Russia Added To Section 126.1
On March 18, the U.S. Department of State amended the International Traffic in Arms Regulations (ITAR) to include Russia in Section 126.1. This coincides with other actions by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC).
All of these actions seem to center around the alleged poisoning of Aleksey Navalny – a prominent political opponent to the current Russian administration. Navalny was apparently poisoned using a nerve agent called Novichok, which is controlled as a chemical/biological weapon.
Specifically regarding ITAR 126.1, this means that the United States now has a general policy of denial for any licenses or approvals to export and/or import defense articles and defense services with respect to Russia.
What Does This Update Mean For Your Business?
The language states that such policy is in force but that certain approvals may be made “on a case-by-case basis.” These two policy exceptions are for: (1) government space cooperation; and (2) commercial space launches prior to September 1, 2021. Otherwise, as a general practice rule, all potential exports of defense articles or defense services are now prohibited.
The BIS actions included adding 14 entities located in Russia, Germany and Switzerland to the Entity List. This is based on these entities’ involvement with Russian weapons of mass destruction programs. Adding these entities to the list triggers a BIS export license requirement for any transaction subject to the EAR.
OFAC designated seven Russian officials to its Specially Designated Nationals (SDN) List.
Additional U.S. Sanctions
It’s worth noting that the State Department has also expanded its existing Russian sanctions imposed in 2018 pursuant to the U.S. Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”). Several waivers from the CBW Act have been authorized by the President. These include:
- Deemed export licenses for Russian nationals working in the United States
- Exports to wholly owned subsidiaries of U.S. and other foreign companies in Russia
- Exports to ensure the safe operation of commercial passenger aviation
- Foreign assistance to Russia
- Certain exports under the following EAR license exceptions: TMP, GOV, BAG, AVS and ENC
Just because your transaction may appear on this list of waivers above does not mean you should proceed without getting a license or approval from the U.S. Government. Each application is reviewed on a case-by-case basis, and a presumption of denial exists.
If you need help understanding these heightened restrictions for Russia or doing business with Russian entities, please schedule a no charge consultation with one of our consultants today.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.