U.S. Moves To Further Restrict Exports To Russia, Belarus And Diverting Countries

• Published date: 22 March 2023
• Subject Matter: International Law, Export Controls & Trade & Investment Sanctions
• Law Firm: Barnes, Richardson & Colburn
• Author: Marvin E. McPherson

Last week, U.S. Department of Commerce's Bureau of Industry and Security (BIS) moved to further restrict exports to Russia and diverting countries, and in a first, BIS, the Department of the Treasury's Office of Foreign Asset Control (OFAC), and the Department of Justice (DOJ) collectively gave warning to the private sector on areas of enforcement and provide guidance on compliance with U.S. sanctions and export laws.

BIS published a new rule restricting the movement of dual use items to Russia, Belarus and intermediate countries, expanded the definition of "luxury goods" and amended supplement No. 2 to Part 746 to include "components," "parts," "accessories," and "attachments" to items currently listed as prohibited from export without a license. These new restrictions are set out to further restrict items from reaching Russia and intermediate countries for use in the ongoing aggression against Ukraine.

BIS expanded the scope of the "Luxury Goods" by adding additional items to supplement no. 5 to part 746 that will require a license under '?746.10. The changes in "Luxury Goods" adds 276 additional entries that will require a license for export or reexport to or transfers within Russia or Belarus and for designated Russian and Belarusian oligarchs and malign actors worldwide under '?746.10(a)(1) and (2). A full list of "Luxury Goods" can be found here. Additionally, the BIS document amends 746.10(a)(1) to add the exclusions for items classified in 5A992 and 5D992 to ensure that the luxury goods license requirements do not undermine the policy behind those exclusions. The luxury goods license requirements, therefore, should not impose a separate license requirement that was excluded by ' 746.8.

Further, BIS amends supplement no. 2 to part 746 to remove references to Schedule B numbers and Schedule B descriptions and replaces them with references to the applicable HTS-6 codes and HTS descriptions. The additions to supplement no. 4 to part 746 adds 322 additional HTS-6 Code entries corresponding to 322 industrial items that will require a license for export or reexport to or transfer within Russia or Belarus under '?746.5(a)(1)(ii).

Additionally, BIS expands the scope of the items...