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May 16, 2022

U.S. Government Issues New Rules Governing Business Dealings In Russia

On May 11, the U.S. Commerce Department’s Bureau of Industry and Security (BIS), issued a final regulation expanding existing restrictions against various Russian industry sectors. The restrictions impact a broad range of inputs and products, including industrial engines, boilers, motors, fans, ventilation equipment, bulldozers, and many other items with industrial and commercial applications. The rule took effect May 9, two days before the final regulation was released.

The policy brings the United States in line with export controls the European Union has put into place by further by broadly restricting Russia’s ability to access “items that it needs to support its military capabilities.”

Specifically, the regulation expands the licensing requirements for exports to Russia under the BIS Russian Industry Sector sanctions by adding 205 new Harmonized Tariff Schedule (HTS) codes and 478 corresponding Schedule B numbers. Exporters of these items must now acquire a license to export or reexport to, or transfer within, Russia unless authorized. While exporters may apply for a license, BIS will review applications under a policy of denial unless items serve a humanitarian purpose.

The final rule is here. Read more here.

Also last week: the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued guidance to public companies regarding disclosure obligations related to Russia’s invasion of Ukraine. The guidance, available here, directs companies to consider disclosing:

  • Direct or indirect exposure to Russia, Belarus, or Ukraine through operations, employees, investments in Russia, Belarus, or Ukraine, securities traded in Russia, sanctions against Russian or Belarusian individuals or entities, or legal or regulatory uncertainty associated with operating in or exiting Russia or Belarus;
  • Direct or indirect reliance on goods or services sourced in Russia or Ukraine or, in some cases, in countries supportive of Russia;
  • Actual or potential supply chain disruptions; and
  • Business relationships, connections to, or assets in Russia, Belarus, or Ukraine.

Finally, On May 8, the United States, the European Union and G7 countries announced their commitment to take further measures against Russia. The United States also announced new prohibitions that ban services critical to Russia’s war effort. Read that announcement from the U.S. Department of the Treasury here.

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