Colleagues, we'll bring this meeting to order. This is meeting number 29, for those who are counting, of the Standing Committee on Foreign Affairs and International Development. I would like to continue, pursuant to the order of reference given to us on Thursday, April 14, with section 20 of the Freezing Assets of Corrupt Foreign Officials Act, a statutory review of that act.
With us today are three witnesses. Two are on video conference. We can see both of our witnesses via video conference, and I understand they can hear us over there in Geneva and in Toronto.
One of our witnesses today is John Boscariol. He's a partner and the leader of the international trade and investment law group at McCarthy Tétrault. John is in Toronto, as I said.
In front of us is Meredith Lilly, associate professor at the Norman Paterson School of International Affairs at Carleton University. Welcome, Meredith.
Last, we have Thomas Biersteker, professor and director of policy research at the Graduate Institute in Geneva.
We welcome all three witnesses to the committee. As you know, we're in the midst of a very important review of legislation. What we're proposing to do this afternoon is have all three witnesses make presentations, and then we'll go into a good hour or so of our questions and your answers.
It looks like we're going to go with John now, who is first on our witness list. Then we'll go to Meredith, and then Thomas, if that's good with everyone.
I'll turn the floor over to John Boscariol.
Thank you very much, Mr. Chair, and thank you to the committee members and the committee clerk for inviting me to appear today to discuss Canada's economic sanctions.
The views I express today are my own. I'm not appearing on behalf of anyone else or any of our firm's clients. I have been practising in the area of international trade and investment law since I was called to the bar in 1995. My focus in my practice is on economic sanctions and export and technology transfer controls, and in particular, on how these Canadian rules interact with their counterparts in the United States and other countries.
Today I certainly want to address all the questions and comments you might have for me, but I want to use my eight minutes of initial speaking time to highlight some of the significant challenges Canadian businesses are facing under Canada's economic sanctions regime, including SEMA, the Special Economic Measures Act, and FACFOA, the Freezing Assets of Corrupt Foreign Officials Act.
I think it's important to understand the history and the context of these measures. I'm sure others appearing before you who are speaking to this are giving you a government, an academic, a policy point of view. I want to give you a practitioner's point of view of this recent history, in the context of where we are currently.
The United States has traditionally established the high water mark for broad and autonomous or unilateral economic sanctions measures. Often those measures are extraterritorial, as you see with respect to Cuba and Iran. It's really only within the last 10 years, I think, that Canada has become more aggressive in this area, implementing broad unilateral measures under SEMA and certainly outside the auspices of the United Nations.
I like to think that started, at least in recent history, around 2006 when Canada added Belarus to the area control list under the Export and Import Permits Act, which essentially prohibited any transfers of technology or any exports to Belarus. It was an extremely aggressive step and measure.
In 2007 Canada implemented sanctions under SEMA against Burma. At the time the government touted those as the most aggressive sanctions imposed against Burma by any country.
In 2010 Canada began to impose autonomous sanctions against Iran, starting with the oil and gas sector, then in subsequent years moved to banning financial services and targeting other sectors, right up until May 2013, when we put a full trade embargo in place against Iran that has since been repealed in part.
In addition to those countries, we've been imposing escalating measures against Russia and Ukraine, North Korea, and Syria. In many instances those measures are more onerous than those of the United States or our trading partners.
I'm not here today to question or debate the policy behind targeting certain countries, entities, or individuals. My primary concern is the administration of these measures. Unfortunately the system today, I believe, is broken.
As Canada has been increasing the use of these sanctions measures, the government has failed to devote even the most basic resources to assisting the business community in complying. This is despite the fact that in two of our recent Canadian budgets over the past years, Finance has promised more resources and funding to be allocated to the administration of these sanctions measures. We've seen no changes, however. There are no officials within Global Affairs Canada or elsewhere in the government who will provide guidance or assistance on economic sanctions.
The economic law section within Global Affairs Canada, staffed with a handful of lawyers, is charged with handling the permit process under 20 or so sanctions regulations. However, it's been made very clear that the lawyers there are responsible for providing legal advice to the government for that permit process and in respect of economic sanctions more broadly, but not to provide any formal or informal guidance or assistance to exporters seeking to comply with these measures. When the business community reaches out to them for even the most seemingly straightforward questions, they're told by Global Affairs to retain legal counsel.
That's great for legal business; it's great for me and maybe I shouldn't be complaining about it, but the fact is, the system shouldn't work that way. Canadian companies doing business abroad, I can tell you, want to comply with these measures, but it shouldn't be this difficult and costly.
