US State Department Imposes Sanctions on Russia For Use of Chemical Weapons

On August 24, 2018, the US State Department gave notice of new sanctions on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”) after determining that the Russian Government has used chemical weapons in violation of international law or chemical or biological weapons against its own nationals.  The imposition of CBW Act sanctions follows reports of the use of a “Novichok” nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal.  There is no indication in the notice regarding the potential for significant additional sanctions (e.g., an export ban, an import ban, an air transportation ban) to be imposed in three months time, as previously described here.  

The CBW Act sanctions will be effective upon their publication in the Federal Register on August 27, 2018, and will be in place for at least one year. (Their imposition has been delayed from the original date provided by the State Department of August 22, 2018.)  Certain waivers of the CBW Act sanctions apply, as further described below.

The following CBW Act sanctions and related waivers will take effect as of August 27, 2018:

1. Waiver of Sanctions Imposed on Foreign Assistance: Though termination of foreign assistance to Russia (except for urgent humanitarian assistance and food or other agricultural commodities) was announced, the State Department has chosen to waive the imposition of such sanctions in the interests of national security.
2. Termination of Arms Sales Except in Furtherance of Space Program: The State Department announced the termination of (a) sales to Russia of defense articles, defense services, or design and construction services subject to the jurisdiction of the International Traffic in Arms Regulations (“ITAR”), and (b) licenses for the export to Russia of any item on the ITAR’s United States Munitions List. However, in furtherance of national security, the State Department has waived these sanctions with respect to the issuance of licenses in support of government space cooperation and commercial space launches. Licenses for such items and activities will be issued on a case-by-case basis consistent with the export licensing policy for Russia that was in effect prior to the enactment of the CBW Act sanctions.
3. Termination of Arms Sales Financing: All foreign military financing for Russia is terminated.
4. Denial of United States Government Credit or Other Financial Assistance: Any credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the US Government is denied, including by the Export-Import Bank of the United States.
5. Prohibition on Exports of Goods and Technology Subject to National Security Controls Subject to Certain Waivers: All exports and reexports to Russia of goods and technology subject to National Security (“NS”) controls on the Commerce Control List (“CCL”) contained in Supplement No. 4 to Part 774 of the Export Administration Regulations (15 C.F.R. Part 730 et seq., “EAR”) are prohibited, except for certain exports or reexports that are waived for national security reasons, as follows:

a.  License Exceptions: Exports or reexports made pursuant to certain EAR license exceptions contained in EAR Part 740 are allowed, including but not limited to exports or reexports under License Exception ENC, which applies to certain encryption-related items. A full list of the License Exceptions is available in the notice. Each license exception is subject to certain conditions, and we would therefore suggest an exporter review the license exceptions in detail before relying on any one exception to export or reexport to Russia a good or technology subject to NS controls.

b.  Certain Exports/Reexports Under New Licenses Allowed: The following exports and reexports of goods and technology controlled for NS reasons are allowed provided they are pursuant to a “new” license.   We interpret this reference to “new” licenses to mean that this waiver applies only to licenses issued after the enactment of the CBW Act sanctions (i.e., issued after August 24, 2018); however, the State Department has not issued guidance on this point thus far. Such “new” licenses will be issued on a case-by-case basis consistent with the export licensing policy for Russia that was in effect prior to the enactment of the CBW Act sanctions.

1. Exports and reexports necessary for flight safety of civil fixed-wing passenger aviation.
2. Exports and reexports for deemed exports and reexports to Russian nationals.
3. Exports and reexports to wholly-owned Russian subsidiaries of US companies.
4. Exports and reexports in support of government space cooperation and commercial space launches.
5. Exports and reexports for commercial end-users and civil end-uses in Russia.

c.  Exports/Reexports to SOEs or SFEs Denied: Separately, license applications for new licenses to export NS-controlled goods or technology to Russian state-owned or state-funded enterprises will be reviewed on a case-by-case basis, subject to a “presumption of denial” policy.