Industry News

Commerce Dept Takes Aim at "Luxury Goods" Destined for Russia and Belarus

Mar. 22, 2022


On March 11, 2022, the Bureau of Industry and Security (BIS) expanded export controls under the Export Administration Regulations (EAR), taking aim this time at “luxury goods” destined for Russia and Belarus. This move follows a series of export control expansions aimed at Russia and Belarus following the Russian invasion of Ukraine. While at first glance the scope of this expansion may seem to be somewhat limited, the term luxury goods applies to far more than Rolexes and yachts and may ultimately have a larger impact on exports than many initially expected.

Under these new controls, a license is required to export, reexport, or transfer (in-country) luxury items, as identified in Supplement No. 5 to Part 746 of the EAR, to or within Russia or Belarus. It should be noted that this restriction applies only to luxury goods subject to the EAR, as defined in 15 CFR 734.3. The list of luxury goods is based on Harmonized Tariff Schedule Numbers (HTS) and is extensive, covering items such as alcohol, passenger vehicles, and camping goods. For any such luxury item destined for Russia or Belarus, a BIS export license will now be required prior to export, with all such license applications reviewed under a general policy of denial. It should be noted that this requirement applies to all luxury items subject to the EAR, including items designated EAR99.

Under the new rule a license is also required to export, reexport, or transfer (in-country) luxury goods to named Russian and Belarusian oligarchs and malign actors regardless of location. This control applies if such individuals are designated on the Office of Foreign Assets Control (OFAC) List of Specially Designated Nationals and Blocked Persons (SDN List) with any relevant OFAC Russia or Ukraine designation. See 15 CFR 746.10(a)(2) for a list of applicable designations.

The move to target luxury goods seems to be yet another clear indication that aiming sanctions and export controls at Russian and Belarusian oligarchs, as well as their families and close associates, is viewed by the Biden administration as a potentially effective path forward as the US seeks to impose economic pressure on the Russian Federation. Notably, this expansion of export controls was imposed soon after US Attorney General Merrick Garland announced the US Department of Justice was launching Taskforce KleptoCapture, designed to identify and seize the assets of listed oligarchs.

If you have questions regarding the expansion of EAR licensing requirements to cover Luxury goods destined for Russia or Belarus, or any recently imposed Russia sanctions and/or export controls, do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.