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.