Yesterday the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced that it had imposed on Belarus the extensive export controls made effective on Russia on February 24, 2002. These measures were taken in response to Belarus’s enabling of the Russian invasion of Ukraine, with an aim to preventing the diversion of items to Russia through Belarus. The unpublished version of these new regulations can be found here. A summary of the initial restrictions that BIS placed on Russia can be found here.
The new rule — which will be published on or about March 8, 2022 — subjects Belarus to the same licensing restrictions under the Export Administration Regulations (EAR) that were previously imposed on Russia. BIS has further revised some of the Russian restrictions, as detailed below:
New Commerce Control List (CCL)-based license requirements for Belarus
- A license is required for the export, reexport, or transfer (in-country) to or within Belarus of any item subject to the EAR and specified in an Export Control Classification Number (ECCN) in Categories 3, 4, 5, 6, 7, 8, or 9 of the CCL, excluding deemed exports and deemed reexports.
- These ECCNs include microelectronics, telecommunications items, sensors, navigation equipment, avionics, marine equipment, and aircraft components, and includes many items that did not previously require a license to Belarus on the basis of their CCL classification.
Review policy of denial for Belarus license applications
- BIS is establishing a policy of denial for applications for the export, reexport, and (in-country) transfer of items subject to licensing requirements for Belarus, with limited exceptions.
- There will be case-by-case review of license applications relating to safety of flight, maritime safety, humanitarian needs, government space cooperation, civil telecommunications infrastructure, government-to-government activities, and to support limited operations of U.S. and partner country companies in Belarus.
Addition of Belarus to ‘military end use’ and ‘military end user’ controls; removal of exception
- BIS is adding Belarus to the list of countries that are subject to ‘military end use’ and ‘military end user’ controls. Restrictions on Belarusian ‘military end uses’ and ‘military end users’ will apply to all items subject to the EAR, instead of to the narrower subset of items identified in Supplement No. 2 to part 744 of the BIS regulations.
- The only exceptions are for food or medicine designated as EAR99. BIS has removed the previously issued exception for ECCN 5A992.c and 5D992.c items destined for end-users other than Russian “government end users” and Russian state-owned enterprises (SOEs).
Russia/Belarus Foreign Direct Product Rule (Russia/Belarus FDP rule)
- The Russia/Belarus FDP rule establishes a license requirement for foreign-produced items that are the direct product of certain U.S.-origin software or technology and destined for Belarus. Specifically, a license is required for foreign-produced items when it is known that the item is destined for Belarus or will be incorporated into or used in the production or development of any part, component, or equipment produced in or destined to Belarus. This includes foreign-produced products that are the direct product of certain U.S.-origin software or technology subject to the EAR, or items that are produced by a complete plant (or a major component of a plant) that is itself the direct product of such U.S.-origin technology or software.
- Does not apply to foreign-produced items that would be designated as EAR99.
- Partner countries that are adopting or have expressed intent to adopt substantially similar measures are not or will not be subject to the Russia/Belarus FDP rule and Russia/Belarus MEU FDP rule (discussed below). This includes all 27 EU member states, Australia, Canada, Japan, and the United Kingdom.
Russia/Belarus ‘military end users’ Foreign Direct Product Rule (Russia/Belarus MEU FDP rule)
- The Russia/Belarus MEU FDP rule establishes licensing requirements for the same products covered by the Russia/Belarus FDP rule, but expands those licensing requirements to include EAR99 items.
- These licensing requirements apply to entities with a Footnote 3 designation on the Entity List who are parties to a transaction, or if there is knowledge that the item will be incorporated into or used in the production or development of any part, component, or equipment produced, purchased, or ordered by any entity with a Footnote 3 designation.
- The Footnote 3 designation indicates that the Russia/Belarus MEU FDP rule licensing requirements apply to the listed party. This is in addition to the licensing requirements for all items subject to the EAR except for food or medicine designated as EAR99.
Addition of Belarusian entities to the Entity List and revision to certain Russian entities
- BIS has added two Belarusian entities to the Entity List
- Licenses are required to export, reexport, or transfer (in-country) all items subject to the EAR to these entities, subject to a license review policy of denial.
- BIS modified the entries for eight existing Russian entities to remove the exclusion for ECCN 5A992.c and 5D992.c unless for Russian or Belarusian “government end users” and Russian or Belarusian state-owned enterprises (SOEs).
Additional updates to the EAR
- BIS has updated the Country Group designations for Belarus to Country Groups D:2 and D:4 to reflect to reflect that Belarus is a country of concern for both nuclear proliferation and missile technology proliferation.
- BIS has added Belarus to the countries subject to ‘military-intelligence end use’ and ‘military-intelligence end user’ (MIEU) restrictions.
- Licenses will be reviewed on a case-by-case basis.
- The amendments significantly restrict the use of EAR license exceptions for Belarus exports, reexports, and transfers (in-country).
The White House announced yesterday that BIS will add Russian and Belarusian entities that have been involved in, contributed to, or otherwise supported the Russian and Belarusian security services, military and defense sectors, and/or military and defense research and development efforts to the Entity List. Also announced by the White House were forthcoming export controls on technology exports relating to oil and gas extraction equipment in order to degrade Russia’s status as a leading energy supplier.
As with the February 24, 2022, sanctions issued by BIS, these additional sanctions cover a broad range of dual-use items and impose significant restrictions on military end users. With the expansion of these sanctions to Belarus, companies need to consider the extent to which they conduct business with Belarus, including:
- Whether the company exports or reexports U.S.-origin products to Belarus and, if so, the ECCNs of these products;
- Whether the company produces, exports, or reexports items that are the foreign direct product of certain U.S.-origin software or technology subject to the EAR; and
- Whether the company engages in any business with entities listed on the Entity List.
The sanctions and restrictions described above supplement — and in some cases, modify — sanctions announced in recent weeks by the U.S. government. U.S. sanctions and export controls with respect to Russia, Ukraine, and Belarus are expected to change in the coming days and weeks. Contact us if you have questions about these developments or their potential impact on your business.