In my view, the government lawyers within Global Affairs are hard working, very competent and knowledgeable, but the economic law section remains understaffed and under-resourced. While the government has continued to implement expanding economic sanctions measures over these years, it has failed to keep up by devoting any resources to the administration of those measures.
Even in the administration of the permit process, we see long delays. In some cases, over 12 months pass before we have a response to the permit application. As you expect, Canadian companies, exporters, and investors need to be able to act quickly in response to emerging international opportunities, and our Canadian sanctions system right now is ill-equipped to deal with that reality.
I note that this is a challenge for large and small businesses alike. It has its most negative impact, though, on SMEs that can't afford such delays and the expensive legal bills for the often complex advice that's necessary when the government doesn't provide direction or guidance. I've been working with industry groups and associations, including the Canadian Association of Importers and Exporters, among others, and making submissions to Global Affairs on these issues, but unfortunately, nothing has been done.
I also think this has now become a competitive issue for Canadian companies. Other jurisdictions, including Australia, the United States, and the European Union, provide significant guidance and tools for their exporters to effectively compete and allow them to do that while still complying with these measures. Canadian businesses don't get the benefit of that direction or guidance from our government, and we're at a competitive disadvantage internationally.
Just to give you a simple example, something as basic as a consolidated list of individuals and entities that are subject to an asset freeze is not available from the Canadian government right now. Canadian companies have to screen their counterparties list by list under each sanctions regulation or retain a third party screening service to do that for them. This increases costs, which is difficult, especially for small and medium-sized enterprises.
In addition to imposing this unnecessary burden on Canadian business, the failure of the government to provide this administrative support, I think, significantly undermines their policy objectives. We've seen this arise in at least two cases.
Let me give you an example with Iran where effective February 5, 2016, Canadian sanctions were significantly repealed. Iran is an emerging market of 80 million educated young consumers. It's a huge opportunity for our oil and gas sector here in Canada. What remains for sanctions under SEMA are prohibitions on dealing with blacklisted individuals and entities, as well as prohibitions against supplying listed items and related technology.
Those items include things such as aluminum and silver. Aluminum and silver are contained in solar panels, for example. The question arises as to whether solar panels are now prohibited from being shipped to Iran. That's a question many Canadian businesses have asked us, whether it's for solar panels or other products, and we've been able to get no guidance from the Canadian government on that. Canadian businesses are being frustrated in their attempts to get guidance. They find the process expensive and time consuming, and often they simply decide not to do business with that country.
This is not what the policy-makers intended by relaxing sanctions against Iran. They didn't intend for Canadian companies to stay away from that market. I believe they intended for them to participate in the market, but still comply with the limited sanctions that are in place.
There's another impact on policy. The fact that we have no guidance from the Canadian government creates a vacuum. In those circumstances, companies will look to other countries to see how they are interpreting sanctions measures, and they might start following those interpretations that other countries use.
I have some examples in my written remarks, and I'm going to have them translated and formally presented to the committee later.
We've seen this happening already with the Russia sanctions and the Ukraine sanctions. I feel that can't have been the intention of the policy-makers either. SEMA sanctions are made-in-Canada sanctions and they should be administered, followed, interpreted and enforced as such.
Again, I'm not suggesting we shouldn't impose economic sanctions. I think they're an important policy tool that should be available to the Canadian government to address international emergencies and crises. However, as this committee considers the use of sanctions and expanding possibly the scope of SEMA, FACFOA, or other measures, I'd ask you first to consider fixing the administration of these measures.
Canadian companies doing business abroad respect and want to comply with our economic sanctions. Please provide them with the basic tools and support to do so.
Thank you very much, Mr. Chair.
Ladies and gentlemen, thank you for inviting me to appear before your committee. It is a pleasure to be here today.
The presentation that I'm making today is based on my experience working with Canadian sanctions legislation and policy instruments as a former foreign affairs adviser in the Prime Minister's Office, as well as my current work as a professor in the Norman Paterson School of International Affairs at Carleton University.
My presentation is based on the brief that I submitted to the committee which outlined four recommendations for amending SEMA, the Special Economic Measures Act. As the committee considers whether Canadian legislation should encompass gross violations of human rights, I would note that the United Nations has long considered gross violations of internationally accepted human rights as an acceptable rationale for imposing economic sanctions, as have the United States and the European Union.
In considering potential amendments to SEMA to also address these violations, I offer several suggestions. First, as the committee is aware, subsection 4(1) of SEMA allows Canada to act unilaterally to impose sanctions in the absence of actions by the UN Security Council. This section of the act allows Canada to introduce economic sanctions in two ways, either as a member of an international organization of states, of which the Commonwealth would be an example, that has called upon its members to impose economic sanctions against a foreign state, or unilaterally, provided that the Governor in Council is satisfied that “a grave breach of international peace and security has occurred that has resulted or is likely to result in a serious international crisis”.
