Russia

A second Donald Trump presidency ushers in a moment in international trade without precedent…other than the first Trump presidency. It is often difficult to predict how a new administration will act, but in this case, the “new” president has previously shown that he does not always conform to the typical expectations of the office, particularly with respect to international trade. Below we outline a few initial impressions on the potential impacts the Trump presidency will have on global relationships and discuss how you can prepare for the new administration.

The practice of determining an item’s country of origin (“COO”) and utilizing the principal of “substantial transformation” to help make this determination is likely a familiar concept for many U.S. importers in the context of compliance with U.S. Customs regulations. However, the principal of substantial transformation is also recognized by the U.S. Office of Foreign Assets Control (“OFAC”) as being applicable in the somewhat unique context of U.S.

Today, on the brink of the two-year anniversary of Russia’s invasion of Ukraine, President Biden announced additional sanctions and export controls against Russia and entities in third countries that have supported the Russian war effort. The February 23 Statement describes that the 500 new sanctions against Russia are “for its ongoing war of conquest on Ukraine and for the death of Aleksey Navalny,” the Russian opposition leader and anti-corruption activist that suspiciously died in a Russian prison on February 16.

Industry is well aware of the final rule published on April 28, 2020 (Final Rule), by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) that, among other changes, revises the Export Administration Regulations (EAR) § 744.21 provision related to Military End Uses and Military End Users in the People’s Republic of China (China), Russia, or Venezuela, and significantly expands the license requirements on exports, reexports, and transfers (in-country) of such items. See our previous article for more details about the EAR revisions stipulated in the Final Rule. Importantly, the Final Rule adds the Electronic Export Information (EEI) filing requirement in the Automated Export System (AES) for exports to China, Russia, or Venezuela. Specific provisions of the Final Rule became effective on June 29 and most recently, other aspects took effect on September 27.

In May 2023, the leaders of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom gathered in Hiroshima, Japan, for the annual G7 summit. The symbolic significance of these global leaders meeting in the city devastated by an atomic bomb on August 6, 1945, was very impactful, particularly to Japan’s Prime Minister, Kishida Fumio, a Hiroshima native. 

The United States Office of Foreign Assets Control (“OFAC”) issued an Alert on April 17, 2023, warning U.S. persons about the possible evasion of the price cap imposed by the Department of Treasury on Russian oil.

As the war in Ukraine continues, the diversion of restricted goods and technology to Russia remains a risk for exporters. The Republic of Turkey has become a primary diversion point for such restricted goods.

On February 17, 2023, the U.S. Department of Justice (“DOJ”) and the U.S. Department of Commerce (“Commerce”) announced the creation of the Disruptive Technology Strike Force (“DTSF”). 

On February 24, 2023, the one-year anniversary of Russia’s invasion of Ukraine, the White House announced a series of actions that the U.S. and Group of 7 (“G7”) will take to support Ukraine and impose further costs on Russia.

Amid political and trade tensions between the United States and the People’s Republic of China (“China”), President Trump issued Executive Order (“EO”) 13959 on November 12, 2020, to address the national emergency posed by the exploitation of United States capital to resource and enable the development and modernization of China’s military, intelligence, and other security organizations.

On June 27 and 28, 2022, the U.S. government unleashed a new wave of sanctions and related measures aimed at Russians and Russian industry in response to Putin’s ongoing war against Ukraine. The Department of Treasury Office of Foreign Assets Control (“OFAC”) 1) added 99 persons to the Specially Designated Nationals and Blocked Persons (“SDN”) List, and 2) prohibited the importation of gold from Russia. OFAC also issued five new General Licenses. 

Now more than ever, U.S. and multinational companies must do everything they can to ensure strict compliance with international sanctions imposed on Russia, Belarus, and individuals linked to those governments.

On May 23, 2022, President Joe Biden, when asked whether the United States would get involved militarily if China invaded Taiwan, answered firmly, “Yes. That’s the commitment we made.”¹ As the world watches the war in Ukraine,

On May 17, 2022, the Nuclear Regulatory Commission (“NRC”) issued an order, effective immediately, suspending the general license authority under NRC regulations to export radioactive material and deuterium for nuclear end use to Russia. Now, exporters of such material must apply to the NRC for a specific license to export to Russia.

