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More Export Controls and Higher Customs Duties on Russia & Belarus

On Friday, April 8, 2022, the US Government added two more weapons to its artillery of actions against Russia and Belarus.

  1. Export license requirement expanded to all items on the Commerce Control List. In a final rule to be published on April 14, 2022, the US Department of Commerce, Bureau of Industry and Security (BIS):

a. expanded the licensing requirement for items to Russia and Belarus to all items with Export Control Classification Numbers (ECCNs) on the Commerce Control List (CCL). This adds a licensing requirement for exports, reexports and transfers (in-country) of items subject to the Export Administration Regulations (EAR) that fall under ECCNs beginning with 0 (Category 0 - Nuclear Materials, Facilities, and Equipment [and Miscellaneous Items]), 1 (Category 1 - Special Materials and Related Equipment, Chemicals, “Microorganisms,” and “Toxins”) and 2 (Category 2 - Materials Processing). EAR99 items still do not require a license for export, reexport, or transfer (in-country) to or within Russia and Belarus – provided they are not to a prohibited end-user (e.g., Entity List entities, Military End Users, etc.) or for a prohibited end-use (e.g., military end use). BIS previously imposed a license requirement on Categories 3-9.

b. expanded the Russia/Belarus Foreign Direct Product Rule (FDPR) to apply where the foreign-produced item is the direct product of US-origin technology or software subject to the EAR that falls in any ECCN in product groups D (Software) or E (Technology) on the CCL or produced by a plant or major component of a plant that is itself a direct product of such software or technology subject to the EAR and falling on the CCL. Previously, the Russia/Belarus FDPR was limited to Categories 3-9.  

c. narrowed license exception Aircraft, Vessels, Spacecraft (AVS) to exclude aircraft registered in, owned or controlled by, or under charter or lease by Belarus or a national of Belarus (in addition to Russia).

While the rule went into effect on April 8, 2022, the day it was filed for public inspection, the rule includes a savings clause that allows entities to export, reexport, or transfer (in-country) items subject to the Russia/Belarus FDPR only without a license if en route aboard a carrier to a port on May 9, 2022 (pursuant to actual orders). Exports of items normally subject to the EAR, by contrast, needed to be en route on April 8, 2022. 

  1. President Biden signed into law HR 7108, which suspended normal trade relations with Russia and Belarus. As previously reported, the US and other allied governments indicated that they would revoke most favored nation (MFN) status for Russia and Belarus, and the US has now enacted that law. This means that all products of the Russian Federation and the Republic of Belarus will have the (typically) higher duty rates set forth in column 2 of the Harmonized Tariff Schedule of the United States. Under the new law, until January 1, 2024, President Biden can also proclaim increases in the rates of duty above those in column 2 after a five day consultation with the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. To lower the duties, the President will need to make a certification that Russia and/or Belarus:

a. has reached an agreement relating to the withdrawal of Russian or Belarusian forces (or both, if applicable) and the cessation of military hostilities that is accepted by the free and independent government of Ukraine;

b. poses no immediate military threat of aggression to any NATO member; and

c. recognizes the right of the people of Ukraine to independently and freely choose their own government.

The President has to notify Congress 45 days before submitting the certification, and there is a procedure for Congress to pass a joint resolution of disapproval of the certification to go back to lower duties.

© 2023 ArentFox Schiff LLPNational Law Review, Volume XII, Number 103
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About this Author

Kay C. Georgi Attorney International Trade ArentFox Schiff Washington DC
Partner and International Trade & Investment Practice Leader

Kay leads the International Trade group and has more than 32 years’ experience advising clients on all aspects of international trade, with particular capability in the areas of export control and sanctions, Foreign Corrupt Practices Act (FCPA), and import (customs) matters.

Ranked as one of the nation’s leading International Trade: Export Controls & Economic Sanctions lawyers by Chambers USA, and as a leading international trade practitioner by Legal 500 and Expert Guides, Kay is known for helping large and small...

202-857-6293
Marwa M. Hassoun Attorney National Security ArentFox Schiff Los Angeles
Partner

Marwa helps companies, investors, and academic institutions expand their reach, solve problems, and manage risk.

As co-leader of the firm's National Security practice, Marwa counsels a diverse group of US and non-US companies on international regulatory issues, including civilian and military export controls, economic sanctions, and antiboycott regulations.

In particular, Marwa's work focuses on assisting companies, universities, and other entities assess and mitigate risk related to export and sanctions compliance....

213-443-7645
Matthew Tuchband Financial Attorney ArentFox Schiff
Tuchband

Matthew advises the firm’s US and foreign clients on foreign trade and banking compliance with all aspects of economic sanctions and embargoes administered by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC).

Prior to joining ArentFox Schiff, Matthew served for 21 years at the Treasury Department’s Office of the Chief Counsel for Foreign Assets Control, including the last 14 years as the Deputy Chief Counsel overseeing a team of attorneys that provided legal counsel to OFAC and reviewed all of OFAC’s economic sanctions actions. As the longest serving...

202-857-6212
Sylvia G. Costelloe Trade Arbitration Attorney ArentFox Schiff Los Angeles
Associate

Sylvia's practice spans several areas of international trade and arbitration matters.

Sylvia regularly advises clients with respect to the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), and Office of Foreign Assets Control (OFAC) sanctions and embargoes. She helps large and small US and non-US companies understand and comply with the complicated US laws and regulations governing exports and re-exports of goods, software, services, and technology. Sylvia advises clients on international regulatory...

213-988-6697
John A. Gurtunca Trade Lawyer ArentFox Schiff
Associate

John has experience assisting clients with a variety of international trade matters, including those pertaining to export controls and economic sanctions, foreign investment screening (CFIUS), strategic technology policy, and trade remedy proceedings. John works with clients across a number of industries, including aerospace and defense, consumer products, information and communications technology, semiconductors, shipping, and manufacturing.   

John helps large and small US and non-US companies understand and comply with the trade controls governing the export and re-export of...

202.857.6174
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