Canada’s trade with Russia plummeted in the first 10 months after Moscow’s invasion of Ukraine a year ago, with Ottawa’s economic measures barring the export of everything from forklifts to barbers’ chairs.
Yet certain sectors have emerged largely unscathed by the restrictions, as businesses grapple with a constantly expanding list of restrictions and sanctions.
Industry Canada data show that between March and December 2022, the value of total imports from Russia plunged 78 per cent to $414 million, from $1.9 billion during the same 10-month period in 2021.
By November and December, Canadian imports from Russia had fallen 98 per cent compared to the year before. Over both months, the total value of imports from Russia was $9 million, compared to $433 million in the last two months of 2021.
The value of exports from Canada to Russia between March and December fell 91 per cent, dropping to $52 million in 2022 from $584 million in 2021.
“The Canadian footprint in Russia has collapsed,” said William Pellerin, an Ottawa-based trade lawyer with the firm McMillan LLP.
Federal data show Canada is still importing a significant amount of pneumatic tires, aviation turbine fuel and plywood. But only a handful of the top 25 products imported from Russia in both 2021 and 2022 saw an increase.
That includes nickel ores, which Canada tends to process for export, as well as ammonium nitrate, mostly used in fertilizer. The imports of both more than doubled in value between the two years, though Canada didn’t import either product after June 2022.
Pellerin said the fertilizer data reflect the annual cycle of farmers making purchases ahead of the spring sowing season. The purchases related to this year’s season will show up in later data, he said.
Ottawa imposed a 35 per cent tariff on Russian and Belarusian products in March, which it expects will yield $115 million in revenue that Canada plans to transfer to Ukraine.
The Liberals have said they accept that tariffs and restrictions have an impact on Canada’s economy, but they argue it’s worth taking a stance in support of international rules.
Canada is the only G7 country to include nitrogen fertilizer in its tariff regime, to the ire of eastern Canadian growers, who say it unfairly drives up the cost of products at a time of high inflation.
About half a dozen products saw an increase in exports in 2022 versus 2021, but many of them saw most or all of that occur in January and February, before Canada imposed sanctions. For example, Canada exported $85 million in aircraft over 15,000 kg to Russia last year, all of it in February 2022.
As part of the firm’s complex regulatory solutions group, Pellerin said his clients include Canadian and international firms navigating sanctions on Russia, but not Russian themselves.
He said the drop in Canadian exports to Russia partially stem from a list of weapons-related goods that Ottawa banned for export in May, many of which don’t consist of actual weaponry.
The list includes motorcycles and surgical or veterinary furniture including “dentists’ chairs” as well as “barbers’ chairs and similar chairs, having rotating as well as both reclining and elevating movements.”
The list also includes cranes, X-ray equipment and forklift trucks, because such goods might be appropriated for military use. Canadian companies can only export these items if they secure a waiver.
“We’re displacing Canadian exports, and they’re being replaced by Chinese supply,” Pellerin argued.
He noted that trade in services have also taken a major hit, in particular for companies that help with mining operations in Canada and Russia, given their similar terrain.
Pellerin has also come across companies based in Dubai or Europe that have significant exchanges with Russians, and others in which Russian oligarchs have partial control or ownership.
“Not a week that goes by that we don’t kick up a rock and there is a sanctioned oligarch in some proposed business dealing that we can no longer do,” he said.
“What the average Canadian does not see is all the business that doesn’t get done with Russian parties as a result of Canadian sanctions — and frankly all the risk that is being borne by international businesses as a result.”
For example, Canadian companies might suddenly discover that they’ve been doing business for years with a firm that has minority Russian ownership, making it unclear whether they need a waiver to continue.
Canadian companies apply for these exemptions by making the case that the economic activity would not violate the intent of sanctions, and a cabinet minister signs off on the waivers.
Pellerin argues this makes the process “more political than is truly independent or legal” and notes there is very limited detail in the guidance Global Affairs Canada posts online, compared to that provided by allied countries.
The department gave no indication it would improve the level of detail it provides, with spokesman Grantly Franklin saying in an email that the waivers “are evaluated on a case-by-case basis, and we have a rigorous due diligence process in place.”
Pellerin said the sanctions team is “doing everything that they can on a shoestring operation,” with some exemptions taking months to process.
In the past year, Canada has sanctioned more than 1,600 people in relation with Russia’s war in Ukraine. Yet the government says it cannot determine how many more of its employees have been assigned to work on sanctions and exemptions.
“Hundreds of Global Affairs Canada employees may be contributing to the sanctions effort at any given time. For these reasons, it is not possible to specify the exact number of people working on sanctions at any given time,” Franklin wrote.
In 2021, Russia stood as Canada’s 28th most valuable trading partner, falling last year all the way to 53rd place.
Russia’s ambassador in Ottawa, Oleg Stepanov, lamented the drop in trade in an interview this month with state news agency RIA Novosti.
“Ottawa’s unfriendly actions have significantly affected the dynamics of bilateral trade,” he said in a Russian-language interview.
“We predict that the negative trend will continue this year.”
This report by The Canadian Press was first published Feb. 23, 2023.
This is a corrected story. An earlier version stated the time frame used to calculate post-sanction trade data was eight months.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
