Canada should prep for life after Iran sanctions

Navid Hassibi discusses how Canada will likely need to lift nuclear-related sanctions against Iran in the event a nuclear deal is reached.

Source: US Department of State

As we approach the current deadline of June 30 for a final nuclear agreement with Iran, countries that have imposed nuclear-related sanctions against Iran, such as Canada, should begin planning for life after a nuclear deal, particularly as it relates to lifting sanctions against Iran.

By most accounts, a final deal will likely be codified into a United Nations Security Council resolution, endorsing the agreement and rescinding previous resolutions sanctioning Iran’s nuclear program. These resolutions have mandated the international community, including Canada, to impose sanctions against Iran in accordance with their provisions. In addition to these UN-mandated sanctions, many countries, Canada included, have imposed their own set of unilateral sanctions against Iran. If a final deal is reached this summer, the next Canadian government after the fall federal election may have little choice but to lift nuclear-related sanctions against Iran.

Between 2007 and 2013, Ottawa enacted about a dozen restrictive measures against Tehran pursuant to numerous UN sanctions resolutions and by joining the United States and the European Union in imposing additional sanctions. These sanctions are authorized by Canadian law under the United Nations Act, which allows the government to implement measures adopted by the UN Security Council, the Special Economic Measures Act, which allows Ottawa to adopt punitive economic measures against other countries, and the Immigration and Refugee Protection Act, which enables travel restrictions against designated persons.

Among other things, Canadian sanctions against Iran include bans on arms and financial transactions; restrictions in banking activities with Iranian banks; the prevention of the transfer of sensitive nuclear materials, including dual-use goods; the imposition of travel bans; the tightening of the arms embargo on Iran; funds and asset freezes of key Iranian government officials; and bans against servicing Iranian ships. In keeping with the most crippling sanctions imposed on Iran by the US and the EU, Canada adopted its own set unilateral sanctions in 2011 and 2012 by expanding the list of prohibited goods to include the mining, steel, petrochemical, and oil and gas sectors in Iran. In 2013, Canada went a step further by imposing a complete ban on imports and exports from and to Iran, subject to certain exemptions.

UN and Canadian sanctions against Iran have had significant impact over the years on bilateral trade. While Iran was once one of Canada’s most important trading partners in the region, with a pre-sanction and pre-recession peak of $720 million in 2008, bilateral trade began to decline in 2009 as sanctions began to take effect and sharply fell to below $40 million in 2013 but improved in 2014 to just over $85 million. This modest upward trend is likely to continue if a nuclear deal is reached and once UN sanctions against Iran are lifted.

While most nuclear-related UN sanctions will likely be removed, it is unclear at this point whether the nuclear deal will mandate all countries to lift unilateral nuclear-related sanctions or whether it will simply endorse the removal of US and EU sanctions. Depending on the situation, Canada may need to remove those sanctions adopted through its Regulations Implementing the United Nations Resolutions on Iran (authorized by the United Nations Act and the Immigration and Refugee Protection Act). Canada may also need to lift the additional unilateral sanctions that it imposed under the Special Economic Measures Act between 2011 and 2013, including the trade ban, which would likely have a more forceful upward impact on bilateral trade with Iran.

The mechanics of removing Canadian sanctions against Iran are much simpler than in the United States, where the president possesses waiver authority but cannot remove sanctions without legislated action from Congress. In Canada, a governor-in-council decision is simply made on the recommendation of the foreign minister.

If Ottawa were to maintain unilateral sanctions against Iran after a nuclear deal, it could prove to be damaging to Canadian interests, particularly in the event that the UN Security Council mandates their removal. This could expose Ottawa to legal risk both domestically, with private industry likely to challenge the government’s decision, and globally due to Canada’s violation of international law. If the removal of non-US and EU unilateral sanctions is not mandated by a Security Council-endorsed nuclear deal, Canada could find itself a global outlier as Washington and Brussels begin the trend of suspending and removing these restrictive measures in keeping with Iranian adherence to a final agreement.

Assuming a final agreement is reached, the issue of removing sanctions will likely be dealt with toward the end of the year as Iran begins to implement its commitments, which means that the next government after the October federal election will be faced with the decision of lifting sanctions against Iran. As the US and Iran test their ability to co-operate, a final nuclear deal will present Canada with the opportunity to be a player in an era of renewed relations between the West and Iran.

This article was originally published in Embassy News.