Ban on Manufacturing Services to Russia

Summary#

The final rule titled Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-173) broadens Canada’s ban on certain services to Russia. It adds two kinds of manufacturing-related services and eight Russian industrial sectors to the list of activities that Canadians are prohibited from providing to Russia. The measure came into force when it was registered on July 14, 2022 and was published in the Canada Gazette on August 3, 2022.

What it does#

• Adds two services to the banned list in Schedule 8:
  • Services incidental to manufacturing (general goods).
  • Services incidental to the manufacture of metal products, machinery and equipment.
• Adds eight Russian industries to the list covered by the ban, including:
  • Manufacture of basic metals; fabricated metal products; computer, electronic and optical products; electrical equipment; machinery and equipment; motor vehicles; other transport equipment; and land transport and transport via pipelines.
• Allows a short wind-down for existing contracts:
  • Providers with contracts entered into before the rule came into force have 60 days to wrap up certain services to those newly covered industries.
• Enforcement and penalties:
  • The rule is enforced by the Royal Canadian Mounted Police and the Canada Border Services Agency.
  • Penalties include fines up to $25,000 or imprisonment up to one year on summary conviction, and imprisonment up to five years on indictment.

Who's affected#

• Canadian companies and individuals who provide manufacturing-related services to Russian clients. That includes engineering, maintenance, testing, installation, and other support services tied to manufacturing activities.
• Suppliers and contractors who have or were negotiating contracts with Russian firms in the newly listed industries.
• Small businesses that export services to Russia may face extra paperwork or permit needs; the government estimated total exports of these kinds of services to Russia at about Can$121 million in 2018, but the exact impact from these specific additions is unclear.
• The measure is part of coordinated action with allies such as the U.S., U.K., EU, Australia, and Japan.

Why it matters#

• This change tightens Canada’s economic pressure on Russia by cutting off more service links to key manufacturing and transport sectors.
• For Canadian businesses, it can mean cancelled or blocked work, tighter export controls, and the need to check whether existing contracts must stop or be winded down within 60 days.
• For the public, it signals Canada’s continued response to Russia’s actions in Ukraine and its alignment with international partners.
• Non‑compliance can lead to criminal penalties and seizures enforced by Canadian authorities.