In 2014-15, that unilateral provision allowed Canada to act via an informal coalition of willing states, namely the United States and the European Union, to impose sanctions against Russia and pro-Russia forces over the crisis in Ukraine. Since the UN could not respond to that crisis due to Russia's veto at the Security Council, and given that Canada was not a member of an organization of states that was willing to act, Canada would not have had the legislative authority to act without the SEMA provisions as they're written. Through this example, we can see how SEMA provisions enabling Canada to act unilaterally have been usefully applied, even though Canada acted multilaterally in practice.
In considering now whether to add “gross violations of internationally recognized human rights” to the rationale for SEMA, it's my sincere hope that a similar logic would be applied before invoking its provisions. To be clear, while broadening the legislation in this way would give Canada the authority to act unilaterally, I hope that Canada would still follow previous practice and would seek to join a coalition of willing states to do so and would do so only in the absence of a recognized forum such as the UN, NATO, or the Commonwealth.
Canada has never acted in a truly unilateral fashion to invoke sanctions under SEMA. It's my view that adding human rights violations to the legislation should not be used as a rationale for doing so now.
My second recommendation relates to the implications that adding human rights provisions to this legislation will have for the test of when Canada will act unilaterally against another state. What I mean by this is that the existing SEMA legislation allows Canada to act unilaterally only when a serious breach of international peace and security has occurred and when a serious international crisis is likely to result. Therefore, by definition, the purpose of adding gross violations of human rights as a rationale for invoking SEMA must be to allow Canada to act when a grave breach of international peace and security has not occurred and when an international crisis is not likely to result, since gross human rights violations that could result in a serious international crisis such as genocide are already captured under the existing legislation. Adding the specific provisions to the act would necessarily lower the threshold for Canadian intervention against foreign states.
Therefore, if this new human rights justification for imposing sanctions is included in the act, then the act must also define what the new threshold for Canada's intervention would be. It could be, for instance, as broad as indicating that these violations have shocked the international community, or they could be much more prescriptive. For instance, the act could adopt elements from Bill , a private member's bill introduced by the member for. That bill seeks to invoke SEMA sanctions for those who have committed gross violations against individuals who are either seeking to expose illegal activity carried out by government officials or who are seeking to promote human rights, democratic and other freedoms, people who we would generally think of as human rights and democracy activists.
Whether the committee supports that kind of rationale or something else, it will be necessary to identify a trigger for Canadian intervention, if Parliament decides to add gross violations of human rights to the rationale for SEMA.
A third issue I wish to raise stems directly from my experience working with SEMA generally as it pertains to the use of travel bans. I know that you heard from folks on this the other day. Changes made to the Immigration and Refugee Protection Act, or IRPA, several years ago allow the Minister of Immigration to use public policy considerations to deny entry to Canada by foreign nationals who have been subject to economic sanctions by Canada. The minister can also ban individuals identified under the Freezing Assets of Corrupt Foreign Officials Act, FACFOA, which I know you're also studying.
Separately and unrelated to economic sanctions, these public policy considerations also give that minister the authority to ban individuals who promote terrorism, violence, criminal activity, hate speech proponents, for instance, or those who pose a public health risk to Canada. While I'm not an expert on our immigration legislation, I suspect that the minister's authority to issue travel bans remains discretionary, due to this other set of considerations.
What this means in practice is that the immigration minister must individually approve each travel ban exercise under these provisions regardless of the rationale. When we come back to economic sanctions, this discretionary authority could result in inconsistent implementation of Canadian policy if the Minister of Foreign Affairs lists a foreign national for economic sanctions but the immigration minister either declines to do so or declines to do it in a prompt fashion.
Despite this potential for inconsistency, the two ministers and the respective departments can in practice coordinate their activities to ensure that travel bans and sanctions are implemented concurrently. Nevertheless, in my mind, given that there's no convincing rationale that the Canadian government would want to impose economic sanctions against an individual yet still allow that person to come to Canada, the government may wish to strengthen the language under IRPA to remove the Minister of Immigration's discretion in this area. I recommend that the government make travel bans automatic for individuals listed under SEMA.
Finally, returning to the issue of human rights violations, I want to highlight for the committee that travel bans on their own are already a foreign policy tool available to demonstrate Canadian action and displeasure with human rights abusers overseas even if the committee declines to recommend that the government take further action on human rights via SEMA.
