Canada’s trade with Russia plummeted in the first 10 months after the Russian army invaded Ukraine a year ago.
However, some sectors remain unaffected by the restrictions.
Industry Canada data shows that between March and December 2022, the value of total imports from Russia fell 78% to $414 million, compared to $1.9 billion in the same eight-month period. in 2021.
In November and December, Canadian imports from Russia were down 98% from the previous year. In the two months, the total value of imports from Russia was $9 million, compared to $433 million in the last two months of 2021.
The value of Canada’s exports to Russia between March and December fell 91%, from $584 million in 2021 to $52 million last year.
“The Canadian footprint in Russia has collapsed,” according to the observations of William Pellerin, an Ottawa-based commercial lawyer with McMillan LLP.
Federal data shows that Canada still imports a significant amount of tires, jet fuel and plywood, but only a handful of the top 25 products imported from Russia in 2021 and 2022 saw an increase.
This includes nickel ores, which Canada tends to process for export, as well as ammonium nitrate, mainly used in fertilizers. The value of imports from both more than doubled between the two years, although Canada did not import any after June 2022.
Lawyer Pellerin explains that the fertilizer data reflects the annual cycle of farmers’ purchases before the spring planting season. Purchases related to this year’s season will appear in later data.
Canada imposed a 35% tariff on Russian and Belarusian products in March, which is expected to bring in $115 million in revenue that Canada plans to transfer to Ukraine.
Canada is the only G7 country to include nitrogen fertilizer in its tariff regime, angering producers in Eastern Canada who say the measure unfairly drives up product costs at a time of high inflation.
About half a dozen products saw their exports increase in 2022 compared to 2021, but many of them saw most or all of the increase occur in January and February, before Canada imposed restrictions. penalties. For example, Canada exported $85 million worth of planes over 15,000 kilograms to Russia last year, all in February 2022.
William Pellerin’s clients include Canadian and international companies dealing with Russian sanctions, but not the Russians themselves. He argues that the drop in Canadian exports to Russia stems in part from a list of weapons-related products that Ottawa banned for export in May, many of which do not consist of real weapons.
The list includes motorcycles and surgical or veterinary furniture, including dentist’s or hairdressers’ chairs and other chairs with rotational, tilting and lifting movements.
The list also includes cranes, x-ray equipment and forklifts, as these items could be suitable for military use. Canadian companies can only export these items if they obtain a waiver.
“Canadian exports are being replaced by Chinese supplies,” argues lawyer Pellerin.
He notes that trade in services has also taken a hit, especially for companies assisting with mining operations in Canada and Russia, given the similar terrain of the two countries.
Mr. Pellerin also met companies based in Dubai or Europe that have significant trade with the Russians, and others in which the Russian oligarchs have partial control or ownership. “Not a week goes by without an oligarch sanctioned in a proposed business deal that we can no longer do.”
“What the average Canadian doesn’t see is all of the business that’s not being done with Russian parties because of Canadian sanctions and, frankly, all of the risk that that entails for international businesses. »
For example, Canadian companies might suddenly discover that they have been doing business for years with a Russian minority-owned company, making it unclear whether they need a waiver to proceed. Canadian companies request these exemptions arguing that the economic activity would not violate the spirit of the sanctions, and a cabinet minister approves the waivers.
William Pellerin argues that this makes the process “more political than independent or legal” and notes that there are very few details in the guidelines published online by Global Affairs Canada, compared to those provided by allied countries.
At the department, spokesperson Grantly Franklin explains that waivers “are assessed on a case-by-case basis and we have a rigorous due diligence process in place.”
William Pellerin says the team evaluating the sanctions “is doing everything they can and some exemptions take months to process”.
Over the past year, Canada has sanctioned more than 1,600 people in connection with Russia’s war in Ukraine. Yet the Government of Canada says it is unable to determine how many of its additional employees have been assigned to work on sanctions and exemptions.
“Hundreds of Global Affairs Canada employees can contribute to the sanctions effort at any time. For these reasons, it is not possible to specify the exact number of people working on sanctions at any given time,” according to Grantly Franklin.
In 2021, Russia was the 28e trading partner of Canada, falling last year to the 53e place.
Russia’s Ambassador to Canada, Oleg Stepanov, laments the decline in trade and in an interview this month with the state news agency RIA Novosti, he says “Ottawa’s hostile actions have significantly affected the dynamics of bilateral trade. We expect the negative trend to continue this year. »