Canada Imposes New Sectoral, Financial and Trade Sanctions Against Belarus

On August 9, 2021, the first anniversary of Belarus’ fraudulent presidential elections, Canada announced expanded sanctions against Belarus, including significant financial and trade measures targeting important sectors of the Belarusian economy, coordinated in part with the United Kingdom and the United States. Up until now, Canada’s sanctions against Belarus have been limited to restrictions on dealings with listed entities and individuals, which have been summarized in our client alerts on September 30, 2020, October 19, 2020, and June 22, 2021.

The new measures, implemented under the Special Economic Measures (Belarus) Regulations, include the first sectoral and trade sanctions that Canada has imposed in seven years. They will affect dealings in certain transferable securities and money market instruments, interactions with debt of longer than 90 days’ maturity, the provision of insurance and reinsurance to certain individuals and entities, and dealings in petroleum and potassium chloride products. Anyone doing business in or with that region of the world should be carefully reviewing its trade control policies and procedures to ensure it is in full compliance with these new measures going forward.

The New Measures

The new measures introduce prohibitions on the following five discrete categories of activity:[1]

1. Transferable securities and money market instruments

The measures prohibit directly or indirectly, dealing in transferable securities and money market instruments, including treasury bills, certificates of deposit and commercial papers but not including instruments of payment, issued by (a) Belarus, (b) Belarusbank, Belinvestbank, Belagroprombank or any other organization controlled by Belarus; or (c) a person acting on behalf of or at the direction of an entity referred to in (a) or (b).

2. Debt financing — 90 days’ maturity

Also prohibited is directly or indirectly, transacting in, providing financing for or otherwise dealing in debt of longer than 90 days’ maturity, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments in relation to (a) Belarus; (b) Belarusbank, Belinvestbank, Belagroprombank or any other organization controlled by Belarus; or (c) a person acting on behalf of or at the direction of an entity referred to in (a) or (b).

3. Insurance and reinsurance

Directly or indirectly providing insurance or reinsurance to (a) Belarus or an organization controlled by Belarus or (b) a person acting on behalf of or at the direction of an entity referred to in paragraph (a) is prohibited.

4. Petroleum products

Importing, purchasing, acquiring, shipping or otherwise dealing in any listed petroleum good, wherever situated, is prohibited if it is being or has been exported from Belarus.

The specific petroleum products captured by these measures are set out in Schedule 2, Part 1 of the Regulations, and include petroleum gas and other hydrocarbons, petroleum oils (excluding crude), certain mineral waxes and bituminous mastics.

The new measures also prohibit providing to Belarus or any person in Belarus any financial, technical or other services, or insurance or reinsurance, related to any such goods.

5. Potash and Fertilizers

Importing, purchasing, acquiring, shipping or otherwise dealing in certain potassium chloride (potash) and fertilizer products, set out in Schedule 2, Part 2 of the Regulations, that are exported from Belarus is also prohibited.

Building on Existing Sanctions and Export Controls

These new measures are a significant addition to the existing economic sanctions against Belarus, which up to now, had been restricted to measures that prevented most dealings with listed individuals and entities. Those sanctions were first implemented on September 29, 2020 and have since been expanded several times to include additional parties on the sanctions list.

Notably, on November 9, 2020, Canada temporarily suspended the issuance of all new permits for the export and brokering of controlled goods and technology to Belarus.[2] This policy remains in force today and covers all goods and technology listed on Canada’s Export Control List (“ECL”) including a wide range of dual-use, military and nuclear-related items. This policy also includes in its scope the brokering or arranging of the supply of certain ECL goods and technology by Canadians from a foreign country to Belarus.

During the years 2006 to 2016, Canada listed Belarus on its Area Control List (“ACL”), one of the most severe forms of trade control that can be applied to a target country, essentially prohibiting the export or transfer of all goods or technology to the country without a permit (and permits would only be issued in very rare circumstances, i.e., for humanitarian purposes). There is no indication yet whether Canada may re-list Belarus on the ACL.

Coordination with International Partners

The initial sanctions and subsequent expansions have regularly corresponded with similar – although not identical – sanctions imposed by the United States, the United Kingdom, and the European Union. In the case of these latest measures, Canada was joined by the US and the UK; the EU, however, has yet to impose analogous measures.[3]

The UK sanctions are similar to the new Canadian measures in that they include trade restrictions specific to potash and petroleum products, as well as financial measures prohibiting purchases of transferable securities and money-market instruments issued by the Belarusian state.[4] By contrast, the scope of the UK sanctions exceeds Canada’s, and includes further trade measures related to certain goods – those used in cigarette manufacturing, for example – and aviation measures.[5] Likewise, the US sanctions target individuals and entities associated with key Belarusian goods including potash and tobacco.[6] The US added a total of 23 individuals and 21 entities to the list of those they currently sanction.[7]

The differing breadth and scope of these regimes makes clear that coordinated imposition of sanctions does not guarantee identical or even consistent measures. It is therefore critical that sanctions-related compliance be considered on a country-by-country basis, and that compliance programs be calibrated accordingly.

[1]https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/belarus_regulations-reglement.aspx?lang=eng

[2]https://www.international.gc.ca/trade-commerce/controls-controles/notices-avis/1033.aspx?lang=eng

[3] Note that a representative of the EU has indicated that they are ready to consider further measures; https://www.scmp.com/news/world/europe/article/3144309/belarus-alexander-lukashenko-threatened-new-eu-sanctions-re

[4]https://www.gov.uk/government/news/belarus-uk-imposes-significant-new-package-of-economic-sanctions-on-belarus-on-anniversary-of-fraudulent-election

[5]https://www.gov.uk/government/news/belarus-uk-imposes-significant-new-package-of-economic-sanctions-on-belarus-on-anniversary-of-fraudulent-election

[6]https://home.treasury.gov/news/press-releases/jy0315

[7]https://home.treasury.gov/news/press-releases/jy0315

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