Industry News

Commerce Department Expands Russian/Belarusian Export Controls

Apr. 12, 2022

On April 8, 2022, the US Department of Commerce released a Final Rule, set to be published in the Federal Register on April 14, 2022, that will once again expand export controls targeting Russia and Belarus. This move follows a series export control expansions in the wake of Russia’s invasion of Ukraine.

This new rule expands the license requirement found in 15 CFR 746.8(a)(1) to now include all items subject to the EAR and designated anywhere on the Commerce Control List (CCL). With this expansion all non-EAR99 items will now require a BIS export license when destined for Russia or Belarus. This new requirement follows a February 24, 2022, move in which the agency imposed a license requirement on Russia covering all items subject to the EAR and designated anywhere in Categories 3 through 9 of the CCL. BIS later extended these new license requirements to include all such items when destined for Belarus.

The expansion of 15 CFR 746.8(a)(1) to include categories 0 through 2 of the CCL broadly relates to materials and equipment related to nuclear, chemical, and materials processing, ultimately capturing items such as medical products containing certain toxins or genetically modified organisms, hydraulic fluids, valves, pumps, and various machine tools. While several license exceptions remain potentially viable when looking to overcome a license requirement created under this rule, the vast majority of non-EAR99 items subject to the EAR will now require a Bureau of Industry and Security (BIS) license prior to export. A key carveout related to the export, reexport, or transfer of 5A992 and 5D992 items destined for certain US subsidiaries, as well as subsidiaries of companies headquartered in countries from Country Group A:5 and A:6 in supplement no. 1 to part 740 of the EAR remains in place.

Next, this rule revises the Russia/Belarus foreign direct product rule (FDP rule) found in 15 CFR 746.8(a)(2). Under this expansion, non-EAR99 foreign-produced items that are the direct product of items captured under Categories 0 through 9 of the CCL will now be subject to the EAR when destined for Russia or Belarus, or when they will be incorporated into or used in the production or development of any non-EAR99 item destined for Russia or Belarus. Previously, this rule applied only to items that were the direct product of items captured under Categories 3 through 9 of the CCL.

Finally, this rule limits the availability of two paragraphs of license exception “Aircraft, vessels and spacecraft” (AVS) for certain Belarus-related aircraft. As revised, paragraphs (a) and (b) of License Exception AVS, found in 15 CFR 740.15 are no longer available for aircraft registered in, owned or controlled by, or under charter or lease by Belarus or Russia, or by a Belarusian or Russian national.

As we have seen in recent weeks, the Biden administration continues to view export controls as a key diplomatic tool as it attempts to combat ongoing Russian aggression in Ukraine. While this move is the latest in an increasingly long list of regulatory changes, it will likely not be the last. If you have questions concerning Russia related export controls or sanctions do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.