The Bass, Berry & Sims international trade team is actively monitoring the situation in Russia and Ukraine and providing real-time advice to clients on managing the situation. This post summarizes new U.S. sanctions and export restrictions as of April 11. This post supplements our previous summaries, which are available by following the links at the bottom of this page.

Commerce Expands Export Restrictions Against Russia and Belarus; Adds to List of Countries Exempt from the Foreign Direct Product (FDP) Rule.

On April 9, the U.S. Commerce Department, Bureau of Industry & Security (BIS) announced that it has expanded the license requirement for exports to Russia and to Belarus of Categories 0, 1, and 2 of the Commerce Control List (CCL). BIS also removed Belarus from eligibility for license exception AVS. BIS had previously established a license requirement for Russia and Belarus for categories 3 through 9 of the CCL.  See our posts from February 25 and March 3 on previous license requirements.

As a result of the April 9 action, all items subject to the Export Administration Regulations (EAR) other than items covered under EAR99 now require a license to export, re-export, or transfer (in-country) to Russia and Belarus. In addition to the license requirement for all items on the CCL, all foreign direct product (FDP) items derived from any CCL item are now subject to the same license requirements. The rule became effective on April 8.

On April 8, BIS announced that Iceland, Liechtenstein, Norway, and Switzerland have been added to the list of countries excluded from the FDP rule as applied to Russia and Belarus. BIS is adding these countries because they have committed to implementing substantially similar export controls on Russia and Belarus. This action brings the total number of countries excluded from application of the FDP rule to 37. See our related post from March 7.

Departments of State and Treasury Block Russia State-Owned Enterprises

On April 7, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) issued sanctions against Public Joint Stock Company Alrosa (Alrosa), a Russian state-owned enterprise (SOE) and the world’s largest diamond mining company. Alrosa was previously subject to Russia Directive 3, which was issued on February 24 and limited U.S. persons in dealing with new debt and equity of Alrosa and other named entities. With the designation, effective immediately, Alrosa and any entity in which Alrosa holds a 50% or more ownership interest are subject to full blocking sanctions. Alrosa is also sanctioned by Canada, the United Kingdom, New Zealand, and the Bahamas. The State Department and OFAC also designated United Shipbuilding Corporation (USC), a major Russian SOE responsible for construction of Russia’s warships. In addition to USC, 28 subsidiaries and eight board members were designated.

OFAC Revises Certain Russia-Related GLs and Issues New GLs

Also on April 7, OFAC announced that it has revised three General Licenses (GLs) and issued two new GLs, as follows:

  • GL 9C extends authorization for transactions ordinarily incident and necessary to dealings in debt or equity related to specified financial institutions. GL 9C supersedes GL 9B dated April 6, 2022; the expiration date for authorization under GL 9C differs depending on the financial institution involved.
  • GL 10C extends authorization for transactions ordinarily incident and necessary to wind down derivative contracts entered into with specific financial institutions. GL 10C supersedes GL 10B dated April 6, 2022; the expiration date for authorization under GL 10C differs depending on the financial institution involved.
  • GL 21A authorizes until June 7, 2022, financial activities ordinarily incident and necessary to the wind down of the operations of Sberbank CIB USA, Inc. and Alrosa USA, Inc. GL 21A supersedes GL 21 dated April 6, 2022
  • GL 24 authorizes until May 7, 2022 all transactions ordinarily incident and necessary to wind down transactions involving Alrosa.
  • GL 25 authorizes transactions ordinarily incident and necessary to the receipt or transmission of telecommunications and other communications software, hardware, and technology providing services such as email, video conferencing, web browsing, and social networking. GL 25 does not relieve licensing requirements under the EAR.

If you have any questions or need assistance related to this evolving situation or other international trade matters, please contact the authors. To read our previous coverage concerning the Russia-Ukraine situation, click the links below:

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Photo of Mi-Yong Kim Mi-Yong Kim

Mi-Yong Kim has nearly 25 years of experience related to export controls and national security. Based on her extensive government service, she is uniquely well equipped to provide advice to help clients navigate the complex regulations related to export controls and national security…

Mi-Yong Kim has nearly 25 years of experience related to export controls and national security. Based on her extensive government service, she is uniquely well equipped to provide advice to help clients navigate the complex regulations related to export controls and national security, including matters related to compliance with the Export Administration Regulations (EAR); the International Traffic in Arms Regulations (ITAR); the Committee on Foreign Investment in the United States (CFIUS); and foreign ownership, control, or influence (FOCI) mitigation by the Defense Security Service. Mi-Yong is also an Adjunct Professor at the National Chengchi University (NCCU) in Taipei, Taiwan. She teaches a graduate-level class on export controls and related topics at the College of International Affairs of NCCU.

Photo of Thad McBride Thad McBride

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP)…

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP), and the Foreign Corrupt Practices Act (FCPA). He also advises clients on anti-boycott controls, and assists companies with matters involving the Committee on Foreign Investment in the United States (CFIUS). Thad supports international companies across a range of industries, including aviation, automotive, defense, energy, financial services, manufacturing, medical devices, oilfield services, professional services, research and development, retail, and technology. Beyond advising on day-to-day compliance matters, Thad regularly assists clients in investigations and enforcement actions brought by government agencies, including the U.S. Department of Justice (DOJ), the U.S. Treasury Department Office of Foreign Assets Control (OFAC), the U.S. State Department Directorate of Defense Trade Controls (DDTC), Customs and Border Protection (CBP), the U.S. Commerce Department Bureau of Industry & Security (BIS), and the Securities & Exchange Commission.

Photo of Sylvia Yi Sylvia Yi

Sylvia Yi represents businesses across a broad range of sectors as they move through the contracting process with federal, state and local governments, and when they engage in international transactions. Sylvia counsels public and private companies on day to day compliance challenges, and…

Sylvia Yi represents businesses across a broad range of sectors as they move through the contracting process with federal, state and local governments, and when they engage in international transactions. Sylvia counsels public and private companies on day to day compliance challenges, and supports clients in responding to criminal and government investigations. She is a regular contributor to the firm’s Government Contracts & International Trade Blog, where she provides insight on the demanding and ever-changing regulatory environment.