Industry sector

On May 9, 2022, the U.S. Department of Commerce issued a final rule (the “Final Rule”) expanding Russian industrial sector sanctions to cover additional items subject to Export Administration Regulations (the “EAR”) beyond restrictions targeting Russian energy. sector.

Under Russian Industry Sanctions, all items identified in EAR Part 746 Supplement No. 4 (“Supplement No. 4”) that are subject to EAR trigger a license requirement when they are exported, re-exported or transferred (in-country) to or within Russia. Supplement No. 4 items are classified as EAR99 and would not otherwise require authorization for export, re-export or transfer to or within Russia.

A list of categories of items covered by Extended Supplement #4 is available here, and the extended controls take effect May 9, 2022. License applications for items subject to these sanctions are reviewed under a denial policy, except where they are for items that may be required for health and safety reasons, which are reviewed under a licensing review policy on a case-by-case basis. The final rule also adds an additional policy of reviewing licenses on a case-by-case basis when a license request is made for items that meet humanitarian needs.

In addition, the final rule clarifies that only items identified in the HTS Description column of Supplement No. 4 are subject to the licensing requirement imposed under Russian industry sanctions. Additionally, the attached HTS Code, Schedule B and Schedule B Description columns are provided for reference and are not intended to indicate that all items classified under these HTS codes or Schedule B numbers are subject to the additional license requirement.

Finally, the final rule also includes an “escape clause” for shipments of items added to Supplement #4 by the final rule that are removed from licensing exception eligibility or export, re-export or the transfer (in the country) without a permit. Specifically, those shipments that were en route pursuant to an actual order to or within a non-U.S. destination on May 9, 2022 may continue to that destination under their prior eligibility.

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