The latest on Russia sanctions from the International Trade and Supply Chain Team
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On May 9, 2022, the Bureau of Industry and Security (“BIS”) released for public inspection a Final Rule adding hundreds of new items to a list of restricted items in Supplement No. 4 to Part 746 of the U.S. Export Administration Regulations (“EAR”).  BIS created the Supplement No. 4 list two months ago in March 2022 to prohibit the export, reexport, or in-country transfer to or within Russia of specified items included on the list. (Husch Blackwell has previously provided more in-depth guidance on this here)  The Supplement No. 4 list is one of two (2) Russia Industry Sector Sanctions lists in the EAR, and Monday’s updates to the Supplement No. 4 list impose strict liability on any person who exports, reexports or transfers (in-country) the listed items to or within Russia.  Effective immediately (as of May 9, 2022, the date of filing for public inspection), the list has ballooned in size through the addition of 478 ten-digit Schedule B codes and 205 six-digit Harmonized Tariff Schedule (“HTS”) codes.  BIS has stated in the Final Rule that the HTS and Schedule B codes “are only intended to assist exporters with their AES filing responsibilities and does not indicate that all items classified under those HTS Codes or Schedule B numbers are subject to § 746.5(a)(1)(ii)’s restrictions.”  Rather, only those items described under the “HTS Description” column are controlled by the strict liability provisions of the Russian Industry Sector Sanctions.  BIS noted this approach is consistent with comparable controls imposed by the European Union indicating “[t]he expansion of these export controls under the EAR, implemented in parallel with similarly stringent measures by partner and ally countries, further limits sources of revenue that could support Russia’s military capabilities, as well as Russia’s ability to withstand the economic impact of the multilateral sanctions.”

Additions to the list include, but are not limited to, building materials, machinery, engines, industrial tooling, cooling and ventilation equipment and a variety of other items.  All license applications for exports, reexports or transfers (in-country) of items “subject to the EAR” and listed on the Supplement No. 4 list will be reviewed by BIS under a presumption of denial license review policy.  BIS will review applications for licenses that satisfy humanitarian needs using the less onerous case-by-case license review policy.  Under the Final Rule’s savings clause, any shipment that is affected by the Final Rule and is en route aboard a carrier to a port of export, reexport, or transfer (in-country) as of date of this Final Rule’s filing for public inspection (May 9, 2022) pursuant to actual orders may proceed to Russia under a previous and valid export authorization eligibility.

To view the updated list prior to its publication at Supplement No. 4 to 15 C.F.R. Part 746, click (here) and scroll to pages 10 through 38 of the PDF. The full list at Supplement No. 4 is maintained here.

Husch Blackwell’s Export Controls and Economic Sanctions Team continues to closely monitor all sanctions and export controls developments concerning Russia, Belarus, and Ukraine and will provide further updates as conditions change.  Additional sanctions actions on May 8, 2022 warrant an additional blog post, which we will release to readers as soon as it is ready.  Interested readers can also review content covering previous Russia, Belarus and Ukraine sanctions developments at the Husch Blackwell Russia Sanctions Resource Library.

Should you have any questions or concerns, please contact Cortney MorganGrant LeachTony Busch or Isabella Peek of our Export Controls and Economic Sanctions Team.