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January 26, 2024

U.S. Department of Commerce Bureau of Industry and Security Implements Additional Sanctions Against Russia, Belarus, and Iran

Advisory

On January 23, the United States implemented additional sanctions measures and trade restrictions on Russia and Belarus in response to Russia’s ongoing war in Ukraine. The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) bolstered its existing restrictions under the Export Administration Regulations (EAR) against Russia, Belarus, and Iran by (1) expanding the scope of the EAR’s Russian and Belarusian Industry Sector Sanctions; (2) modifying the licensing requirements that apply to the occupied Crimea region of Ukraine; (3) revising recent restrictions targeting Iran’s supply of Unmanned Aerial Vehicles (UAV) to Russia; and (4) refining certain existing export controls on Russia and Belarus.

Overview of New Export Controls

This new rule strengthens and enhances current export control measures targeting Russia, Belarus, the occupied Crimea region of Ukraine, and Iran’s supply of UAV to Russia. The new export control measures include:

  • Expansion of Russian and Belarusian Industry Sector Sanctions: BIS added 94 additional Harmonized Tariff Schedule (HTS)-6 Code entries to Supplement No. 4 to Part 746 (Russian and Belarussian Industry Sector Sanctions). As a result, these items now require a license for export, reexport, or transfer to or within Russia or Belarus. These newly added items include a variety of industrial materials, items needed for manufacturing, and certain aircraft-related items. Several examples include spanners and wrenches, hand operated, non-adjustable, and parts thereof, of base metal (820411), hand tools not elsewhere specified or indicated, and parts thereof, of base metal (820559), parachutes (including dirigible parachutes and paragliders) (880400), ground flying trainers and parts thereof (880529), parts of airplanes or helicopters, not elsewhere specified or indicated (880730).
  • Expansion of Items That Require a License When Destined to Iran, Russia, or Belarus: BIS expanded the list of items requiring a license by adding one additional HTS-6 Code entry (852910) to Supplement No. 7 to Part 746, which is aimed at curbing Iran’s ongoing support of Russia’s military capabilities. The items within this entry include a variety of antennas, antenna reflectors, and related parts.
  • Prohibiting the Use of De Minimis for .y "600 Series" and 9x515 Items for Belarus and Russia: This rule expands the scope of the paragraph (a)(6)(ii) of the de minimis rule to specifically include Belarus and Russia. As a result, foreign-made items that incorporate U.S.-origin "600 series" .y items or 9x515 items are subject to the EAR and trigger a license requirement when destined to Russia or Belarus.

Overview of Corrections and Clarifications to Existing Export Controls

Additionally, this rule makes corrections and clarifications with respect to certain Russia and Belarus-related provisions of the EAR. These corrections and clarifications include:

  • Addition of Exclusion From License Requirements for Deployments by the Armed Forces of Ukraine to or Within the Temporarily Occupied Crimea Region of Ukraine and Covered Regions of Ukraine: This rule added an exclusion to the license requirements under Section 746.6 for exports, reexports, and transfers (in-country) to or within the temporarily occupied Crimea region of Ukraine and covered regions of Ukraine (currently Donetsk and Luhansk) related to deployments made by the Ukrainian Armed Forces to allow more efficient and effective operations of the Ukrainian Armed Forces (AFU or ZSU) in the region.
  • Clarification That De Minimis Exclusion for Exports/Reexports From Certain Partner Countries Also Apply to Luxury Goods Sanctions: BIS clarified the exclusion to the de minimis rule available to certain partner countries that have committed to imposing similar export control measures is also available for the Luxury Goods Sanctions under § 746.10 of the EAR.
  • Clarification Regarding Order of Precedence for Items Identified in Russian and Belarusian Industry Sector Sanctions or Luxury Goods Sanctions and Classified Under Commerce Control List: The rule revises the introductory texts of Sections 746.5 (Russian and Belarussian Industry Sector Sanctions), 746.8 (Sanctions Against Russia and Belarus), and 746.10 (Luxury Goods Sanctions) to clarify how exporters should treat controlled items destined to Belarus or Russia across multiple sections of the EAR.
  • Clarification Regarding the Exclusion of Fasteners From the Scope of Supplement Nos. 2, 4, 5, and 7: BIS clarified that, although fasteners (e.g., screws, bolts, nuts, nut plates, studs, inserts, clips, rivets, pins, washers, spacers, insulators, grommets, bushing, springs, wires, and solders) are excluded from the scope of Supplement Nos. 2, 4, and 5, an exporter, reexporter, or transferor must review Part 744 for the license requirements for Russia and Belarus that extend to all items subject to the EAR.
  • Harmonization of License Exceptions: BIS revised Sections 746.5 (Russian and Belarussian Industry Sector Sanctions), 746.8 (Sanctions Against Russia and Belarus), and 746.10 (Luxury Goods Sanctions) to harmonize the license exceptions available for these Russia/Belarus-related export controls. Prior to the amendment, different sets of license exceptions applied to each of the three sections, causing some confusion. (See below for the License Exceptions table for §§ 746.5, 746.8, 746.10.)
  • Clarification That “Medicines” Are Excluded From the Scope of Supplement No. 6 to Part 746: BIS clarified that Supplement No. 6 to Part 746 (Russian and Belarussian Industry Sector Sanctions) does not include any item meeting the definition of "medicine." According to the EAR, “medicines” means a “drug” as defined in section 201 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321). For purposes of the EAR, this includes EAR99 prescription and over-the-counter medicines for humans and animals. Certain medicines, such as immunotoxins and vaccines on the CCL, are not affected by this change.
  • Adopting Case-by-Case License Review Policy for Applications Related to Safety of Flight Under §§ 746.5 and 746.10 to Conform With § 746.8: BIS revised its case-by-case license review policy in §§ 746.5 and 746.10 to include applications related to safety of flight because certain EAR99 items related to safety of flight are identified in Supplement Nos. 4 and 5. License applications for these items should be reviewed consistently with the policy outlined in § 746.8. BIS stated both BIS and other license reviewing agencies use a narrow and restrictive interpretation of what items qualify as "related to safety of flight." These items pertain to items without which an aircraft would be unable to safely operate. BIS does not intend this category to apply to aircraft in "production," but rather only those aircraft that require safety-critical items in an emergency.
  • Modification to Restrictions on the Temporary Import of Firearms From Ukraine: U.S.-origin firearms originally provided to Ukraine pursuant to a BIS license may be temporarily imported pursuant to the EAR for repair or replacement under License Exception RPL (15 CFR 740.10(b)(4)(i)) for return to Ukraine for use in its defense against Russia since such activity is consistent with U.S. foreign policy and the EAR. BIS will update its “Exports of Firearms and Related Items FAQs” on its website in connection with this policy.

