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Cyber-Security Exports to Russia Eased Under New General License

Monday, February 06, 2017
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control published Feb. 2 a general license intended to ease U.S. exports of information technology products to Russia. Among other things, this license allows U.S. companies to work with Russia’s Federal Security Service, which controls the country’s imports of certain electronic goods, including those with encryption technology (which can include consumer items), to file required notifications or secure required import licenses. U.S. officials characterized the license as a technical fix designed to ameliorate an unintended impact on U.S. businesses from economic sanctions imposed on Russia by the Obama administration.

The general license authorizes all transactions and activities otherwise prohibited pursuant to Executive Order 13694 that are necessary and ordinarily incident to requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the FSB for the importation, distribution, or use of information technology products in Russia. The license does not authorize shipments of such goods to the FSB itself or the exportation, reexportation, or provision of any goods, technology, or services to the Crimea region of Ukraine. In addition, the payment of any fees to the FSB for such licenses, permits, certifications, or notifications is limited to $5,000 per calendar year.

However, it could be a challenge for U.S. exporters to take advantage of this general license because one of its conditions is that any item provided to the FSB must be in compliance with the Export Administration Regulations. Steve Brotherton, export controls practice leader for Sandler, Travis & Rosenberg, explained that technical information necessary to file a notification or secure an import license for certain goods in Russia may itself be regulated under the EAR. Since the FSB is on the EAR’s Entity List, Brotherton said, providing such information to the FSB would require an export license, but the Bureau of Industry and Security reviews applications for such licenses with a presumption of denial. Exporters could opt to provide publicly available information only, which is not subject to the EAR, but that may prove challenging given the details Russia typically requires.

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