Background

The Biden administration is reportedly considering whether to impose new export restrictions against Russia if it invades Ukraine.

The foreign direct product rule imposes controls on exports of goods made outside the U.S. with certain U.S. technology that, if exported from the U.S., would require a license. In September 2020, as part of an ongoing effort to prevent the acquisition of components developed or produced using U.S. technology by Chinese company Huawei, the Department of Commerce amended this rule to apply to transactions (1) where U.S. software or technology is the basis for a foreign-produced item that will be  incorporated into, or will be used in the production or development of, any part, component, or equipment produced, purchased, or ordered by any Huawei entity on the Entity List or (2) to which any Huawei entity on the Entity List is a party; e.g., as a purchaser, intermediate consignee, ultimate consignee, or end-user.

According to press reports, the White House is considering extending this amended rule to Russia to limit its ability to further develop production capability in sectors like artificial intelligence, quantum computing, maritime, defense, aerospace, and civilian aviation. The U.S. is also reportedly working with European and Asian allies to impose similar rules.

Kristine Pirnia, head of ST&R’s Export Controls and Sanctions Practice, said companies should act quickly to assess their business with and/or exports to Russia to be ready for any new restrictions. For more information, Pirnia can be contacted at (202) 730-4964 or via email.

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