U.S. expands controls on exports of industrial and commercial goods to Russia

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U.S. expands controls on exports of industrial and commercial goods to Russia

16 May 2022

The U.S. Bureau of Industry and Security (“BIS”) has expanded export controls relating to Russia. The final rule imposes license requirements for exports, reexports and transfers to/within Russia on several items with industrial and commercial applications that were not previously subject to license requirements.

Following the US sanctions developments and the White House’s publication of its May 8 Fact Sheet: United States and G7 Partners Impose Sever Costs for Putin’s War Against Ukraine, BIS announced an expansion of its export control rules relating to Russia, effective 9 May 2022. The final rule imposes license requirements for exports, reexports and transfers to/within Russia of items classified within 205 additional HTS codes at the 6-digit level and 478 corresponding 10-digit Schedule B numbers in Supplement 4 to Part 746 of the Export Administration Regulations (“EAR”). The rule clarifies that only those items identified in the HTS description are subject to license requirements under Part 746.5(a)(1)(ii), while the HTS and Schedule B codes are meant to assist exporters with compliance. These items were not previously subject to license requirements and include wood products, industrial engines, boilers, motors, fans, and ventilation equipment, bulldozers, and many other items with industrial and commercial applications. See the final rule for full list. With this expansion, BIS has also reorganized Supp. 4 to Part 746 which now lists the items numerically by Schedule B number.

The final rule provides a savings clause that allows items that were “en route aboard a carrier to a port of export, reexport, or transfer (in-country), on May 9, 2022, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination [to] proceed to that destination” under previous eligibility to ship without a license. License applications for items intended to meet humanitarian needs will be reviewed on a case-by-case basis.

Supplement 5 to Part 746 includes a separate list of luxury items subject to licensing requirements. Accordingly, companies should include consultation of the Commerce Control List, and Part 746 Supplement 4 and Supplement 5 of the EAR when determining licensing requirements applicable to their products and/or services.

Next steps

Hogan Lovells would be pleased to answer any questions regarding the maintenance of an effective trade compliance program and the impact of US export controls on your company.

Authored by Ajay Kuntamukkala, Aleksandar Dukic, Ari Fridman, Cayla Ebert, and Andrea Fraser-Reid.