Foreign Trade16.03.2022 Newsletter
It has now been almost three weeks since Russian troops began the invasion of Ukraine in the early hours of 24 February 2022 – three weeks that have doubtlessly been the most eventful weeks in the history of international economic sanctions and embargoes. On 15 and 16 March 2022, the fourth package of EU sanctions since the beginning of the Ukraine war took effect. They especially focus on the energy and luxury goods sectors, as well as steel and iron, in addition to sanctioning further individuals and companies.
In what is already a complex environment of embargoes and sanctions, it can sometimes be difficult to keep track of the current legal situation. Below, we are providing you with an overview of the new and existing sanctions.
New EU sanctions
The amendment of EU Regulation 833/2014 that took effect on 16 March 2022 provides for the following additional sanctions:
- A (virtually) total ban on any and all transactions with certain Russian state-owned enterprises such as, among others, Gazprom Neft, Transneft, Kamaz, Rosneft (the exceptions are narrowly limited to, in particular, the acquisition of fossil fuels and other raw materials such as titanium and aluminium, etc.)
- An EU ban on the purchase, transportation and import of specific iron and steel products that currently fall under EU protection measures
- A far-reaching prohibition of new investments in the entire Russian energy sector, with limited exceptions for civil nuclear energy and the energy supply of the Union
- An EU export ban on luxury goods (e.g. luxury cars, jewellery, household goods, porcelain, electrical appliances, clothing and bags, food and alcohol, pedigree breeding animals, etc.), targeting the Russian elite directly
- A ban on the rating of Russia and Russian enterprises by EU rating agencies and the rendering of rating services for Russian customers
In addition, the list of sanctioned individuals and establishments was extended to include further oligarchs and business elites with links to the Kremlin as well as enterprises operating in the military and defence sectors (amendment of Regulation 269/2014, effective 15 March 2022). Overall, about 900 individuals and 70 enterprises are now subject to various degrees of sanctions under EU law.
Overview of the existing EU sanctions
These new sanctions supplement the existing three sanction packages of the EU. Through these sanctions, extensive import and export bans as well as bans on services are now in place in almost all industrial sectors, in particular in the areas:
- Military goods and technologies, or such that can be used for military purposes
- Financial market
- IT and telecommunication
- IT security
- Sensors and lasers
- Aviation and maritime
- Navigation and drives
- Crude oil and natural gas
- Sheet metal and steel products
- Luxury goods in the broader sense
What needs to be done
In addition to the usual sanctions screening of business partners and customers, all companies that do direct or indirect business with Russia need to closely check whether their goods or components of such goods are listed in an annex to Regulation 833/2014, as now amended. Besides Annex VI of the Regulation, Annex XVIII is now also of particular relevance. Goods affected by the purchase and import bans in the steel and iron sector (above all sheet metals and pipes) can be found in Annex XVII of the Regulation.
Information in the press often only provides an initial overview. For example, the sanctions concerning luxury goods also cover goods that one generally would not understood as necessarily being “luxury goods”, such as ski suits, slippers, antenna amplifiers, smart phones, electronic articles for household use worth more than 750 EUR, certain clothing and even nappies (irrespective of the material used). Whether a product is listed depends on whether it can be subsumed under the specified HS code and exceeds the specified value limit.
To do: it is absolutely vital that companies that distribute, service, repair or provide support in connection with the corresponding goods or technologies and that do direct or indirect business with Russia conduct their own examination of the annexes of Regulation 833/2014, as now amended. When doing so, they must ensure that they conduct their sanctions screenings on the basis of the current lists of personal sanctions.
Observance of US sanctions
In addition to these far-reaching EU sanctions, equally far-reaching sanctions have been imposed by the USA, Great Britain and other countries.
US law claims for itself worldwide validity, and many European companies have US business or group associations in the USA or use goods or technologies with US origin. The existing US sanctions against Russia are therefore also relevant for many EU companies. The economic sectors affected by the US sanctions are essentially the same as those affected by the EU sanctions. However, companies should always check on a case-by-case basis whether so-called non-US persons are also targeted by the sanctions.