On April 8, 2022, in response to Russia’s ongoing aggression in Ukraine, which has been substantially enabled by Belarus, the US Commerce Department’s Bureau of Industry and Security (“BIS“) issued a final rule (“Final Rule“) expanding license requirements for Russia and Belarus under the Export Administration Regulations (“EAR“) to all items on the Commerce Control List (“CCL“). The Final Rule also removes license exception eligibility for aircraft registered in, owned or controlled by, or under charter or lease by Belarus or a national of Belarus.
Concurrently, BIS issued a rule formally adding Iceland, Liechtenstein, Norway, and Switzerland to the global coalition of nations that are cooperating in the stand against Russian aggression, and Belarusian complicity, through their implementation of stringent export controls.
New Sanctions Against Russia and Belarus Under the EAR
Expands License Requirements for Russia and Belarus to All Items on the CCL
In February and March of 2022, BIS imposed sweeping new export controls on Russia and Belarus, which included a license requirement for items classified under any Export Control Classification Number (“ECCN“) in Categories 3 through 9 of the CCL. (Our blog posts discussing these export controls are here and here).
The Final Rule expands the license requirement imposed on Russia and Belarus to include items classified under any ECCN in Categories 0 through 2 of the CCL. As a result, the license requirement under § 746.8(a)(1) (Russia and Belarus sanctions) now applies to any items that are controlled in any ECCN on the CCL, i.e., to any item that is not classified as EAR99.
Consistent with the expanded license requirement, the Final Rule revises the foreign “direct product” rule (“FDP rule“) for both Russia and Belarus to apply to all items on the CCL. Therefore, foreign-produced items derived from technology or software classified under any ECCN in Categories 0 through 9 of the CCL will now be subject to the EAR under the Russia/Belarus FDP rule and will trigger license requirements under § 746.8(a)(2).
Removes License Exception Eligibility For Certain Belarus-related Aircraft
The Final Rule also limits the availability of License Exception Aircraft, Vessels and Spacecraft (AVS) for certain Belarus-related aircraft, as was already the case for certain Russia-related aircraft. As a result, License Exception AVS is no longer available for aircraft registered in, owned, or controlled by, or under charter or lease by, Belarus or Russia, or by a Belarusian or Russian national.
Additional Countries Excluded from Certain License Requirements for Standing Against Russia
BIS has published a list of countries in supplement no. 3 to part 746 of the EAR that are excluded from certain license requirements under the EAR. These countries have committed to implementing export controls on Belarus and Russia substantially similar to those of the United States. Countries that have made such a commitment receive full or partial exclusions from the FDP rule license requirements.
Iceland, Liechtenstein, Norway, and Switzerland have now been added to this list, which also includes Australia, Canada, the 27 member states of the EU, Japan, the Republic of Korea, New Zealand, and the UK, bringing the total number of countries on the list to 37.
Baker McKenzie will continue closely monitoring developments related to the Russia-Ukraine situation and will update this blog accordingly.