Under section 35 of IRPA, persons can already be found inadmissible to Canada who have engaged in gross human rights violations. The Minister of Immigration can certainly apply these provisions more liberally in the future if he wishes. While I recognize that travel bans on their own represent a relatively weaker diplomatic response than economic sanctions, Canada may wish to issue travel bans early as part of a broader diplomatic strategy to gradually escalate pressure against a foreign state.
It would also be very straightforward to prompt Canada to issue travel bans alone unlike economic sanctions, which I believe Canada should impose in concert with other willing states.
This concludes my presentation. I'd be happy to answer any questions.
Thank you very much for the invitation to comment on these issues.
I've selected a couple of general questions with which I'm most familiar.
I'll give you a little bit of additional background. I've been working on the issue of primarily United Nations targeted sanctions over the course of the past 15 to 16 years, and a consortium of a group of colleagues, both academic and policy practitioners, including some from the Canadian foreign affairs department, have participated in what we call the targeted sanctions consortium. It was about 50 individuals around the world looking at the impacts and effectiveness of the UN targeted sanctions from 1990 to the present. In fact, we just published a book this past year called Targeted Sanctions: The Impacts and Effectiveness of UN Action, published by Cambridge University Press in 2016.
I'm going to reflect on that work, primarily focused on the UN, but I've also worked more recently serving as a member of an EU task force on EU sanctions against Iran, Russia, and Syria.
I want to focus on a couple of points. First is the question in the briefing memo about the use of sanctions and how it has evolved over time. I'll make four brief points about this.
First, today there has been a significant increase in the frequency with which sanctions have been applied. There are more UN sanctions in place today than at any time in the UN's history, at least in this past year. Even though some have described the 1990s as the so-called sanctions decade, there were twice as many UN sanction regimes in place in 2016 as there were at any point in the 1990s.
There are also record numbers of European Union and U.S. sanctions in place. After the termination of the sanctions against Siberia and Côte d'Ivoire, the United Nations has 14 sanctions regimes in place. The European Union has 38 sanctions regimes in place. The United States has 28 different sanctions regimes in place. Sanctions appear to have become a policy instrument of choice.
The second point, in terms of trends and evolution, is that all sanctions regimes today are targeted in some form. Even the U.S., although it may retain some comprehensive measures, has not applied any new comprehensive sanctions since 2000.
There are different types of targeting. You've already heard references to individual targeting. There's individual and corporate entity targeting. There's targeting on one sector of economic, diplomatic, or military activity. There is some targeting that is in fact focused on simply territories of the target country rather than on an entire country, or areas under the control of a rebel group in a country.
I don't know whether anyone there is familiar with this, but I believe the Canadian government has used something called SanctionsApp, which is an app for mobile devices, available also online, for evaluating the impacts and effectiveness of UN sanctions. We now have a menu of 76 different variations of UN-applied restrictions over the last 25 years. These are different measures.
A point that came up in the first presentation dealt with a question about what we call the challenge of keeping targeted sanctions targeted, and this is something that I've heard frequently. It's not just a Canadian problem, by the way. It's a problem in many other countries where private sector firms are having difficulty with regard to the implementation of the measures and keeping them targeted.
In our research, we have come up with a scale of combinations of targeted measures, because it's hard to single out the effects of a travel ban versus an asset freeze versus a sectoral measure. We look at the combination of measures in place by any given centre, and we've developed a five category set of classifications, almost like, I suppose you could say, hurricane classifications. Category one is just individual measures. Category two is diplomatic or arms embargos. Category three refers to sectoral, particularly commodity sanctions measures. Category four is relatively non-discriminating sectoral measures, such as sanctions on oil, sanctions on the financial sector, or sanctions on shipping. Category five would be comprehensive trade embargos.
We were interested in analyzing and trying to understand the challenge of keeping a measure, which may be designed either in New York, Brussels or Ottawa to be a targeted measure targeted and keeping the political goals and objectives consistent with what firms are logically going to do in the spot, and so on.
A third point about how sanctions have evolved is that we've seen—and this is a positive story, I think—an increase in the sophistication of sanctions regimes over time. There's been significant improvement in the specificity of language. This is particularly with reference now to United Nations sanctions. There were nicknames being used for designations in the 1990s. Today the UN is trying to bring its designations to what they call its OFAC standard, which is based on the U.S. Treasury model and uses biometric identifiers, Arabic script, rather than transliterations and so on in the designations criteria.
There's also been some policy learning that's gone on. I would say that the application of measures of financial asset freezes in advance, basically giving a target a warning two weeks before that they should change their policy or we will impose a financial ban or an asset freeze, obviously gives them enough time to move their assets to other locations. There has been some learning. The UN no longer threatens an asset freeze in advance of its application.
