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Where Russia-Canada trade relations stand as Ukraine is attacked

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As Russia launches an invasion into Ukraine, Canada has responded by imposing more sanctions on Moscow that target oligarchs, Russian banks and export permits.

Canadian sanctions against Russia have been in force since 2014 when Russia forcibly annexed Ukraine鈥檚 Crimean Peninsula. But despite these sanctions, trade between Canada and Russia has continued.

In 2020, Canada received more than $1 billion in imports from Russia and delivered more than $600 million in exports, according to data from the International Trade Centre.

The shows Canada鈥檚 exports to Russia in 2020 totalled $617 million, a third of which included nuclear reactors, machinery, mechanical appliances, and boilers. Other significant exports were helicopters and airplanes, spacecraft, and agricultural machinery.

 

Canada鈥檚 total value of imports from Russia, meanwhile, was $1.19 billion in 2020, nearly a quarter of which consisted of mineral fuels and oils and waxes. Canada also gets 10 per cent of its fertilizer imports from Russia.

Taken into context, the value of Canada鈥檚 exports to Russia was relatively small 鈥 0.11 per cent of its exports around the world. Even the top exported products 鈥 machinery, mechanical appliances, and nuclear reactors 鈥 make up less than one per cent of Canada鈥檚 total export value of those products.

The $1 billion in imports was also a relatively small fraction of Canada鈥檚 total import value of approximately $541.7 billion.

鈥淥f all the rich countries that could impose sanctions, Canada has the least to lose,鈥 Mark Manger, associate professor of political economy and global affairs at the Munk School, told CTVNews.ca in a phone interview prior to Russia's attack. 鈥淏asically, anything that Russia exports, Canada exports as well, just to different partners.鈥

Manger, who鈥檚 also director of the Global Economic Policy Lab, said Canada could theoretically supplant Russia in world markets. 鈥淚f sanctions are imposed on Russia, the price of virtually everything that Canada exports goes up,鈥 he said.

Meanwhile, the ongoing tensions could impact oil prices. Last week, that the U.S. was in talks with several international energy companies on contingency plans for supplying natural gas to Europe, should the conflict deepen.

Manger said that the crisis could lead to fewer investments from the West, potentially redirecting those exports to China. He said by Europe have not done much when it comes to trade because the export of natural resources from Russia to Europe has only increased since 2014, partly due to transitions towards a low carbon footprint. He said Germany has switched off most of its nuclear power stations and replaced that energy generation capacity with gas (mostly) and a little bit renewables.

The European Union is highly dependent on Russia for . Among the EU Member States, Germany was both the from and the largest exporter of goods to Russia in 2020. With ongoing tensions, this supply could get disrupted.

With some Western nations pulling diplomats from Ukraine and the North Atlantic Treaty Organization (NATO) putting troops on standby, the Russia-Ukraine crisis is slowly intensifying.

Canada鈥檚 sanctions on Russia in 2014 and the collapse of the rouble

In 2014, Canada imposed after Russia forcibly annexed Ukraine鈥檚 Crimean Peninsula in the same year. The was the first since the Second World War that a European state seized the territory of another. The conflict led to more than 14,000 deaths, the bloodiest in Europe since the Balkan War of the 1990s.

Canada was the to recognize Ukraine鈥檚 independence and has had close bilateral relationships since. The two countries entered an important milestone through a bilateral trade deal, the (CUFTA) that came into force in August 2017. According to, in 2020, Canada鈥檚 export value to Ukraine was $161 million, and imports valued at $144 million.

In 2014, Canada restricted export and import from and to Russia, along with other sanctions such as asset freeze and financial prohibitions under the in order to respond to the gravity of Russia鈥檚 violation.

After the Special Economic Measures Act came into force on March 17, 2014, a series of amendments were made to it. Since 2014, Canada has sanctioned more than , mostly in coordination with its allies such as the . The regulations imposed restrictions on sectors such as finance and energy.

Between 2014 and 2018, the U.S. and European Union which included trade suspension, export and import restrictions, and restrictions on the export of various oil and gas technologies to Russia. Since 2014, Russia remains to have faced sanctions of such magnitude. The series of such international sanctions and declining oil prices at the time led to the collapse of the and eventually, the Russian financial crisis. Following the annexation of Crimea in 2014, Russia was also suspended indefinitely from G8, (now known as G7) a group of advanced democracies for coordination of economic policies and transnational issues.

The escalating tensions has led to more sanctions by Canada.

Canada's "first round" of economic sanctions against Moscow came on Feb. 22, when it became clear that a Russian invasion was imminent. The sanctions affect two state-backed Russian banks and ban Canadians from purchasing Russian sovereign debt.

Another round of sanctions came just after Russia launched its attack on Ukraine. Trudeau announced that Canada's sanctions would target members of the Russian elite and their family members, major Russian banks as well as the Wagner Group, a Russian paramilitary organization.

The sanctions also target members of the Russian Security Council, including the defence minister, the finance minister and the justice minister. In addition Canada will no longer issuing new export permits for Russia and will also cancel existing permits.

Canada鈥檚 active partnerships with Russia

Despite the trade sanctions in place, the (TCS) in Russia continues to operate. Currently, Canada has in force, which includes Canada-Russian Federation Foreign Investment Promotion and Protection Agreement.

Manger said ongoing tensions have little impact on multilateral partnerships since Canada will work in tandem with other member countries. Both Canada and Russia are working with other countries to address global challenges such as Arctic Council, Asia- Pacific Economic Cooperation (APEC), G20, and International Civil Aviation Organization (ICAO), Organization for Security and Co-operation in Europe (OSCE), United Nations (UN), United Nations Educational, Scientific and Cultural Organization (UNESCO) and World Trade Organization (WTO).


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