March 7, 2022

The Canadian government is responding to Russia’s invasion of Ukraine by dropping Russia's Most-Favoured-Nation Tariff (MFN) treatment and closing its ports to Russian ships, a move that will hurt the country's pockets.

According to Chrystia Freeland, Deputy Prime Minister and Minister of Finance, and the Honourable Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, Canada has issued the Most-Favoured-Nation Tariff Withdrawal Order (2022-1), removing Russia and Belarus’ MFN treatment, as announced on March 3.

The move will remove benefits that Canada offers World Trade Organization member countries, most notably low tariffs on goods.

The order will lead to the General Tariff for goods imported into Canada that originate from Russia or Belarus. Under the General Tariff, a tariff rate of 35% will now be applied to “virtually all” imports. Russia, North Korea and Belarus are the only three countries with that rate.

“The economic costs of the Kremlin’s barbaric war are already high, and they will continue to rise. Canada and our allies are united in our condemnation of President Putin and his war of aggression, and we are united in our support for the remarkable Ukrainians who are so bravely resisting his assault,” Freeland said.

Reuters found that Canada imported C$2.14 billion ($1.68 billion) worth of goods from Russia in 2021, with metals and minerals among the most valuable categories.

"This measure is in addition to the many punitive actions that Canada and its allies have already taken against Russia and Belarus as a result of the illegal and unprovoked invasion of Ukraine, including other trade restrictions under the Special Economic Measures Act," the Department of Finance Canada wrote in a press release.

The seafood industry has responded to Russia’s invasion, including Newfoundland, Canada, based Icewater Seafoods which became the first to cancel imports of seafood from Russia, as SeafoodNews reported.

President and CEO Alberto Wareham released a statement on Tuesday denouncing Russia’s attack on Ukraine.

“Like others around the world, we are following the invasion of Ukraine with deep concern and sadness,” said Wareham. “We are simultaneously heartbroken for Ukrainians and inspired by their courage. We are committed to doing our part to offer them unwavering support.”

Icewater Seafoods’ announcement was followed by Royal Greenland which announced it will stop trading with Russia.

Canada’s move to increase tariffs on Russia follows its March 1 announcement to ban crude oil imports and Russian-owned or registered ships and fishing vessels from Canadian ports and internal waters.

While Canada's Transport Minister Omar Alghabra told Reuters that the number of ships entering Canadian waters and ports is small, an impact will be felt as other countries make similar moves. That is exactly what occurred as the Biden Administration is reportedly set to make a similar move, per the Wall Street Journal and the U.K. already made a similar move.

The publication spoke to the executive director of the Port of Los Angeles Gene Seroka who believes an announcement is imminent.

"The ban on Russian ships from U.K. ports, and new economic sanctions against key Russian financial institutions including its central bank, in close coordination with our allies, will degrade Russia's economy and help make sure Putin loses," Foreign Secretary Liz Truss told the publication.

The U.S. port ban would come alongside the country’s ban on Russian aircraft from entering U.S. airspace, announced on March 2.

According to a statement from the U.S. Department of Transportation, the order prohibits all passenger, cargo and charter flights on "all aircraft owned, certified, operated, registered, chartered, leased, or controlled by, for, or for the benefit of, a person who is a citizen of Russia,” per npr.

Photo Credit: Borka Kiss / Shutterstock.com

Ryan Doyle
Urner Barry
1-732-240-5330
rdoyle@urnerbarry.com