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 the evolving situation as of late evening on Monday, March 14 concerning current U.S. sanctions and export restrictions related to Russia and Ukraine. This post supplements our previous analysis all of which are linked at the end of today’s content.
On March 11, President Biden announced the U.S. – along with several allies, including Canada, the European Union, France, Germany, Italy, Japan, and the United Kingdom – will revoke Russia’s status as a “most favored nation,” which will remove preferential treatment of imports and tariffs. President Biden stated that he will work with Congress to deny Russia the benefits of World Trade Organization membership and deny preferential treatment of imports from Russia and Belarus.
President Biden also issued an Executive Order (EO) prohibiting new investment in any designated sector of the Russian economy. However, to date, no sectors of the Russian economy have been designated. In addition, the EO prohibits the export, re-export, sale, or supply, directly or indirectly, from the United States or by a U.S. person, wherever located, of specified luxury goods to any person located in Russia. And the EO bans the sale or export of U.S. dollars to Russia or any person in Russia.
Following the EO, the Bureau of Industry and Security (BIS) issued a rule with two new license requirements – one for luxury goods destined for any end user in Russia or Belarus and another for luxury goods destined for certain Russian and Belarusian oligarchs and malign actors designated by the Office of Foreign Assets Control (OFAC) of the Department of Treasury, regardless of their geographical location. Luxury goods, listed in a new Supplement No. 5 to Part 746 of the Export Administration Regulations (EAR), include alcoholic beverages, tobacco products, perfumes, leather goods, jewelry, and vehicles, among other goods.
The EO also bans the importation of specific Russian-origin products, as follows:
- Fish, seafood, and preparations thereof.
- Alcoholic beverages.
- Non-industrial diamonds.
OFAC issued several General Licenses authorizing certain transactions ordinarily incident and necessary to:
- The importation of fish, seafood, and preparations thereof; alcoholic beverages; and non-industrial diamonds through March 25, 2022, for written contracts or agreements entered into before March 11, 2022. General License No. 17.
- The transfer of U.S. dollar-denominated banknote noncommercial, personal remittances from (1) the United States or a U.S. person to an individual located in Russia; or (2) a U.S. person who is an individual located in Russia. General License No. 18. This does not include charitable donations to or for the benefit of an entity or funds transfers to support or operate any business.
- The personal maintenance in Russia of individuals who are U.S. persons located in Russia, including payment of housing expenses; acquiring goods or services for personal use; payment of taxes or fees; and purchasing or receipt of permits, licenses, or public utility services. General License No. 19.
OFAC also issued Ukraine General License No. 23 to permit transactions ordinarily incident and necessary to activities by non-governmental organizations, including activities to support the Donetsk People’s Republic or Luhansk People’s Republic regions of Ukraine, such as:
- Humanitarian projects to meet basic human needs.
- Democracy building.
- Noncommercial development projects.
- Environmental and natural resource protection.
Finally, OFAC imposed additional sanctions focused on Kremlin elites, oligarchs, and Russia’s political and national leaders by adding the following individuals and entities to the Specially Designated Nationals (SDN) List:
- Ten individuals on the management board of VTB Bank, which is reportedly Russia’s second-largest bank and was designated as an SDN on February 24 (Read our February 24 post here).
- Three family members of SDN Dmitriy Sergeevich Peskov, designated on March 3 (Read our March 3 post here).
- Vyacheslav Victorovich Volodin and 11 members of the Duma.
- An aircraft and a yacht owned by SDN Viktor Feliksovich Vekselberg.
If you have any questions or need any 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: