Vol. 150, No. 4 — February 24, 2016

Registration

SOR/2016-15 February 5, 2016

SPECIAL ECONOMIC MEASURES ACT

Regulations Amending the Special Economic Measures (Iran) Regulations

P.C. 2016-51 February 5, 2016

Whereas the Governor in Council is of the opinion that the situation in Iran 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), makes the annexed Regulations Amending the Special Economic Measures (Iran) Regulations.

Regulations Amending the Special Economic Measures (Iran) Regulations

Amendments

1 (1) The definitions arms and related material, designated person,Iranian financial institution and significant interest in section 1 of the Special Economic Measures (Iran) Regulations (see footnote 1) are repealed.

(2) The definition Iran in section 1 of the Regulations is replaced by the following:

Iran means the Islamic Republic of Iran and includes

2 (1) The portion of section 2 of the Regulations before paragraph (a) is replaced by the following:

2 A person whose name is listed in Schedule 1 is a person who is in Iran, or is a national of Iran who does not ordinarily reside in Canada, and in respect of whom the Governor in Council, on the recommendation of the Minister, is satisfied that there are reasonable grounds to believe is

(2) Paragraph 2(c) of the Regulations is replaced by the following:

(3) Paragraph 2(e) of the English version of the Regulations is replaced by the following:

3 Sections 3 and 3.1 of the Regulations are replaced by the following:

3 It is prohibited for any person in Canada or any Canadian outside Canada to

3.1 Section 3 does not apply with respect to

4 Section 4 of the Regulations is replaced by the following:

4 (1) It is prohibited for any person in Canada or any Canadian outside Canada to export, sell, supply or ship any of the goods listed in Schedule 2, wherever situated, to Iran, to a person in Iran, or to a person for the purposes of a business carried on in or operated from Iran.

(2) It is prohibited for any person in Canada or any Canadian outside Canada to transfer, provide or disclose to Iran or any person in Iran any technical data related to the goods listed in Schedule 2.

5 Sections 4.1 to 8 of the Regulations are replaced by the following:

8 It is prohibited for any person in Canada or any Canadian outside Canada to do anything that causes, facilitates or assists in, or is intended to cause, facilitate or assist in, any act or thing prohibited by sections 3 and 4.

6 (1) The portion of section 8.1 of the Regulations before paragraph (a) is replaced by the following:

8.1 Sections 4 and 8 do not apply to

(2) Subparagraph 8.1(c)(iii) of the Regulations is replaced by the following:

7 (1) The portion of section 9 of the Regulations before paragraph (a) is replaced by the following:

9 The following entities must determine on a continuing basis whether they are in possession or control of property that is owned, held or controlled by or on behalf of a listed person:

(2) Paragraph 9(a) of the French version of the Regulations is replaced by the following:

8 Section 10 of the Regulations is replaced by the following:

10 (1) Every person in Canada and every Canadian outside Canada must disclose without delay to the Commissioner of the Royal Canadian Mounted Police or to the Director of the Canadian Security Intelligence Service

(2) No proceedings under the Special Economic Measures Act and no civil proceedings lie against a person for a disclosure made in good faith under subsection (1).

9 The heading before section 11 of the English version of the Regulations is replaced by the following:

Application to No Longer Be a Listed Person

10 (1) Subsection 11(1) of the Regulations is replaced by the following:

11 (1) A listed person may apply to the Minister in writing to have their name removed from Schedule 1.

(2) Subsection 11(5) of the English version of the Regulations is replaced by the following:

(5) If there has been a material change in circumstances since the last application was submitted, a person may submit another application under subsection (1).

11 Section 12 of the Regulations is replaced by the following:

12 (1) A person whose name is the same as or similar to the name of a listed person and that claims not to be that listed person may apply to the Minister in writing for a certificate stating that they are not that listed person.

(2) If it is established that the person is not a listed person, the Minister must issue a certificate to the applicant within 30 days after receiving the application.

12 Schedules 1 to 3 to the Regulations are replaced by the Schedules 1 and 2 set out in the schedule to these Regulations.

Application Prior to Publication

13 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

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

SCHEDULE
(Section 12)

SCHEDULE 1
(Section 2 and subsection 11(1))

Persons
Entities

Part 1

Individuals

Part 2

SCHEDULE 2
(Section 4)

Goods

Item Column 1

Goods		 Column 2

Description

1

Aerodynamic particle size measuring equipment

Any equipment designed to measure in real time the aerodynamic particle size of aerosols in the range of 0.1 to 50 micrometers.

2

Aerosol generators

Any equipment capable of producing aerosols of radioactive, chemical or biological materials with aerodynamic particle sizes in the range of 0.1 to 50 micrometres.

3

Aluminum and aluminum alloy products

Piping, tubing, fittings, flanges, forging, castings, valves, any unfinished products in any form and any waste or scrap that are made of aluminum and its alloys that are not specified in the Export Control List.

4

Argon ion lasers

Argon ion lasers that are not specified in the Export Control List and have an average output power equal to or greater than 5 W.

5

Autoclaves (double-ended)

Double-ended or pass-through autoclaves with internal volume greater than 1 m3, bioseal, interlocking doors, warning lights or audible alarms.

6

Automated take-off or landing systems

Systems that are usable in the systems specified in entry 6-1.A.2 of the Guide and are capable of operating vehicles with a stall speed in excess of 30 knots.

7

Batch centrifuges

Batch centrifuges with a rotor capacity of 25 L or greater, usable with biological material.

8

Bellows-sealed scroll compressors and vacuum pumps

(1) The following vacuum pumps:

  • (a) turbomolecular pumps having a flow-rate equal to or greater than 400 l/s;
  • (b) Roots-type roughing pumps having a volumetric aspiration flow-rate greater than 200 m³/hr;
  • (c) bellows-sealed, scroll, dry pumps; and
  • (d) bellows-sealed, scroll, dry compressor pumps.
   

(2) Vacuum pumps that are not specified in the Export Control List and that

  • (a) are suitable for corrosive fluids;
  • (b) have a maximum flow-rate greater than 5 m³/hr, measured under standard temperature and pressure conditions of 273 K (0°C) and 101.3 kPa, respectively; and
  • (c) are pumps in which all surfaces that may come into direct contact with fluids consist of stainless steel, aluminium alloy or a combination of the two.

9

Decanning and decladding equipment

Mechanical equipment designed or usable for decanning or decladding spent nuclear reactor fuel as part of a fuel processing process.

10

Drum drying equipment

Any drum drying equipment capable of producing dry particles of radioactive, chemical or biological materials with aerodynamic particle sizes in the range of 0.1 to 50 micrometres.

11

Electrical power supply units and transformers

High voltage direct current power supply units that are not specified in the Export Control List and

  • (a) are capable of continuously producing 10 kV or more over a period of 8 hours, with output power of 5 kW or more with or without sweeping; and
  • (b) have current or voltage stability better than 0.1% over a period of 4 hours.

12

Electrolytic cells for fluorine products

Electrolytic cells that are not specified in the Export Control List that

  • (a) are used for fluorine production; and
  • (b) have an output capacity greater than 100 g of fluorine per hour.

13

Fibrous or filamentary materials

The following fibrous or filamentary materials or prepregs that are not specified in the Export Control List:

  • (a) carbon or aramid fibrous or filamentary materials having either
    • (i) a specific modulus exceeding 10 x 10^6 m, or
    • (ii) a specific tensile strength exceeding 17 x 10^4 m;
   
  • (b) glass fibrous or filamentary materials having either
    • (i) a specific modulus exceeding 3.18 x 10^6 m, or
    • (ii) a specific tensile strength exceeding 76.2 x 10^3 m; and
  • (c) thermoset resin-impregnated continuous yarns, rovings, tows and tapes with a width of 15 mm or less (prepregs), made for carbon or glass fibrous or filamentary materials.

14

Flow-forming machines

Flow-forming machines and spin-forming machines capable of flow-forming functions and mandrels, as follows:

  • (a) machines that have three or more rollers and that can be equipped with numerical control units or a computer control; and
  • (b) rotor-forming mandrels designed to form cylindrical rotors with an inside diameter between 75 and 400 mm.

15

Frequency changers (inverters) and specially designed software for them

(1) Frequency changers that

  • (a) have multiphase frequency output;
  • (b) are capable of providing power of 40 W or greater;
  • (c) are capable of operating anywhere between 600 and 2000 Hz; and
  • (d) have frequency control less than 0.2%.

