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As the United States and other allies of Ukraine marked the one-year anniversary of the Russian invasion by announcing a new wave of sanctions against the regime of Vladimir Putin, two Canadian companies were among 86 new entities targeted by the US Department of Commerce for “various reasons related to the activities to support Russia’s defense-industrial sector and war effort.
The Canadian Border Services Agency has now announced that the two companies were identified as part of a “global effort” that now includes US officials almost embedded in Canada’s inspection system.
CPUNTO Inc. and Electronic Network Inc. listed for “acts contrary to the national security or foreign policy interests of the United States.” They are now subject to US export restrictions, effectively cutting off access to certain goods unless the company obtains a special license from US authorities.
The Commerce Department’s list doesn’t specify what the companies sent or tried to do that drew America’s attention, so it’s unclear what business they were doing to trigger the action.
Electronics wholesalers and distributors are increasingly under global scrutiny. Certain components that are currently in short supply, such as semiconductors, may not be suitable for the defense industry but can now be reused for military use.
U.S. officials are increasingly serious about monitoring trade, including not only direct shipments to and from the U.S., but goods that are “in transit” — passing through one or more third-party countries on the way to their destination.
Why didn’t Canada get in first?
While most of the entities the US added on February 24 are from Russia, five are from China, and three are based in the European Union, as well as two Canadian companies. The US said “some” of the newly listed entities are subsidiaries of companies based in China and Russia.
A Commerce Department release said the list is not “action against the countries in which the entity is located or registered, or the government of those countries.” But it raises the question of why, if a Montreal company is involved in a trade that causes security problems, the Canadian government didn’t stop it first.
CBC News asked the Canada Border Services Agency how it knew about this list and why Canada isn’t taking action on its own to shut down this trade.
Russian President Vladimir Putin has boasted that Western sanctions have failed to slow the economy, but experts say the impact is starting to show and the strain will become more apparent as the year goes on.
A week after the first inquiry was made, spokeswoman Maria Ladouceur explained that the CBSA’s Counter-Proliferation Operations Section now has officers from the US Bureau of Industry and Security (BIS) almost deployed along with front-line officers responsible for checking incoming and outgoing shipments.
He said Canadian officials are working with their partners “on a daily basis to identify attempts to send restricted goods and technology to Russia through third countries.”
In the year since the war in Ukraine, CBSA officers have examined more than 500 shipments with a declared final destination in Russia, he said. Of these, several dozen have been referred for in-depth examination, resulting in:
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Seven administrative monetary penalties were imposed on exporters.
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Eight shipments are recommended for confiscation.
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Three submissions were withdrawn.
Ladouceur did not specify whether the two companies were involved in the enforcement action. Canadian officials, he said, contributed to a “global effort” that led to two Montreal-area electronics distributors being added to the US sanctions list.
No additional information is offered about the limited shipments identified or what information is shared in this merger process.
Alexander Yermukov, a director at CPUNTO Inc., told CBC News that his company takes this matter “very seriously, because we always act in good faith with no intention of lying, deceiving or doing bad things.
“We intend to engage more to solve the problem but we cannot comment on the specifics at this time,” Yermukov said.
A representative from the second company, Electronic Networks Inc., declined to speak to CBC News about the recording.
Sanctions ban some electronics
The Canadian sanctions prohibit the export of any items that can be used to make weapons to Russia and also prohibit the export of certain technologies such as electronics, computers, telecommunications systems, sensors and lasers, navigation and avionics.
On the anniversary of the invasion, it added certain chemical elements used in electronics to this list, but the move may be symbolic, as Canada has not exported these items to Russia since 2019.
Rosemary Barton Live spoke with Foreign Minister Melanie Joly about the new sanctions on Russia, and why Ottawa is asking allies to boost military aid to Ukraine in an effort to stop Russian advances.
A year ago, Canada stopped issuing export permits for controlled (restricted) goods to Russia and revoked all existing permits, a move Canadian officials said effectively shut down $700 million in trade.
James Emmanuel Wanki, a spokesman for Global Affairs Canada, confirmed earlier last week that the department was “aware” of the two companies being added to the US sanctions regime against Russia.
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