On Monday August 27th the Department of State published a Federal Register announcement introducing new sanctions effective immediately on Russia. This round of sanctions is in retaliation for Russia’s violation of international law through the use of chemical weapons. The case refers to the March 2018 use of a military grade nerve agent that took place the United Kingdom in an attempt take the life of Sergei Skripal, a former Russian intelligence officer who was accused of working as a double agent for the UK. Two British nationals, one of whom later died, were exposed to the chemical agent. Under the new sanctions which are tied to the unlawful use of chemical weapons, the Department of State has imposed the following sanctions:

  • Prohibition on Arms Sales: Effective August 27, 2018 a prohibition applies to (a) sales to Russia under the Arms Export Control Act of any defense articles, defense services, or design and construction services, and (b) licenses for the export to Russia of any item on the United States Munitions List.
  • Exception/Carve Out: licenses in support of government space cooperation and commercial space launches, provided that such licenses shall be issued on a case-by-case basis and consistent with export licensing policy for Russia prior to the enactment of these sanctions.
  • Prohibition on Arms Sales Financing: Effective August 27, 2018 termination of all foreign military financing for Russia under the Arms Export Control Act.
  • Denial of United States Government Credit or Other Financial Assistance: Denial to Russia of any credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the United States Government, including the Export-Import Bank of the United States.
  • Prohibition on Exports of National Security-Sensitive Goods and Technology: Effective August 27, 2018 there is a complete prohibition on the export to Russia of any goods or technology on that are subject to National Security (either column I or Column II) export controls as listed in Supplement 1 to Part 738 of the U.S. Export Administration Regulations (EAR).

 

Exception/Carve outs/Comments:

1. The prohibition on National Security controlled products does not apply for exports and re-exports of goods and technology that are eligible for the following license exceptions: GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS.

2. Safety of Flight: Exports and reexports of goods or technology pursuant to new licenses necessary for the safety of flight of civil fixed-wing passenger aviation, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.

3. Deemed Exports/Reexports: Exports and re-exports of goods or technology pursuant to new licenses for deemed exports and reexports to Russian nationals, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.

4. Wholly-Owned U.S. Subsidiaries: Exports and reexports of goods or technology pursuant to new licenses for exports and reexports to wholly-owned U.S. subsidiaries in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.

5. Space Flight: Exports and reexports of goods or technology pursuant to new licenses in support of government space cooperation and commercial space launches, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.

6. Commercial End-Users: Exports and reexports of goods or technology pursuant to new licenses for commercial end-users civil end-uses in Russia, provided that such licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.

7. SOEs/SFEs: Exports and reexports of goods or technology pursuant to new licenses for Russian state-owned or state-funded enterprises will be reviewed on a case-by-case basis, subject to a “presumption of denial” policy.

The State Department announced these sanctions will be in place for at least 1-year from date of implementation. For more details contact TSI Global Consulting.