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U.S. Expands Restrictions on Exports to Russia, Warns on Marking of Imports from Crimea

Tuesday, April 29, 2014
Sandler, Travis & Rosenberg Trade Report

The U.S. is continuing to strengthen its economic sanctions against Russia due to its annexation of Crimea and continued actions in other regions of Ukraine.

Export Licenses. Effective April 28, the Bureau of Industry and Security will deny pending applications for licenses to export or reexport to Russia or occupied Crimea any high-technology item subject to the Export Administration Regulations that contributes to Russia’s military capabilities. Similarly, the State Department’s Directorate of Defense Trade Controls will deny pending applications for exports or reexports to Russia or occupied Crimea of any high-technology defense articles or services regulated under the U.S. Munitions List that contribute to Russia’s military capabilities. BIS and DDTC are also taking actions to revoke any existing export licenses that meet these conditions. All other pending applications and existing licenses will receive a case-by-case evaluation to determine their contribution to Russia’s military capabilities.

Previously, BIS and DDTC had suspended the issuance of new licenses. Both agencies state that they will continue to adjust their export licensing policies toward Russia as warranted by its actions in Ukraine.

Entity List. BIS is adding 13 companies to the Entity List based on a determination that they are involved, or pose a significant risk of becoming involved, in activities contrary to U.S. national security and foreign policy interests. These companies include one in Cyprus, one located in Luxembourg and Russia, and 11 located in Russia.

Certain exports, reexports and transfers (in-country) of items subject to the EAR to entities identified on the Entity List require licenses from BIS but are usually subject to a policy of denial because BIS considers such entities to present significant risks of diversion to weapons of mass destruction programs, terrorism or other activities that are contrary to U.S. national security or foreign policy interests. This license requirement applies to any transaction in which items are to be exported, reexported or transferred (in country) to such persons or in which such persons act as purchaser, intermediate consignee, ultimate consignee or end-user. In addition, no license exceptions are available for such transactions.

Imports from Crimea. U.S. Customs and Border Protection issued April 23 a message stating that goods that are the growth, product or manufacture of Crimea and other areas of Ukraine should be marked as “product of Ukraine” or “made in Ukraine.” If the container of the imported good is marked, it may be marked “contents made in Ukraine” or with words similar in meaning.

CBP’s message suggests that articles originating from Crimea that are marked as originating in Russia (due to its annexation of that territory) will be subject to additional duties of 10% of the final appraised value unless they are exported or destroyed under CBP supervision prior to liquidation.

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