On May 9, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced a new final rule, to be published on May 11, 2022, expanding export controls against Russia under the Export Administration Regulations (“EAR”). The final rule imposes a license requirement under 15 C.F.R § 746.5(a)(1)(ii) for exports, reexports, or transfers (in-country) to or within Russia for additional items subject to the EAR identified under specific Harmonized Tariff Schedule (“HTS”) descriptions. The final rule adds 205 HTS codes at the 6-digit level (and descriptions) and 478 corresponding 10-digit Schedule B numbers (and descriptions) to the chart in Supplement No. 4 to Part 746.

On May 8, 2022, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a determination pursuant to Executive Order (“EO”) 14071. The determination specifies that the provision of the following activities to any person in Russia are prohibited: accounting services, trust and corporate formation services, and management consulting services. The prohibition takes effect on June 7, 2022 and does not apply to services provided to entities located in Russia owned or controlled by U.S. persons, or any services in connection with the wind down or divestiture of any entity in Russia not owned or controlled by a Russian person. The determination expands EO 14024 to prohibit such services.

On March 2, 2022, as part of a string of sanctions and export controls, the Russia/Belarus Foreign Direct Product (“FDP”) Rule and Russia/Belarus-Military End User (“MEU”) FDP Rule took effect.¹ These rules, generally, restrict the sale to Russia and Belarus of foreign-produced items produced with certain controlled U.S.-origin software or technology.

Wondering how the new Russian sanctions will impact your company? Shipping Solutions and Olga Torres, Managing Member of Torres Law and Torres Trade Advisory, discuss the basics of these new Russian sanctions and what impact they may have on your company operations. Watch the 20-minute conversation.

President Biden, following a meeting with the Leaders of the G7 on Thursday morning, addressed the ongoing Russian invasion of Ukraine as well as the “further consequences” that the U.S., in conjunction with many other nations, would be imposing against Russia. President Biden announced additional economic sanctions targeting major Russian financial institutions as well as more designations of Russian elites and their family members. Notably, President Biden for the first time announced that new export controls will be implemented to “cut off more than half” of Russia’s high-tech imports. However, despite pressures from domestic lawmakers and foreign heads of state, Russia was not ousted from the SWIFT financial messaging system, nor was Russian President Putin himself personally sanctioned. But, as President Biden made clear, such options remain “on the table.”

Over the past 48 hours, the U.S. government and its allies have responded to Russia’s aggression in eastern Ukraine with new sanctions against Russia. This trade alert summarizes the economic sanctions imposed by the U.S. government to date. 

U.S. companies involved in international trade and transactions have become accustomed to compliance hurdles when conducting business with the Russian Federation ("Russia").

Prior to the inauguration of President Biden, many commenters predicted additional sanctions or other punitive measures against Russia at the beginning of the new presidential administration. These predictions were fulfilled on March 2, 2021, when multiple U.S. executive branch agencies announced additional measures against Russia in response to the poisoning of Russian opposition figure Aleksey Navalny.

On June 29, 2020, revisions to the Export Administration Regulations (“EAR”) that will impact many exporters and reexporters – particularly those doing business with the People’s Republic of China – became effective. 

Among the tools used by the U.S. Government to impose sanctions on both entities and individuals, few are as powerful as "U.S. Denied Party Lists."

Inclusion on a U.S. Denied Party List can have adverse consequences even if the designated parties are ultimately removed from the list, as two recent cases involving lawsuits against OFAC involving due process concerns will demonstrate.

This article will discuss U.S. economic sanctions on Russia as enforced by the Office of Foreign Assets Control (“OFAC”), a government agency within the U.S. Department of the Treasury. Specifically, we will provide an overview of Directive 4 to Executive Order 13662 (“Directive 4”), which prohibits certain transactions related to the Russian oil sector.1 While Directive 4 does not prohibit all oil sector transactions with companies in Russia, it does create many potential obstacles for U.S. businesses. We will also briefly discuss Russian oil sector prohibitions administered by the Department of Commerce Bureau of Industry and Security (“BIS”).2 Russia and Texas are two of the largest producers of oil and gas in the world, and, because many companies involved in the petroleum industry in Texas have dealings with Russian entities or individuals, they are likely to be faced with sanctions issues. Below we describe some of the issues that need to be addressed prior to the commencement of transactions involving Russian parties in the context of certain oil exploration and production activities.

This article first appeared in the Newsletter of the International Law Section (www.ilstexas.org) of the State Bar of Texas, and is reproduced with the Section’s permission.

The first weeks of the Trump Administration have been eventful, but there has been little action in the area of export controls and economic sanctions. In this regard, there's no clear consensus just yet as to whether and how significantly President Trump plans to deviate from the course set over the last eight years of the Obama Administration.