US once again tightened restrictions on exports to Russia - ForumDaily
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The US once again tightened restrictions on exports to Russia

Electronics supplies for the civilian sector will be impossible without a license, writes RBC.

Photo: Shutterstock

The United States has once again tightened export control rules for the supply of goods to Russia. On June 29, two new rules of the Bureau of Industry and Security (BIS) of the US Department of Commerce came into force, which further limit the potential export of sensitive technologies to Russia (as well as China and Venezuela).

Entering a license for civilian supplies

The first rule cancels the exception for American exporters, who previously could deliver to Russia without a license a relatively wide range of goods if they are intended for civilian use by civilian consumers. These are bearings, semiconductors, computers, telecommunications equipment, radar systems, equipment for the production of aircraft engines and more. Now, even if these goods are intended to be used exclusively for civilian purposes, the exporter will need to obtain a special license from the US Department of Commerce. This takes additional time, and export authorization may be denied if BIS has any doubts about the end user of such products.

Apart from Russia, China and Venezuela, the change will also affect Armenia, Azerbaijan, Ukraine, Belarus, Kazakhstan and Iraq.

BIS explained the cancellation of the “civilian” license for such deliveries by the fact that countries like China or Russia often use a strategy to integrate civil and military sectors, which makes it difficult for US exporters to identify the end user. In addition, sometimes American technology, delivered to civilian consumers, subsequently falls into the hands of defense industry organizations.

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Removing the “civilian” exclusion will affect some US exporters (and re-exporters of US products), said Doug Jacobson, managing partner of sanctions and export controls, US law firm Jacobson Burton Kelley PLLC.

“For example, I just applied for a US export license for a European client to supply an electronic product to Russia, which would normally be exempted due to civilian use,” Jacobson told RBC. In general, the abolition of this exemption should not affect the ability of companies to sell their products [including to Russia], but the process will take longer because of the need to obtain a BIS license.

Inability to supply an iPhone for the army

The second rule, affecting Russia, China and Venezuela, expands the definition of “military use” of goods, which will narrow the already minimal ability of the Russian defense sector to purchase American goods, technology and software. “End military user” will mean the armed forces, the national police, the national guard, intelligence services, as well as “any person or organization whose actions or functions are intended to support the military use” of the product. Adding the last paragraph will complicate the supply of American goods for those users in Russia who are at least somehow connected with the military or power sector.

“Final military use” will now mean not only the direct development or production of military products, but also the use of any product to “support or facilitate the operation, installation, maintenance or repair, modernization” of military products. On the issue of exporting goods and technologies to Russia for “end military users” or “end military use” (in the expanded definition), BIS will follow a refusal policy: in other words, exporters should not even try to obtain an export license.

Generators for use at nuclear power plants, sensors and lasers, propulsion systems, certain equipment for ships, acoustic equipment for detecting underwater objects, etc. are added to the list of goods that can no longer be delivered to military users. For example, the delivery of an iPhone or a copy of Microsoft Windows to a military user in Russia or China will become almost impossible, says the blog of the international law firm Pillsbury Winthrop Shaw Pittman.

Doug Jacobson believes that these changes will affect the export of electronic parts and components to China. “The hardest part now is to determine whether the end user in China is military or not. In many cases, this is difficult to do, so we recommend that companies request end-user certificates from their customers and distributors, ”says the lawyer.

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The new rules specifically stipulate that restrictions will not affect the export or re-export to Russia of certain goods destined for the International Space Station (ISS), including the launch of spacecraft at the station. The US administration usually removes space cooperation with Russia from the scope of sanctions.

In February, the US Department of Commerce transferred Russia to the category of countries of concern in terms of exports of missile and nuclear technologies there. As a result, the United States stopped issuing licenses for the export to Russia of materials that could be used to make chemical or biological weapons, technologies that are dangerous from the point of view of nuclear proliferation, and rocket technologies (including ballistic missiles, launch vehicles, probes, and unmanned systems - cruise missiles, reconnaissance drones, etc.).

In August 2018, the United States banned the supply of US state-owned goods and technologies to Russian state-owned enterprises that were labeled “national security” in the US nomenclature: avionics, underwater vehicles, some gas turbines, calibration equipment, electronic components, information security systems, etc. For civilian use by commercial consumers, nothing has changed.

It is difficult to say how the new restrictions introduced from the end of June will affect US exports to Russia, since information on the actual export of sensitive goods from the United States is not public.

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