Canada is signalling its willingness to re-engage with Iran by lifting a broad ban on financial services, imports and exports, Foreign Affairs Minister Stéphane Dion announced today.

"We'll keep sanctions to be sure the proliferation or nuclear will not happen in Iran, the same for ballistic missiles," said Dion. "We'll engage with Iran, step-by-step, open eyes, because we still have a lot of concerns about the role of Iran in the region including for allies like Israel and also the record of Iran on human rights is very questionable to say the least.

"That's why we'll continue to champion a resolution in the United Nations to make sure the government oif Iran will respect human rights of the people of Iran," he said.

In a statement, Global Affairs Canada said it had amended its "broad-reaching autonomous sanctions against Iran to allow for a controlled economic re-engagement, including lifting the broad ban on financial services, imports and exports," and had also updated regulations to conform with recent changes to the United Nations sanctions regime.

The UN Security Council approved the lifting of sanctions last month after confirming that Iran had complied with promises it made under an international deal struck six months ago.

"I think it's good for Israel that Canada will be able to speak with Iran," Dion said. "It was a mistake to think that isolation is better than engagement. And engagement is not agreement.

"When you disagree with a regime you need to engage in a way that may give positive results. It has been the case when the United States and the other engaged with Iran in a very firm way," he added.

Step by step

Canada broke off ties with Iran in September, 2012, closing the embassy in Tehran citing concern for the safety of Canadian diplomats and staff. Iranian diplomats in Canada were expelled. Dion said today Canada is considering the restoration of diplomatic contacts.

"That will be done step-by-step, it cannot be done overnight," Dion said. "We need to engage with the country that we have a lot of suspicions about. So we'll do it step-by-step."

The statement, issued by Dion and International Trade Minister Chrystia Freeland, says: "Canadian companies will now be able to position themselves for new trade opportunities, but we will also maintain rigorous controls on any exports that raise serious proliferation concerns."

Speaking to reporters Dion said many areas of the Canadian economy stand to benefit in a renewed relationship with Iran.

"It's not only the aerospace industry, it's transport, it's agriculture, it's the petrochemical industry, it's the extraction industry, the oil and gas industry," Dion said. "They have a lot of expertise to sell to Iran and for them it is great news as long, of course, that [sensitive] products are not sent to Iran because some sanctions will remain"

Concerns remain

The government also says exporters have been told by the government that export permits will be considered on a case-by-case basis and permits for "sensitive items" on Canada's Export Control List "will normally be denied."

"Canada continues to have serious concerns regarding Iran's nuclear ambitions and will continue to maintain tight restrictions on exports to Iran of goods, services and technologies considered sensitive from a security perspective," including goods that could help Iran's nuclear or ballistic missile capabilities, the statement said.

Foreign affairs critic Tony Clement said Iran still sponsors terrorism and remains a threat to Israel.

"Conservatives remain skeptical over Iran's intentions," said Clement, who was in Halifax on Friday for the provincial Conservative party's annual general meeting.

"They continue to be a state sponsor of terror. They are supporting terrorist organizations like Hamas and Hezbollah, who are taking innocent lives in the region and around the world."

Restoring diplomatic relations with Iran sends the wrong message, he added.

"We want to judge Iran by their actions, not by their words. While it is important to reduce the nuclear threat, there are all these others threats that Iran is involved in that are antithetical to our interests as Canadians as well as people who want peace and non-violence in the world," he said.

NDP Foreign Affairs critic Hélène Laverdière echoed those concerns and stressed caution going forward but said that as Iran had complied with its responsibilities with respect to nuclear development, reopening a diplomatic relationship was "the right step for Canada to take."

"A little draw back is that it did take some time to act as our allies, and that might be to the detriment of some of our industries — Bombardier is an example," she said. "But generally I think it's a step in the right direction. And I think the overall process shows what can be achieved through diplomacy."