BIS Implements Additional Sanctions Against Russia, Belarus, Crimea and Iran

On May 23, 2023, BIS published a Final Rule amending the Export Administration Regulations (“EAR”) to expand the current export controls and sanctions levied against Russia and Belarus, Crimea, and Iran in response to the ongoing aggression against Ukraine. The new controls took effect on May 19, 2023, and are intended to enhance and strengthen the effectiveness of the sanctions and to better align them with similar actions taken by U.S. allies and partners.  See 88 Federal Register 33422 (May 23, 2023). The new controls include the following—

• Over 1,000 industrial items classified as EAR99 (e.g., electronics, instruments, advanced fibers, etc.) will now require a license for export, reexport or in-country transfer to or within Russia and Belarus. These items are identified by their Harmonized Tariff (HTSUS) classifications and were added to Supplement No. 4 to Part 746 of the EAR. It should be noted that all items classified in HTSUS Chapters 84 (machinery and mechanical appliances), 85 (electrical machinery) and 90 (optical, photographic, measuring, medical and surgical instruments) are now captured in Supplement No. 4. The objective of these controls is to continue undermining the Russian and Belarusian industrial bases and their ability to continue to support Russia’s military aggression in Ukraine.
  
  
• Several chemicals, as well as certain equipment and consumable materials that are not produced in Russia, will now require a license for export, reexport or in-country transfer to or within Russia and Belarus. They were added to Supplement No. 6 to Part 746 of the EAR. These items are useful for Russia’s chemical and biological weapons production capabilities, as well as in Russia’s advanced production and development capabilities across a number of industries.
  
  
• Certain electrical parts and machinery significant for UAVs classified under HTSUS Subheading 8548.00, were added to Supplement No. 7 to Part 746 of the EAR and require a license for Iran, Russia and Belarus. The objective was to undermine Iran’s ability to support the Russian and Belarusian industrial bases and their ability to continue to support Russia’s military aggression in Ukraine.
  
  
• The Russia/Belarus Foreign Direct Product (“FDP”) Rule in Section 734.9(f) of the EAR was expanded to include Crimea. A license will be required to reexport, export from abroad or transfer (in-country) any foreign produced item subject to the EAR under this expanded FDP Rule to any destination; however, countries listed in Supplement No. 3 to Part 746 (i.e., countries that have implemented substantially similar export controls on Russia and Belarus) will be exempt from this license requirement.
  
  
• Under new Section 750.7(c)(1)(xi) of the EAR, BIS noted that the addition of the new HTSUS subheadings to Supplements No. 2, 4, 5, 6 and 7 will not trigger a replacement license requirement for reexporters provided that: (a) the end use of the existing BIS license is for the divesture of items within Russia or Belarus or their transfer within Russia or Belarus for the purposes of reexporting them from Russia or Belarus; (b) the new items were added to the supplements after the license was granted; (c) the license has not yet expired; and, (d) the export, reexport or in-country transfer of items covered by the newly added HTSUS subheadings will not exceed the shipping tolerance or the number of units authorized under the original BS license.
  
  
• For purposes of Sections 746.8 (Russia and Belarus Sanctions) and 746.10 (Luxury Goods Sanctions on Russia, Belarus, and Oligarchs), telecommunications hardware items classified in ECCN 5A991 were excluded from the EAR licensing requirements just like mass market hardware and software items in ECCNs 5A992 and 5D992. BIS noted that 5A991 items are utilized in end-uses and by end-users that are similar to those for 5A992/5D992 items.

Please contact Melissa Proctor (melissa@millerproctorlaw.com) should you have any questions about these recent amendments to the EAR, the current export controls and sanctions imposed on Russia and Belarus, and other international trade issues.