Rest assured that the U.S. government and our allies and partners are focused on enforcing the sanctions and restrictions on Russia as a result of Russia’s invasion of Ukraine. In fact, in recent remarks to the Ukrainian Congress Committee of America, Matthew Axelrod, Assistant Secretary for Export Enforcement, described the Department of Commerce’s Bureau of Industry and Security’s (BIS) actions in preventing Russia from obtaining tools of war. He stated that BIS’s mission is to ensure that bad actors like Russia can’t get and use sensitive U.S. goods and technologies for destructive or malicious purposes.
OEE Focus on Enforcement of Russian Sanctions
BIS has worked in close coordination with U.S. allies and partners to impose far reaching export restrictions that limit Russia’s ability to obtain the goods and technologies it needs to wage war; including expansive controls on dual-use goods, luxury items, as well as limiting transactions with specific sanctioned parties. More recently, BIS imposed additional controls on Russia for various industrial items that are classified as EAR99. This collective effort includes the U.S. with 37 allies and partners around the globe.
Secretary Axelrod further advised that since the beginning of the invasion of Ukraine by Russia and the sanctions implemented at the end of February, there has been a 90% decrease in exports compared with the 30 days prior. Reporting suggests that Russia’s defense industries are unable to obtain spare parts needed and even a report that Aeroflot may be unable to sustain even domestic flights as Boeing and Airbus have halted exports of spare parts. It is further noteworthy that Chinese telecom company Huawei suspended all orders in Russia and furloughed staff to avoid US and allied sanctions. This demonstrates that sanctions are working.
The Office of Export Enforcement (OEE) is tasked with enforcement of the sanctions with the support of 130 agents stationed in 30 cities nationwide. OEE is and has its eyes and ears out by actively:
- Reviewing AES records for exports to Russia. Secretary Axelrod indicated that since end of February OEE has prevented 145 shipments worth nearly $76 million from being exported to Russia.
- Identifying 176 airplanes that they believe were illegally exported to Russia and an additional 7 airplanes that went to Belarus. BIS views the public announcement as putting other countries on notice that if they service those aircrafts that they are violating US export controls.
- Identifying specific airlines as being unable to receive US Parts for their airplanes. This includes Aeroflot.
- Listing 260 companies with Russian defense affiliations on the Entity List which means a license is required to export and there is a presumption of denial. Included in these companies are Russia Integrated Circuit manufacturers, space-based and satellite-based component manufacturers and UAV and shipbuilders.
- Performing outreaches to companies that did business prior to the conflict with parties that are now sanctioned. This is to ensure that the business has ended as well as to provide education. BIS has conducted 412 of those outreach efforts.
- Conducting physical inspections of banned items to ensure that they are not being diverted to Russia.
Further, Bloomberg News reported that Secretary Axelrod also described additional enforcement efforts including higher fines, earlier public disclosure of violations and even possibly make public charges against companies as opposed to waiting until the case is settled.
Support for Exports to Ukraine
While the U.S. is doing everything it can to prevent Russia from obtaining products that will support their effort against Ukraine, BIS is also looking to support exports to the Ukraine in their defense efforts. This includes BIS licensing teams committed to expediting license applications that are for the protection and support of Ukraine and the people of Ukraine.
With that in mind, exporters must not forget the Who, What, Where and Why of export controls:
- What are you exporting? Classify the product and review various regulations.
- To whom are you exporting? Conduct restricted party screening.
- Where are you exporting?
- For what purpose are you exporting? Obtain End Use Statements.
- Pay close attention for any diversion red flags
If you have any questions please contact Export Solutions, Inc. for a free consultation.
Rebecca Yeager is a Trade Compliance Consultant for Export Solutions -- a full-service consulting firm that specializes in helping companies comply with U.S. and international import/export regulations.