(2) Specially designed software for these frequency changers.

16

Glove boxes

Any glove boxes or similar devices with remote manipulators that can provide the operator with protection from radiation or radioactive materials.

17

Heat treatment and sintering furnaces

Controlled-atmosphere heat treatment furnaces capable of operation at temperatures above 400°C.

18

HEPA filters

HEPA filters of a frame area of 0.0625 m2 or larger with a DOP rating of 99.997% (at 0.3 micron) or higher.

19

High speed cameras

Electronic framing cameras having a speed exceeding 1000 frames per second.

20

Lead in sheets or blocks/bricks

Must be suitable for use in shielding.

21

Magnetic alloys in thin strip form

Magnetic alloy materials in sheet or thin strip form with a thickness of 0.1 mm or less, made of iron-chromium-cobalt, iron-cobalt-vanadium, iron-chromium-cobalt-vanadium or iron-chromium.

22

Mass spectrometers

The following mass spectrometers that are not specified in the Export Control List that are capable of measuring ions of 200 atomic mass units or more and have a resolution of better than 2 parts in 200:

  • (a) inductively coupled plasma mass spectrometers (ICP/MS);
  • (b) glow discharge mass spectrometers (GDMS);
  • (c) thermal ionization mass spectrometers (TIMS);
  • (d) electron bombardment mass spectrometers with a source chamber constructed from, lined with or plated with, materials resistant to corrosion by UF6 ;
  • (e) molecular beam mass spectrometers with either
    • (i) a source chamber constructed from, lined with or plated with, stainless steel or molybdenum and equipped with a cold trap capable of cooling to 193 K (-80°C) or less, or
    • (ii) a source chamber constructed from, lined with or plated with, materials resistant to corrosion by UF6 ; and
  • (f) mass spectrometers equipped with a microfluorination ion source usable with actinides or actinide fluorides.

23

Nucleic acid synthesisers

Any device designed to produce oligonucleotides from nucleic acids or derivatives.

24

Oxidation furnaces

Furnaces capable of operation at temperatures over 400°C.

25

Riot gear

Riot helmets and associated equipment, balaclavas, flashbangs, sting-ball grenades, impact munitions, chemical munitions, clothing specifically used for physical protection in riot control situations, batons and paintball guns.

26

Sintered metal filters employing monel or other high nickel content alloys

Sintered metal filters made of

  • (a) nickel; or
  • (b) nickel alloy with a nickel content of 40% or more by weight.

27

Sintering presses

Sintering systems, including parts, software and technology for them, capable of generating a temperature in excess of 999°C or atmospheric pressure of less than 2 atmospheres.

28

Tributyl phosphate (TBP)

Chemical Abstract Service registry number 126-73-8.

29

Absolute pressure transducers

Absolute pressure transducers capable of measuring absolute pressures below 100 kPa, and specially designed parts and software for them.

30

Gamma-ray spectrometers

Gamma-ray spectrometers of all types and specifications, and specially designed parts and software for them.

31

Numerically controlled machine tools

Numerically controlled machine tools of all types, and specially designed parts and software for them.

32

Electroslag remelters

Electroslag remelters of all types and specifications, and specially designed parts for them.

33

Gold, silver, platinum, palladium, ruthenium, rhodium, osmium and iridium

In addition to specific items made of those metals referred to in these Regulations, all raw, semi-finished or finished forms of those metals or their alloys.

34

Helium or hydrogen leak detectors

Helium or hydrogen leak detectors capable of detecting leak rates of less than 1 x 10-5 standard cubic centimetres of air per second (atm cc/s for air).

35

Smelting machinery and products

Any smelting machines and specially designed parts for them, as well as any reducing agents or fluxes used in the smelting process.

36

Stainless steel valves, piping, tubing and fittings

Any valves, piping, tubing and fittings that are made of stainless steel type 304, 316 or 317 and that are not specified in the Export Control List.

37

Maraging steels

Maraging steels in the Export Control List 6-6.C.8 having an ultimate tensile strength equal to or greater than 2.05 GPa, measured at 20°C, in the form of sheet, plate or tubing with a wall or plate thickness equal to or less than 5.0 mm and usable in systems specified in 6-1.A or 6-19.A.1 of the Guide.

