Background

The U.S. announced Feb. 24 a broad range of restrictions on exports to Russia in response to that country’s further invasion of Ukraine. Additional measures are possible in the coming days.

Under new regulations being imposed by the Bureau of Industry and Security, said BIS chief Thea Rozman Kendler, “Russia’s access to cutting-edge U.S. and partner country technology will halt. Its defense industrial base and military and intelligence services will not be able to acquire most Western-made products. Even most products made overseas using sensitive U.S. technology will be restricted for export to Russia.”

Effective Feb. 24, the BIS final rule imposes the following requirements and policies specific to Russia and Russian end-users.

Foreign direct product rules. The rule creates a new FDP rule for all of Russia that establishes a control over foreign-produced items that are (1) the direct product of certain U.S.-origin software or technology subject to the Export Administration Regulations or (2) produced by certain plants or major components thereof that are themselves the direct product of certain U.S.-origin software or technology subject to the EAR. This control applies when it is known that the foreign-produced item is destined to Russia or will be incorporated into or used in the production or development of any part, component, or equipment produced in or destined to Russia. The Russia FDP rule does not apply to foreign-produced items that would be designated as EAR99, which includes many consumer items.

BIS has also created a new FDP rule for Russian military end-users that is more extensive than the Russia FDP rule and applies to foreign-produced items that are (1) the direct product of any software or technology subject to the EAR that is on the Commerce Control List or (2) produced by certain plants or major components thereof that are themselves the direct product of any U.S.-origin software or technology on the CCL. Such items will be subject to the EAR and require a license if an entity with a footnote 3 designation on the Entity List (see below) is a party to the transaction, or if there is knowledge that the item will be incorporated into or used in the production or development of any part, component, or equipment produced, purchased, or ordered by any such entity. These restrictions apply to all items, including those designated as EAR99, with certain exceptions, and impose a license requirement for footnote 3-designated Russian military end-users.

Exports, reexports, and transfers (in-country) from the following countries are not subject to these FDP rules: Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

New license requirements. The final rule adds new license requirements for all export control classification numbers in categories 3-9 of the CCL. Some of these items, in 58 ECCNs with unilateral controls, were not previously controlled to Russia and include microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment, and aircraft components.

License review policy. Applications for the export, reexport, or transfer (in-country) of items that require a license for Russia will be reviewed, with certain limited exceptions, under a policy of denial. Applications to be reviewed on a case-by-case basis are those related to safety of flight, maritime safety, humanitarian needs, government space cooperation, civil telecommunications infrastructure, government-to-government activities, and support of limited operations of partner country companies in Russia.

License exceptions. Only certain sections of the following license exceptions are available for exports to Russia.

- TMP (temporary imports, exports, reexports, and transfers in country): items for use by the news media

- GOV: certain government activities

- TSU (technology and software unrestricted): software updates to civil end-users that are subsidiaries of, or joint ventures with, companies headquartered in the U.S. or partner countries

- BAG (baggage): baggage, excluding firearms and ammunition

- AVS (aircraft, vessels, and spacecraft): aircraft flying into and out of Russia

- ENC (encryption commodities, software, and technology): encryption items, but not if they are destined for Russian government end-users and Russian state-owned enterprises

- CCD (consumer communication devices): consumer communication devices, but not if they are destined for government end-users or certain individuals associated with the government

Entity List. Entity List footnote 3 indicates that the Russia-MEU FDP rule applies to that entity; as a result, a license is required to export, reexport, or transfer (in-country) all items subject to the EAR (including foreign-produced items under the Russia-MEU FDP rule) to these entities, with limited exceptions. Footnote 3 also applies to the Russian Ministry of Defense, including the armed forces of Russia, wherever located. License applications for footnote 3-designated entities will be reviewed under a policy of denial in all cases.

A total of 47 entities are being transferred from the MEU List to the Entity List and are being designated with footnote 3. In addition, BIS is adding two new Russian MEUs to the Entity List with a footnote designation. Additional entities may be added in the future.

Military end-use controls. Restrictions on Russian military end-users and military end-uses now cover all items subject to the EAR with exceptions for (1) food and medicine designated as EAR99 and (2) items classified as ECCN 5A992.c or 5D992.c, so long as they are not for Russian government end-users or Russian state-owned enterprises.

For more information on these export restrictions, please contact Kristine Pirnia at (202) 730-4964 or via email.

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