By Joan Koenig and Mollie D. Sitkowski
On Monday, April 28, 2014, the United States, the European Union, and Canada announced that additional individuals and companies had been placed on their sanctions lists as a result of the continuing unrest in the Ukraine. The Department of Commerce, Bureau of Industry and Security (BIS) also announced it will deny any pending applications for licenses to export certain high-technology items to Russia and imposed export restrictions on 13 companies. The sanctions stem from Russia’s breach of its commitment to de-escalate the ongoing unrest.
The latest U.S. measures target seven additional Russian officials and 17 companies, while the EU has agreed to add 15 more Russian and Ukrainian individuals to its sanctions. The EU released names of the individuals it has targeted on April 29, 2014, and those sanctions will take effect immediately. Canada added nine individuals and two banks to its sanctions list. These new sanctions target Russian President Vladimir Putin’s “inner circle,” without going after Putin personally.
The additions to the U.S. list face travel bans and asset freezes. However, the newly released sanctions did not target new types of businesses or any major financial institutions. Uncertainty regarding sanctions has affected the stock price of the Rostec military-industrial conglomerate and Russia’s state-controlled oil company, OAO Rosnef. The U.S. added Rostec’s CEO, Sergei Chemezov (who is also on the Board of OAO Rosneft), and Rosneft’s President, Igor Sechin, to the list, but this may have little effect on the companies because the companies were not named.
The restrictions on the export and re-export of high-technology, dual-use items are more likely to have direct impact on Russian and U.S. companies. In March, BIS announced on its website that it had placed a hold on issuing licenses for exports to Russia. Now, BIS has formally announced it will deny pending applications for licenses to export or re-export any high-technology item subject to the Export Administration Regulations (EAR) with the destination of Russia or Crimea if it could contribute to Russia’s military capabilities. It is also taking actions to revoke any existing export licenses of high-technology items that could contribute to Russia’s military capabilities.
BIS did not specify what would be included in its definition of high-technology articles. In addition, the license denials and revocations likely will not be public, making the types of articles which fall within the ban difficult to ascertain.
For more information on how your company may be affected by the ongoing sanctions against Russia, please contact one of the authors listed above, or any other member of Drinker Biddle’s Customs and International Trade team.