38

Explosive release devices

Explosive bolts

39

Isocyanates

Propellants and constituent chemicals for propellants, either as a pure substance or as a mixture containing at least 50% of one of the following chemicals:

  • (a) toluene diisocyanate (TDI);
  • (b) methyl diphenyl diisocyanate (MDI);
  • (c) isophorone diisocyanate (IPDI);
  • (d) sodium perchlorate;
  • (e) xylidine;
  • (f) hydroxy terminated polyether (HTPE); or
  • (g) hydroxy terminated caprolactone ether (HTCE).

40

Production equipment

Computer controlled or numerically controlled laser welding and laser cutting machines, and their specially designed components.

41

Production equipment

Computer controlled or numerically controlled electron beam welding machines, and their specially designed components.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In 2010, Canada imposed sanctions against Iran under the Special Economic Measures Act (SEMA). The Special Economic Measures (Iran) Regulations (Iran SEMA Regulations) were adopted and enhanced in response to the Government of Iran’s successive violations of its nuclear-related international obligations under United Nations (UN) Security Council resolutions (Security Council) and its refusal to cooperate fully with the International Atomic Energy Agency (IAEA) and suspend its enrichment-related activities. Canada’s autonomous sanctions under SEMA were imposed in addition to existing Security Council sanctions against Iran, implemented in Canada under the United Nations Act.

On July 20, 2015, the Security Council adopted Resolution 2231, under Chapter VII of the UN Charter, endorsing the agreement known as the Joint Comprehensive Plan of Action (JCPOA) reached between the five permanent members of the Security Council (China, France, Russia, the United Kingdom, and the United States), Germany (P5+1) and Iran to ensure that Iran’s nuclear program would be exclusively peaceful. The agreement provides Iran with substantial international sanctions relief in return for Iran fulfilling its commitments to significantly roll back and constrain its nuclear program. Under the JCPOA, the European Union (EU) and the United States (U.S.) have also relaxed some of their sanctions against Iran to varying degrees, beginning on January 16, 2016, known as “Implementation Day” of the JCPOA.

The Regulations Amending the Special Economic Measures (Iran) Regulations (the Regulations) will broadly align the Iran SEMA Regulations with the sanctions regimes of the majority of Canada’s like-minded countries, including EU member states, following the implementation of the JCPOA. The Regulations withdraw some of the broad restrictions on trade and financial transactions with Iran and maintain controls on the flow of sensitive goods, reflecting the consensus that, if effectively and verifiably implemented, the nuclear agreement has and will continue to reduce the threat posed by Iran’s nuclear program.

Background

On July 26, 2010, the Iran SEMA Regulations were enacted in response to Iran’s nuclear proliferation activities, its violation of multiple Security Council resolutions and its failure to cooperate with the IAEA.

The Iran SEMA Regulations prohibited dealings with a list of designated persons; banned the export of goods used in the liquefaction of gas or the refining of oil, as well as the export of arms and related material not already prohibited under existing Security Council resolutions; prohibited the provision of certain financial services to persons in Iran; and prohibited the export of a list of goods and related technology that could be used in Iran’s nuclear and missile programs enumerated in Schedule 2 of the Regulations.

On October 18, 2011, amendments to the Iran SEMA Regulations added five individuals, either senior officials of the Islamic Revolutionary Guards Corps Qods Force or individuals associated with them, to the list of designated persons.

On November 21, 2011, amendments to the Iran SEMA Regulations added new sanctions in response to the IAEA’s November 9, 2011, assessment of Iran’s nuclear program. The amendments prohibited all financial transactions with Iran, subject to limited certain exceptions; expanded the list of prohibited goods to all goods used in the petrochemical, oil and gas industry in Iran; added items that could be used in Iran’s nuclear program to the list of prohibited goods; added new individuals and entities to the list of designated persons; and removed certain entities that no longer presented a proliferation concern for Canada.

On January 31, 2012, amendments to the Iran SEMA Regulations added three individuals and five entities to the list of designated persons. These individuals were listed in order to align Canadian sanctions with measures adopted by the EU.

