The Department of Commerce has published a Final Rule, entitled Implementation of Additional Sanctions Against Russia and Belarus Under the Export Administration Regulations (EAR) and Refinements to Existing Controls. 88 FR 33422. This rule became effective on May 19, 2023 and strengthens Export Administration Regulations (EAR) targeting Russia, Belarus, and Iran by building on prior regulations found at 87 FR 12226, 87 FR 13048, 88 FR 12150, and 88 FR 12175. These revisions include:
1) Expanding the scope of the Export Administration Regulations’ (EAR) Russian and Belarusian Industry Sector Sanctions;
2) Expanding the Foreign-Direct Product Rule that currently applies to Russia and Belarus to also apply to the occupied Crimea region of Ukraine; and
3) Revising recent restrictions targeting Iran’s supply of Unmanned Aerial Vehicles to Russia. Specifically, this rule revises regulations created under Export Control Measures Under the Export Administration Regulations (EAR) to Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation. 88 FR 12150.
Firstly, this rule adds 1,224 types of industrial items to supplement no. 4 of 15 CFR Part 746. Supplement no. 4 addresses “Russian and Belarusian Industry Sector Sanctions Pursuant to 15 CFR § 746.5(a)(1)(ii)”. Persons exporting, reexporting, or transferring these items within Russia or Belarus will require a license under 15 CFR § 746.5(a)(1)(ii). The targeted items include electronics, instruments, and advanced fibers for the reinforcement of composite materials, e.g. carbon fibers. These items are identified by their Harmonized Tariff Schedule 6 (HTS-6) codes as derived from the United States International Trade Commission (USITC's) Harmonized Tariff Schedule of the United States (2023). The restrictions are designed to undermine Russia’s ability to continue its military operations in Ukraine. The complete list of 1,224 new HTS-6 Codes this rule adds to supplement no. 4 are identified in the rule’s amendatory instruction 11.d.
This rule also adds items to supplement no. 6 of 15 CFR Part 746. Supplement no. 6 addresses items that may be useful for Russia's chemical and biological weapons production capabilities. Persons exporting, reexporting, or transferring these items within Russia or Belarus will require a license under 15 CFR § 746.5(a)(1)(ii). The addition of items to supplement no. 6 is designed to better align United States sanctions on Russia and Belarus with the U.S. allies’ and partners’ controls. The complete list of items this rule adds to supplement no. 7 are identified in the rule’s amendatory instruction 13.
Further, this rule expands the list of items that require a license in supplement no. 7 to part 746. Supplement no. 7 addresses “Items That Require a License Under § 746.7 When Destined to Iran and Under § 746.8 When Destined to Russia or Belarus”. The added item type was previously omitted inadvertently from the Iran Unmanned Aerial Vehicles rule, found at 88 FR 12150. The omitted item type is “Electrical parts of machinery or apparatus, [Not Elsewhere Specified Or Included (NESOI)]” and is designated by HTS-6 Code 854800. The instant rule requires a person to obtain a license for such items to export or reexport them to Iran under 15 CFR § 746.7(a)(1)(ii). The restrictions on this item type are intended to further undermine Iran’s ability to support the Russian and Belarusian industrial bases and their ability to continue to support Russia’s military operations in Ukraine.
This rule expands the scope of the Foreign-Direct Product (FDP) Rules under 15 CFR § 734.9(f). The FDP Rule seeks to apply the EAR’s control to foreign-produced items outside the United States “when they are a ‘direct product’ of specified ‘technology’ or ‘software,’ or are produced by a plant or 'major component' of a plant that itself is a ‘direct product’ of specified ‘technology’ or ‘software.’” 15 CFR § 734.9(f) applies the FDP Rule to items produced in Russia and Belarus. The instant rule expands this application to also include items produced in Crimea to make it more difficult for Russia to procure items for its use in Crimea.
Next, this rule updates the license requirements in 15 CFR § 746.8(a)(2) and the license exemption in 15 CFR § 746.8(a)(4) to include references to Ukraine in accordance with the modification of the FDP Rule. 15 CFR § 746.8 enumerates the sanctions against Russia and Belarus. Subsection (a)(2) requires a person to have a license to reexport, export from abroad, or transfer (in-country) any foreign-produced item subject to the EAR under the FDP Rule described in § 734.9(f) of the EAR. Subsection (a)(4) creates an exclusion from the (a)(2) licensing requirement. Subsection (a)(4) exempts from the (a)(2) requirement exports/ reexports from and transfers within the countries listed in supplement no. 3 of 15 CFR Part 746. These countries have committed to implementing similar export controls on Russia and Belarus, so the exemption effectively cedes jurisdiction to these countries to enforce their export controls. This rule updates subsection (a)(2) and its exemption in (a)(4) to now include a reference to the “Temporarily occupied Crimea region of Ukraine” in their reference to the FDP Rule. Thus, the updated (a)(2) and (a)(4) now pertain to products produced in Crimea and not just to products produced in Russia or Belarus.
Finally, this rule adds subsections (a)(1)(ii) and (a)(4) to 15 CFR § 746.6, Temporarily occupied Crimea region of Ukraine and covered regions of Ukraine. Subsection 15 CFR § 746.6(a)(1)(ii) reiterate 15 CFR § 746.8(a)(2), and subsection 15 CFR § 746.6(a)(4) reiterates 15 CFR § 746.8(a)(4). Similarly, this rule revises the heading and introduction of supplement no. 3 to part 746 to add references to Crimea and to 15 CFR § 746.6(a)(4). Finally, this rule updates supplement no. 7 to part 746 to include a reference to Crimea in the supplement’s heading, introduction, and paragraph (b).
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