We've also seen standardization of language, routine practices, and standardized language for exemptions that we see across one UN Security Council resolution to another. Quite significantly, Canada, among others, supported this particular position. There have been, in my view, significant improvements in legal protection for individuals and for firms that have been designated with the creation of the office of the ombudsman at the UN. We've seen similar types of developments within the EU, particularly in the actions by the European Court of Justice and the European Court of Human Rights.
The fourth trend or evolution that we've seen over time is an increase in the complexity of sanctions regimes. I mentioned earlier that just in looking at sanctions regimes from 1990 to the present, we've seen 76 different varieties of restrictive measures. When we updated our app for 2016, which has just been released this past week for the DPRK and Iran in particular—Iran now being different from the DPRK.... The latest resolution on North Korea is so complex that we've had to develop an entirely new typology to understand it. Where there were outright sanctions, restrictions, or prohibitions on activities, now there are conditional measures indicating that if a country has reason to suspect a violation of the sanction, then it is legally required to take action. This might then apply to its firms. These are what we call conditional measures. The resolution includes additional measures that states are encouraged to consider. I think this is creating additional complexity, that is even building on some of the comments from the first speaker this afternoon.
If there's time, let me briefly say something about whether or not sanctions work, since that's the most common question we're usually asked about this. We're focused primarily on United Nations sanctions. I'd like to make one or two points about the effectiveness of sanctions.
Yes, sometimes they do work, but we need to understand and remember that sanctions are never applied in isolation. UN sanctions are always applied in combination with other policy instruments and most often with negotiation or mediation. Sometimes we hear in the public discourse an argument that we keep on applying sanctions, but we should negotiate. Most often, or almost always, sanctions are embedded in a negotiating or bargaining framework.
In our own analysis of the effectiveness of measures, we argue that the effectiveness varies according to the purposes of sanctions. We differentiate between three broad purposes of sanctions.
The first is to coerce a change in behaviour. That's typically the goal of many sanctions regimes. We oftentimes will see that's one of the principal objectives. We find, in our research, that coercing a change in behaviour through the application of sanctions is rarely effective not only on its own, but even in combination with other measures. It's very difficult to coerce a target to change behaviour, but if you're trying to constrain a target from engaging in some kind of proscribed activity, we find that the sanctions increase in their effectiveness by almost a factor of three.
We also argue that sanctions are important instruments to send a signal. They're more than just words, because they're words backed by costs self-imposed on the target and costs imposed on the sender. We find that in general we do not have as much effectiveness in coercing changes in behaviour, but oftentimes sanctions can play a significant role in changing the nature of forces on the ground or constraining an actor from undertaking actions that are proscribed by the international community more generally.
As one final point on unilateral versus multilateral sanctions, most research has concluded that multilateral sanctions are more effective than unilateral sanctions, particularly if they're UN sanctions backed by political will. These are the most effective, the most legitimate, and by some standards the only legal sanctions—but I think there are others that are legal—and both the EU and to a lesser extent the U.S. legitimize their individual unilateral sanctions measures in terms of prior United Nations decisions.
We also see that recent experience has shown that coordinated action by like-minded countries can significantly enhance the impacts and effectiveness of sanctions. Consider for example the coordinated actions undertaken that have gone beyond just the UN sanctions, particularly with regard to Iran. I'm happy to elaborate on our analysis of the JCPOA, or a similar report that we just finished for Rasmussen Global group on an analysis of the coordinated sanctions applied against Russia over Ukraine.
I'm happy to provide the committee with additional information and to answer any questions. I'd also like the opportunity to comment on the very interesting presentations of my predecessors at this time.
To our witnesses, thank you very much.
I think, Mr. Chair, we should have had them first, because the information they've given us has been very enlightening—not that bureaucrats don't do a good job, but they do confuse the issue sometimes more than they clarify.
Thank you very much for all your recommendations. I think there are some great recommendations which we should look at, as far as that goes.
In terms of Magnitsky—I know that a couple of you are familiar with that act in the U.S.—we talked about unilateral actions versus looking at doing more across a broad base. Meredith, because I know you're probably familiar with this, in light of our private members' bills that were first proposed by Irwin Cotler and then by , what are your thoughts on the effectiveness of the Magnitsky Act and law?
I hear what we're saying, that this act is not to target governments; I realize that it's looking at individuals.
I'm hearing, John, what you said, that if we're going to look at this we need to have resources, and you're talking about some of our companies that go out to these places.
As you look at what was passed in the U.S., do you think it's effective? We just heard Thomas say that we're also sending a message when we talk about sanctions.
