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U.S. Opens Door to Economic Sanctions Against Russia for Action in Crimea

Monday, March 24, 2014
Sandler, Travis & Rosenberg Trade Report

President Obama signed March 20 an executive order that would allow the U.S. to impose economic sanctions against Russia for its use of force in and purported annexation of the Ukrainian region of Crimea. Senior Obama administration officials said this EO authorizes the Treasury Department to designate any or all of the following sectors of the Russian economy for additional sanctions: financial services, energy, metals and mining, engineering, and defense and related materiel. Once any such sector is designated, the officials said, the U.S. will be able to impose sanctions on specific entities within that sector.

The officials said the EO represents a “flexible tool” that the U.S. will use “if Russia further escalates this situation;” e.g., through military intervention in southern or eastern Ukraine or economic pressure. They noted that Russia appears to have closed its border to imports of Ukrainian goods, “effectively having imposed a trade embargo” that violates Russia’s obligations as a member of the World Trade Organization,” but did not indicate whether such a move would warrant imposition of the newly authorized sanctions. The officials claimed that such sanctions “would have a significant impact on the Russian economy” but said the U.S. will pursue them “with care, given the fact that that could also impact the global economy.” The officials added that they are working to determine “ways we could actually operationalize this executive order” so the U.S. will be ready to act if and when necessary.

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