When the United States and other allies of Ukraine marked the one-year anniversary of Russia’s invasion by announcing a new wave of sanctions against Vladimir Putin’s regime, two Canadian companies were among 86 new entities targeted by the U.S. Department of Commerce for “a variety of reasons related to their activities in support of Russia’s defense-industrial sector and war effort.”
The Canada Border Services Agency has now revealed that these two companies were identified as part of a “global effort” that now includes U.S. officials being virtually embedded in Canada’s inspection system.
CPUNTO Inc. and Electronic Network Inc. were listed for “acting contrary to the national security or foreign policy interests of the United States.” They’re now subject to U.S. export restrictions, effectively cutting off their access to certain goods unless the companies obtain a specific licence from U.S. authorities.
The Commerce Department listing didn’t specify what these companies shipped or attempted to ship that caught American attention, making it unclear what kind of business they were engaged in to trigger this action.
Electronics wholesalers and distributors are under increasing global scrutiny. Certain components now in short supply, such as semiconductors, may not originally have been intended for defence industries but could now be re-purposed for military use.
U.S. officials have become increasingly serious about monitoring trade, including not only direct shipments in and out of the U.S. but goods that are “trans-shipped” — passing through one or more third-party countries on the way to their eventual destination.
Why didn’t Canada step in first?
While most of the entities added by the U.S. on Feb. 24 are from Russia, five are from China, and three were based in the European Union, as well as the two Canadian firms. The U.S. said “several” of the newly listed entities were subsidiaries of firms based in China and Russia.
The Commerce Department release said these listings were not an “action against the countries in which the entities are located or registered, or the governments of those countries.” But it raises the question of why, if Montreal companies are engaged in trade that raises security concerns, the Canadian government didn’t step in first.
CBC News asked the Canada Border Services Agency how it was made aware of this listing and why Canada hadn’t taken action of its own to shut down this trade.
Russian President Vladimir Putin has bragged that Western sanctions have failed to slow the economy, but experts say their impact is beginning to show and that the strain will become more obvious as the year progresses.
A week after the inquiry was first made, spokesperson Maria Ladouceur explained that the CBSA’s Counter Proliferation Operations Section now has officers from the U.S. Bureau of Industry and Security (BIS) virtually embedded alongside its front-line officers responsible for inspecting incoming and outgoing shipments.
She said Canadian officials work with partners on “a daily basis to identify efforts to ship restricted goods and technologies to Russia via third countries.”
In the year since the start of the war in Ukraine, CBSA officers have reviewed more than 500 shipments with a declared end destination of Russia, she said. Of those, several dozen have been referred for in-depth examinations, resulting in:
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Seven administrative monetary penalties levied against exporters.
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Eight shipments recommended for seizure.
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Three shipments being withdrawn.
Ladouceur did not specify if these two firms were involved in any of these enforcement actions. Canadian officers, she said, contributed to the “global effort” that led to the two Montreal-area electronics distributors being added to the U.S. sanctions list.
No additional information was offered as to what restricted shipments were identified or what information was shared in this joint process.
Alexander Yermukov, a director at CPUNTO Inc., told CBC News his firm takes this matter “very seriously, as we have always been acting in good faith without intention to defraud, deceive or in any way act maliciously.
“We intend to engage further to address the concerns but cannot comment on any specifics at this point,” Yermukov said.
A representative of the second firm, Electronic Networks Inc., was unwilling to speak to CBC News on the record.
Sanctions prohibit some electronics
Canada’s sanctions prohibit the export of any good that could be used for the manufacture of weapons to Russia and also prohibit the export of certain listed technologies such as electronics, computers, telecommunications systems, sensors and lasers, navigation and avionics.
On the one-year anniversary of the invasion, it added certain chemical elements for use in electronics to this list, but that move may have been mostly symbolic, as Canada hasn’t exported any of that type of goods to Russia since 2019.
Rosemary Barton Live speaks with Minister of Foreign Affairs Melanie Joly about new sanctions against Russia, and why Ottawa is urging allies to boost military aid to Ukraine in an effort to deter a Russian advance.
A year ago, Canada stopped issuing export permits for controlled (restricted) goods bound for Russia and cancelled all existing permits, a move Canadian officials touted as effectively shutting down some $700 million worth of trade.
James Emmanuel Wanki, a spokesperson for Global Affairs Canada, confirmed earlier last week that his department “is aware” these two companies were added to the U.S. sanctions regime against Russia.