Maybe just comment on your perception of what the Magnitsky law in the United States has done to the whole issue around sanctions and corrupt officials.
Canada is not alone in this issue and problem. A few years ago we organized a meeting between the panel of experts for the Lybia sanctions committee here in Geneva and private sector individuals, because as the first speaker has pointed out, individual financial firms are themselves the main sources of the implementation of these measures.
The comments we heard from the private sector—from financial institutions, from insurance companies, from shipping companies—were about the inadequate information they were receiving from their governments. Particularly, I must say—this seemed to be disproportionately from the U.K.—there were complaints about Brussels. I'm not going to make a Brexit comment at this point, but it's a common problem that the private sector has difficulty getting the information it needs in a timely manner. This is not a uniquely Canadian problem. It's a problem for the private sector implementing sanctions globally.
I made reference in my comments to the challenge of keeping targeted sanctions targeted. This is keeping them consistent with the careful design of the measures, when they are actually being crafted in New York, Brussels, or Ottawa. I think the problem of keeping them targeted is a problem of what we call the dual translation problem. There are two translations that are under way: first, the translation from, in the case of the EU, a council decision, or in the case of the UN, a Security Council resolution, into national legislation; and second, the communication of that national legislation to the private sector.
At both of these points, the translation—from a council decision to government legislation, and to the interpretation of that legislation, the way it's communicated to firms and the way firms then through compliance implement the measures—can lead to a significant distortion. It could mean a narrowing, but most often it means a widening or broadening of the sanctions and particularly over Iran in the past few years, the phenomenon of widespread derisking because firms were simply concerned that if they didn't divest virtually all activities with regard to Iran, they could be in trouble with their own governments, and with other governments as well in terms of fines and penalties.
Thank you very much for that question.
In our assessment we developed an approach to try to assess the effectiveness of sanctions. We differentiate among the various purposes. We evaluate the question. Was Iran coerced to changing its position on the weaponization of its nuclear program? Was Iran constrained, by which we mean, were the costs raised? Did it change its strategy in some way? Was Iran effectively signalled? Was the message clearly articulated? Importantly, was there some degree of stigmatization of Iran? It's not just the clarity of the message, but a sense of some degree of stigmatization in some areas.
The other thing we do when we look at evaluating effectiveness is differentiate country regimes by what we call episodes. In the Iran sanctions regime, we define an episode as a change in the nature of the sanction being applied, the target of the sanction, or the purpose of the sanction.
Over the course of the period from 2006 until the Joint Comprehensive Plan Of Action last year, we identified five different sanctions episodes in Iran. All of this information is available either at sanctionsapp.com or on our app device—which, by the way, I'm not selling; it's free and available. It may not work on BlackBerry, though. That may be a problem in Canada; I'm not sure.
Particularly with regard to the most recent phase, we found and made the argument that the sanctions were effective, but in the following way. They weren't effective on their own. The sanctions were effective in forcing a change in behaviour not because they brought Iran to the bargaining table—Iran had been negotiating through this period. The changes are multiple. I said earlier that sanctions are always applied in conjunction with other policy instruments. I think there are two other significant developments that led to the JCPOA, one of which was a change in the bargaining position of the E3-plus-3, or the P5-plus-1, depending which side of the Atlantic you are looking at the issue from.
Previous to 2015 there was a total prohibition on any enrichment, so the E3-plus-3 changed their negotiating position. The combination of intensified sanctions, and this is the point I made about multilateralizing, brought Europe on board and brought many other countries on board, with even trade reduction from India, from China up to a point, from Korea and Japan. It was a comprehensive strategy. That was very important, but the sanctions alone did not produce the change. It's the change in bargaining position and, I would say, certain elements of luck. The election of President Rouhani in 2013, which was not expected by most specialists of Iranian politics, also created an enabling environment. To make the sanctions effective, you needed to have some degree of luck. You also needed to have it coordinated closely with bargaining and negotiations. I would argue that this, plus sanctions, resulted in an effective outcome.
I'm sorry for the long dissertation on that, but we've thought a lot about this.
Thank you very much for that question.
Yes, I worked very closely with a former colleague at the Watson Institute at Brown University, Sue Eckert, who was the assistant secretary for export controls in the Clinton administration.
We made a number of recommendations and suggestions for ways of addressing what was fundamentally a very serious problem, the absence of due process for individuals who were designated, individuals who were put on the list.
When the other nations first started applying individual sanctions, I asked someone at the secretariat who was overseeing the policy, “Did you think about the human rights implications of having the Security Council listing individuals?” At the time, he said, they were so concerned with changing and amending the comprehensive sanctions against Iran that they simply didn't ask this question; no one even thought about it. they thought they might be going after politically exposed persons, but no one thought about due process rights of individuals.
