UPDATE: U.S. Ramps Up Pressure Against Russia with New Round of Sanctions and Export Controls

4 min

This is part of a series of advisory alerts from Venable's International Trade and Logistics Group in response to the ongoing situation in Ukraine. Earlier alerts on Russia and Ukraine sanctions are available here, here, here, and here.

On Friday, March 11, 2022, President Biden, in coordination with G7 leaders in the United Kingdom, European Union, Canada, and Japan, announced another round of economic actions aimed at further isolating the Russian economy in response to the war in Ukraine. With a new ban on the export of luxury goods to Russia; an import ban on Russian seafood, spirits, and diamond imports; and other restrictions and Russian countermeasures, the latest developments underscore the escalating risks of continued trade with Russia and Belarus across economic sectors.

In the March 11, 2022 executive order (EO), "Prohibiting Certain Imports, Exports, and New Investment with Respect to Continued Russian Federation Aggression," President Biden announced trade restrictions:

  • Banning the export, re-export, sale, or supply, directly or indirectly, from the U.S. or by a U.S. person, of "luxury goods" to any person located in Russia.

According to the new implementing rule from the Department of Commerce, Bureau of Industry and Security (BIS), U.S. persons are now restricted from exporting, re-exporting, or transferring certain "luxury goods" to Russia and Belarus, as well as to Russian and Belarusian individuals, wherever located, who have been designated by the Office of Foreign Asset Control (OFAC) under certain Russia- or Ukraine-related sanctions. The term "luxury goods," as defined in the rule, is quite broad and encompasses a range of tobacco, beverage, skincare, clothing, home goods, and retail products. In effect, this essentially prohibits U.S. persons from selling, whether directly or indirectly, any listed "luxury goods" to customers in Russia or Belarus, or to sanctioned Russian and Belarusian individuals, wherever located, with very limited exceptions. The European Union also announced a similar ban last week.

  • Blocking the Import of Russian-Origin Seafood, Alcoholic Beverages, and Non-Industrial Diamonds

This ban is effective on March 11, 2022, with a wind-down period until March 25, 2022, for contracts entered into prior to the effective date. In a new FAQ, OFAC listed the Harmonized Tariff Schedule of the United States (HTSUS) codes for affected products.

  • Banning the export, re-export, sale, or supply, from the U.S. or by a U.S. person, of dollar-denominated banknotes to the Russian government or any person located in Russia.

General Licenses No. 18 and No. 19 authorize limited transfers, in U.S. dollar-denominated banknotes that are ordinarily incident and necessary for "personal remittances," from U.S. persons to persons located in Russia, or for the "personal maintenance" of U.S. persons located in Russia.

In the EO, President Biden also expanded the authority of the secretary of the treasury, in consultation with the secretary of state, to further ban U.S. investments in Russia, and authorized new blocking sanctions on additional Russian elites.

In addition, the EO contains a standard "facilitation provision" banning U.S. persons from facilitating, approving, financing, or guaranteeing any transactions by foreign persons, if such a transaction would be prohibited were it to be performed by a U.S. person or in the U.S.

  • Revoking Normal Trade Relations with Russia

Also on Friday, President Biden announced he was working with Congress to promptly revoke Russia's status of "permanent normal trade relations." Once Congress does so, the U.S. can move to impose higher tariffs on Russian products. Similarly, the EU and other G7 nations have announced plans to strip Russia of its "most favored nation" trade relations status.

  • Russia Retaliates with New Countermeasures

In response to mounting sanctions imposed by the U.S. and its allies, Russian President Vladimir Putin recently announced an export ban on approximately 200 Russian products, including certain vehicles, medical supplies, agricultural commodities, electrical equipment, and timber. Other countermeasures could soon follow, such as the nationalization of assets owned by foreign companies that have left Russia since the invasion of Ukraine.