial remittances. The Minister of Foreign Affairs is also authorized to issue permits to allow those affected by the Regulations to undertake activities that would otherwise be prohibited.

Consultation

The departments of Justice, Finance and Citizenship and Immigration were all consulted in advance and expressed no concerns with the nature of the measures to be introduced.

Small business lens

The Regulations may affect Canadians or Canadian companies that conduct business with the designated individuals and entity, or that engage in financial transactions with Syria or persons in Syria. However, Canadian commercial ties with Syria are limited. Imports from Syria are prohibited under sanctions imposed by Canada on December 23, 2011. Exports to Syria in 2010 totalled $60 million (all figures in Canadian dollars), including cereals ($17.5 million); machinery ($9.7 million); and iron and steel products ($7.6 million). Imports to Canada from Syria totalled $17 million, including crude oil ($9.6 million); baking-related material ($1.03 million); and plastics ($985,000) [source: World Trade Atlas]. The Regulations may nevertheless have an impact on those small- and medium-size enterprises (SMEs) whose business depends significantly on their commercial ties to Syria or persons in Syria. However, the Minister of Foreign Affairs is also authorized to issue permits to allow those affected by the Regulations to undertake activities that would otherwise be prohibited.

Rationale

The United States, the European Union (EU), the Arab League and Turkey have all imposed sanctions on Syria with the most recent round of EU sanctions imposed on February 27, 2011. The latest Regulations contribute to these concerted international efforts to further isolate and exert pressure on the Syrian regime to end the violence, while signalling Canada’s support for the people of Syria. Syria is already starting to feel the effects of international sanctions.

The financial services prohibition is subject to several exemptions designed to mitigate any unintended negative impact. These exemptions include humanitarian activities, activities of the Canadian embassy, the payment of pensions, the repayment of pre-existing loans and non-commercial remittances.

The Regulations may affect Canadians or Canadian companies that conduct business with the designated individuals and entity, or that engage in financial transactions with Syria or persons in Syria. However, Canadian commercial ties with Syria are limited. Imports from Syria are prohibited under sanctions imposed by Canada on December 23, 2011. Exports to Syria in 2010 totalled $60 million (all figures in Canadian dollars), including cereals ($17.5 million); machinery ($9.7 million); and iron and steel products ($7.6 million). Imports to Canada from Syria totalled $17 million, including crude oil ($9.6 million); baking-related material ($1.03 million); and plastics ($985,000) [source: World Trade Atlas]. The Regulations may nevertheless have an impact on those small- and medium-size enterprises (SMEs) whose business depends significantly on their commercial ties to Syria or persons in Syria. However, the Minister of Foreign Affairs is also authorized to issue permits to allow those affected by the Regulations to undertake activities that would otherwise be prohibited.

Although we cannot state with certainty which Canadian companies would be affected, Canadian companies with a presence in Syria currently include Loon Energy (now Kulczyk Oil Ventures Inc.), Stratic Energy, SLC Petroleum Inc., Valura Energy, C-Dragon, Petro Solutions, Trylon TSF Inc., 13 International Inc., Saskcan, Second Cup, Point Zero, Le Château, Aldo, Cinzeo, Bido and RWDI.

Implementation, enforcement and service standards

Compliance is ensured by the Royal Canadian Mounted Police and the Canada Border Services Agency. Every person who contravenes section 3 of the Regulations is liable, upon conviction, to the punishments set out in section 8 of the Special Economic Measures Act.

Contacts

Curtis Schmeichel
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: 613-996-3863
Fax: 613-992-2467
Email: curtis.schmeichel@international.gc.ca

Hugh Adsett
Director
United Nations, Human Rights and Economic Law Division (JLH)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-992-6296
Fax: 613-992-2467
Email: hugh.adsett@international.gc.ca

Mark Bailey
Director (Syria and Iran)
Middle East and Maghreb Relations Division
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-944-3022
Fax: 613-944-7975
Email: mark.bailey@international.gc.ca

Footnote a
S.C. 1992, c. 17

Footnote 1
SOR/2011-114