We were commissioned by the governments of Switzerland, Sweden, and Germany to explore different ways of addressing this problem at the UN level. We didn't give policy advice. We simply organized the different options that were on the table and evaluated them in terms of the extent to which these different institutional options would address the fundamental due process violations of notification, access, right to a hearing, and effective remedy.
Ultimately, the Security Council, although there was a lot of opposition in 2006, things changed in 2008 or 2009, probably because of the change in administration in the U.S. particularly. There was the introduction of the office of the ombudsperson. In fact, the first ombudsperson was a Canadian national, I think, Kimberly Prost. She was a former prosecutor at the ICTY.
What Kim did in the office is interesting. I tell this to my students of institutions; it's a very interesting story. She actually, in 18 months, managed to take an office that was strongly opposed by permanent members of the Security Council and in effect give it a reverse veto. That means that recommendations made by the ombudsperson are binding unless all 15 members of the council overturn those recommendations. I talked about the improvement in legal procedures. This is actually quite a dramatic and quite a significant development.
My legal colleagues will not agree that the ombudsperson has effective remedy, because ultimately, the decision remains at the Security Council level. But I argue that not a single one of the ombudsperson's recommendations has ever been overturned by the council, at this point in time. I think it's actually a fairly innovative and important mechanism.
The reason we argued so strongly for it was that the Security Council's individual designations were increasingly being delegitimized by legal suits, particularly in European courts. Even with the EU trying to implement UN sanctions, it was finding it was losing about two-thirds of the cases relating to designations in the European Court of Justice. That has levelled off to about 50% today.
In the EU, of course, it's handled differently. Here in Switzerland we're not in the EU, but in the European Union, it's handled through the court system.
I think it's important that when making individual designations, these questions be addressed and taken seriously; otherwise there are fundamental due process violations. All I would argue—this is perhaps a [Inaudible—Editor statement—is that all individuals have rights, even individuals charged with committing war crimes and other criminal activities of [Inaudible—Editor] terrorism cell. I think it's important to introduce these kinds of measures and to take this as seriously as it deserves.
Our current campaign is to some extent to get the UN to extend the mandate of the ombudsperson from the counterterrorism committee under Resolution 1267 to other committees, because the issues are fundamentally the same.
I agree very much with Mr. Boscariol's points about the importance of having procedures available. If there are mistakes made, there need to be procedures available for the presentation of information. The biggest problem historically has been that most of the designations, in sheer numbers, have been related to counterterrorism. The information that serves as the basis for these statements of case tend to be from classified sources, and this is why it's difficult to have a fair, full hearing in the aftermath.
I do think it's important to have procedures in place, and rigorous procedures too. Something the United Nations did under Resolution 1822 in 2008 was it simply went through all of those lists to make sure that they had adequate information, that they still agreed that the designated individuals should remain designated. The size of the list is less important than the quality of the list.
In different countries there are different ways in which these lists are constructed. In the United States, the list is constructed through a fairly elaborate inter-agency procedure where representatives from a number of different federal departments determine the basis of designation. This procedure includes the justice department as well as others, so it's not the product of a single agency or a single department of government. It's an inter-agency decision.
With regard to the UN, it's a political decision, and technically it's argued to be a preventive measure. People are put there on the basis of reasonable information in the spirit of trying to prevent certain actions from taking place.
On Professor Lilly's points, I'm not conversant with the details of Canadian legislation, so I'm not in a position to say whether or not the means are available. In respect of concerns about gross violations of human rights, I think it's important for any sovereign state to have the capacity to make a determination and exercise its policy in that area. I agree with her, however, that it's very difficult, and I think her previous comments about establishing benchmarks and having procedures is something that would be important to introduce.
I have a slight disagreement with something she said in her opening statement, although it may just be a matter of interpretation. As to UN sanctions, the United Nations invokes human rights in every resolution, but rarely are human rights violations the principal reason for UN action. This is is mainly due, I think, to technicalities in the UN charter. For example, the sanctions on South Sudan are motivated by concerns about potential genocide and concerns about the result being framed not in human rights but in armed conflict. They would attempt to obtain a ceasefire, negotiate a settlement, get implementation of that settlement, and ultimately resolve it.
So although the UN has in theory used the doctrine of the responsibility to protect, interestingly it's only been used in one case, in two episodes, and that was in Libya in 2011.
