In response to Russia’s further invasion of Ukraine, and Belarus’ enabling of it, the Commerce Department’s Bureau of Industry and Security (BIS) has amended the Export Administration Regulations (EAR) to impose significant Russia- and Belarus specific controls on exports, reexports and transfers of many different types of U.S.- and foreign-produced commodities, software and technology, which are collectively referred to as “items.” U.S. and non-U.S. companies with, and that choose to continue, any direct or indirect involvement with Russia or Belarus will need to spend a significant amount of time studying the rules and updating internal policies and procedures to ensure compliance.
In sum, there is little that can be exported or reexported that involves Russia or Belarus, or Russian or Belarusian entities, directly or indirectly, without requiring an analysis of complex and novel U.S. and allied and partner country export controls. To ensure compliance, one will need to determine, at a minimum, (i) which items of interest are identified on the EAR’s Commerce Control List as controlled for “AntiTerrorism” reasons; and (ii) which foreign-made items are produced using technology, software or equipment that is subject to the EAR.
A simplistic, imprecise, but nonetheless helpful way of thinking about the new controls is the following:
- If the item at issue is of a type described on the Commerce Control List, whether U.S.- or foreign-produced, then it generally cannot be shipped from anywhere to anyone in Russia or Belarus for any reason without a license or other authorization.
- If the item at issue is of a type not described on the Commerce Control List (i.e., an EAR99 item), whether U.S.- or foreign-produced, then it generally can be shipped to Russia or Belarus, so long as it would not be for a military end use, a military end user or involving an entity on the Entity List.
The purpose of the new controls is “to protect U.S. national security and foreign policy interests by restricting Russia’s access to items that it needs to project power and fulfill its strategic ambitions.” The rule does this by leveraging the “global dominance of U.S.-origin software, technology, and equipment (including tooling)” to largely block the export and reexport of U.S.- and foreign-produced items that are essential inputs for sectors important to the Russia and Belarusian economies, primarily their defense, aerospace and maritime sectors. The related purpose of the parallel controls against Belarus is to restrict its access to items “it needs to support its military capabilities and preventing such items from being diverted through Belarus to Russia.”
The rules reflect an extraordinary amount of export control cooperation and coordination among close allies and partner countries that has not been seen since the end of the Cold War. In particular:
- The allies and partner countries have agreed to a common licensing policy of denial for exports of controlled items to Russia and Belarus. Until these rules, the standard had been one of “national discretion,” which allows each country to make its own licensing decisions without a need to coordinate with other countries.
- The allies and partner countries have each agreed to impose their own unilateral controls on items that only the United States has historically controlled, namely AntiTerrorism-controlled items. Until these rules, allies and partner countries have been reluctant to, or did not have the legal authority to, impose controls on items that were not identified in one of the four primary multilateral export control regimes.
- The rules’ extraterritorial controls on foreign-produced items do not apply if the items are produced in countries that commit to imposing substantially similar controls to those of the United States. This creates an incentive for other countries to cooperate, reduces the negative impacts of unilateral controls on U.S. industry and reduces the incentive to design out U.S.-origin content or items produced with U.S. technology or tools.
Indeed, the rules create a whole new paradigm, structure and purpose for coordinated export controls. That is, traditional multilateral export controls since the end of the Cold War have been focused on regulating weapons of mass destruction, conventional weapons, and the bespoke and dual-use commodities, software and technologies necessary for their development, production or use. In contrast, these rules have a much broader purpose, which is the plurilateral 1 control over exports to specific end users and the types of items important to a country’s strategic economic and military objectives. In particular, the White House stated that these “actions will ensure that the military as well as the aerospace, maritime and high-technology sectors do not obtain U.S. technology goods and technology that can be used to support Russian technical maintenance and innovation.” Export controls are being used as, and to enhance, economic sanctions tools.us-government-imposes-expansive-novel-and-plurilateral-export
To read the full report by Akin Gump, please click here.