On December 12, 2012, amendments to the Iran SEMA Regulations sought to further align Canadian sanctions with measures adopted by like-minded countries as a result of Iran’s continued refusal to engage meaningfully with the international community. The amendments added export restrictions on vessels designed to transport or store crude oil, petroleum and petrochemical products, goods used to build or maintain ships, goods used in the mining industry, and shipments of hard currency valued at greater than $40,000. Eighty-nine additional entities and one individual were also listed as designated persons. An exemption was introduced to facilitate activities with the purpose of safeguarding human life, disaster relief, and the provision of food, medicine and medical supplies.

On May 29, 2013, amendments to the Iran SEMA Regulations introduced a broad ban on imports from Iran and exports to Iran and provided the addition of 82 new entities and 32 individuals to the list of designated persons. They also introduced an exemption aimed at increasing the availability of consumer communication technologies that contribute to Internet freedom, and an exemption for goods used to purify water for civilian and public health purposes.

On July 14, 2015, the P5+1 reached an agreement with Iran on the JCPOA. The Security Council endorsed the deal by adopting Resolution 2231 (2015). Under the JCPOA, Iran accepted long-term restrictions on its nuclear program, combined with extensive international verification, aimed at preventing Iran from being able to produce a nuclear weapon. In return, Iran received significant relief from sanctions imposed for its past non-compliance with international obligations in regard to its nuclear program.

Under the JCPOA, the U.S. and the EU have committed to suspending or withdrawing some of their sanctions against Iran. Implementation of this commitment began on “Implementation Day,” when the IAEA presented its report that Iran had implemented a first tranche of its commitments under the JCPOA. A full overview of EU and U.S. sanctions relief can be found in Annex II of the JCPOA.

Objectives

The Regulations allow Canada to broadly align its SEMA sanctions against Iran with those of the majority of its like-minded countries including the EU member states. The amendments aim to contribute to international efforts by like-minded countries to recognize the steps taken under the JCPOA, while continuing to pressure its government to make additional reforms and restrict its access to sensitive goods.

Description

The Regulations

The Regulations will continue to authorize the Minister of Foreign Affairs to issue to any person in Canada, or any Canadian outside of Canada, a permit to carry out a specific activity or transaction restricted under the Iran SEMA Regulations, including the export to Iran of items listed under Schedule 2.

Finally, the language is updated throughout the Regulations to give effect to certain recommendations made by the Standing Joint Committee for the Scrutiny of Regulations, to clarify intent, and to ensure consistency across Canada’s economic sanctions regulations.

“One-for-One” Rule

The “One-for-One” Rule applies to this proposal, as there are minimal administrative costs to business, because of the reporting requirement. However, the administrative burden associated with the proposed Regulations is carved out from the “One-for-One” Rule, as they address unique, exceptional circumstances.

Small business lens

The small business lens does not apply to this proposal, as there are no costs (or insignificant costs) on small business, and small business would not be disproportionately affected.

Consultation

Foreign Affairs, Trade and Development Canada drafted the Regulations in consultation with the Department of Justice, the Department of National Defence, the Canadian Nuclear Safety Commission, and the Canadian Security Intelligence Service.

Rationale

The implementation of the JCPOA will help to ensure that Iran cannot build a nuclear weapon and that its nuclear program is exclusively for peaceful purposes. It will also reduce the risk of a destabilizing nuclear arms race in the region. However, Canada remains concerned about Iran’s nuclear ambitions and will continue to pay close attention to developments relating to Iran’s nuclear program, including Iran’s implementation of the measures agreed under the JCPOA and its respect for its international non-proliferation obligations.

The amendments to the Iran SEMA Regulations aim to reinforce international efforts to recognize the steps taken under the JCPOA, which have reduced the threat posed by Iran’s nuclear program, while continuing to pressure the government of Iran to make further reforms and restrict its access to sensitive goods. The amendments are consistent with the approaches taken by many of Canada’s like-minded partners.

Implementation, enforcement and service standards

Canada’s sanctions regulations are enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency. In accordance with section 8 of the Special Economic Measures Act (SEMA), every person who wilfully convenes the Iran Regulations under the SEMA is liable on summary conviction to a fine of not more than $25,000 or to imprisonment for a term of not more than five years.

Contact

Emmanuelle Lamoureux
Director
Gulf States Relations Division
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 343-203-3293
Email: Emmanuelle.Lamoureux@international.gc.ca