To address your first question, that's right. Companies will sometimes come to us after they've already attempted to get that advice from Global Affairs, although often it's before. Frankly, as legal counsel, we still have a role, regardless of whether we're getting direction from the government, to advise our clients as best we can on moving forward with a transaction, for example, that involves Iran. Often, it means that we can't give them a clear legal opinion that there's no issue under Canadian law. We have to identify the risks with moving forward.
As I was mentioning earlier, it often means that when a company sees those risks, and those risks often arise because there's no guidance from the Canadian government, the company feels that they're better off simply not proceeding with the transaction. It's not worth the cost. Or, if they want to proceed, and they have to continue to retain legal counsel to help them through the steps and all of that, that's costly for companies. For them it becomes a big headache to proceed, and it's easier for them just to say they are not going to engage in trade with that region for the time being until there's more clarity.
I'm less familiar with the situation you mentioned in the second part of your question, Mr. Kent, in terms of who is on and off the list. I can tell you from a Canadian point of view that is not as readily available, and hasn't been in the past, as it has been from other countries like the United States. We've had situations where orders in council have been passed adding parties, but those orders were not published for a day or two, which is a problem sometimes, especially for banks that need to be right on top of it as soon as that comes into force. We've had to struggle with that. In the past, sometimes we've seen it on the PMO website, and sometimes it's on the Global Affairs website. Sometimes when it's on the Global Affairs website, that list is called an unofficial list. There's still a lot of uncertainty around that listing process and identifying those parties quickly for Canadian companies and banks to respond quickly.
I just missed the beginning. It didn't come through, sorry.
I think we'll see. As you know, the current European sanctions are scheduled to expire at the end of January 2017. The council met last week, and there are some indications that the sanctions are likely to be continued. I'd be happy to send you and members of the committee a report we just wrote for Rasmussen Global, where we looked at the economic impact of Russia's countermeasures on all 28 members of the European Union.
One of the things we discovered is that the burden is quite disproportionate on different countries. The Baltic republics, Poland, and Germany had the greatest reductions in trade as a result of primarily both the European measures as well as the Russian countermeasures. At the same time, businesses have been quite quick to adapt. What we found is that in many cases business is not waiting for the European Union to decide whether to continue sanctions, because they've already diversified their trade. Many companies and many firms have found new markets. They acted very quickly as soon as the markets were closed.
One of the interesting points that we discovered is that some of the countries that are the most strongly opposed to sanctions are the least affected in material terms. Greece, although it makes statements opposing the sanctions, has found its trade with Russia has increased in the past year and a half. That has something to do with the situation in Greece, as well, but it's an interesting dynamic. We wrote this report primarily to inform the debate in Europe, and we were applying the methods I just described to the previous questioner.
I was surprised. I did not expect there would be very much in the way of evidence of constraint on Russia, or restraint being exercised, and we've found quite a number of instances where Russia could have done more and did not. Sanctions were not the only factor by any means, but they do appear to be important in some cases. We'll see. I think we'll know in a month or so. We're currently presenting this report in various capitals—Berlin, Paris, London—in the next couple of weeks, so we'll see what reactions we get.
Thank you very much, Mr. Wrzesnewskyj.
I appreciate the patience of our witnesses. I want to, on behalf of the committee, thank all three of you very much. This was a very good start for us, and a better start than some of the earlier discussions we have had.
One of the issues that I'd like you to consider and get back to us in writing if you could is the idea that if the European Union has a timeline on sanctions and then does a review, would it make some sense for Parliament to have a structure where it's allowed to do a review, other than just allowing the government through its order in council process to make decisions as to when they want to remove sanctions? Then it would be more robust and allow the ability for us, as members of Parliament, whether it's necessary to be in camera or not...but the reality of it is that it is left up to others, and there's no.... It so happens that there was a five-year review; otherwise we probably wouldn't be having this discussion today. I would be very interested in your sense of how that might work if we were to expand the structure of SEMA beyond what it is today to human rights violations, as an example. How would we deal with those individuals who might be put on a list unnecessarily, and that had a huge impact on their business or opportunities, and then it gave us the undesired result, if I can put it in those terms?
On behalf of the committee, we look forward to your giving us more information on some reports. Mr. Biersteker commented that there are some reports out there that we've not had a chance to look at which would be very useful to our discussions.
On behalf of the committee, Mr. Biersteker, Mr. Boscariol, and Ms. Lilly, thank you very much for your time. We very much appreciate it.
I think the committee realized that I was not seeing the clock when it came to individual members, but I think it had a better effect as far as the flow of the discussion goes. I was not intending to cut off the witnesses when they're giving us very valuable information. Again, thank you very much.
Colleagues, I will see you on Monday.
The meeting is adjourned.