Conclusion

These newly implemented sanctions against Russia and Belarus seek to further hamper Russia's war of aggression against Ukraine. Additionally, these expanded controls seek to target Belarus’ complicity and Iran’s continued support of Russia. We will continue to monitor the sanctions and export control restrictions as they emerge.

License Exceptions Table

License Exception § 746.5  § 746.8  § 746.10
License Exception temporary exports and reexports (TMP) for items for use by the news media as set forth in § 740.9(a)(9) of the EAR  Eligibility added  Available  Eligibility added
License Exception governments and international organizations (GOV) (§ 740.11(b))  Available  Available  Eligibility added
License Exception software updates (TSU) for software updates for civil end-users that are wholly-owned U.S. subsidiaries, branches, or sales offices, foreign subsidiaries, branches, or sales offices of U.S. companies that are joint ventures with other U.S. and companies, joint ventures of U.S. companies with companies headquartered in countries from Country Group A:5 and A:6 in supplement no. 1 to part 740 of the EAR countries, the wholly-owned subsidiaries, branches, or sales offices of companies headquartered in countries from Country Group A:5 and A:6 in supplement no. 1 to part 740, or joint ventures of companies headquartered in Country Group A:5 and A:6 with other companies headquartered in Country Groups A:5 and A:6 (§ 740.13(c) of the EAR)  Eligibility added  Available  Eligibility added
License Exception baggage (BAG), excluding firearms and ammunition (§ 740.14, excluding paragraph (e), of the EAR)  Eligibility added  Available  Available
License Exception aircraft, vessels, and spacecraft (AVS), excluding any aircraft registered in, owned or controlled by, or under charter or lease by Russia or Belarus or a national of Russia or Belarus (§ 740.15(a) and (b) of the EAR)   Available  Available

Eligibility added.

Note: A narrower subset of License Exception AVS was previously referenced, but for conformity with the other two sections this rule adopts the same License Exception AVS eligibility.

License Exception encryption commodities, software, and technology (ENC) for civil end users that are wholly-owned U.S. subsidiaries, branches, or sales offices, foreign subsidiaries, branches, or sales offices of U.S. companies that are joint ventures with other U.S. companies, joint ventures of U.S. companies with companies headquartered in countries from Country Group A:5 and A:6 in supplement no. 1 to part 740 of the EAR countries, the wholly-owned subsidiaries, branches, or sales offices of companies headquartered in countries from Country Group A:5 and A:6 in supplement no. 1 to part 740, or joint ventures of companies headquartered in Country Group A:5 and A:6 with other companies headquartered in Country Groups A:5 and A:6 (§§ 740.13(c) and 740.17 of the EAR)  Eligibility added  Available  Eligibility added
 License Exception commodities and software authorized under License Exception consumer communications devices (CCD) (§ 740.19 of the EAR)  Available  Available  Available

 

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.