New US Sanctions against Russia: How Companies Should Respond to the New Export Control Regulations

On June 12, 2024, on the eve of the G7 Leaders Summit in Italy, the US Department of Commerce, Department of the Treasury, and Department of State simultaneously announced a new round of export controls, embargoes, and economic sanctions against Russia. Subsequently, in the joint communiqué of the G7 Summit released on June 14, G7 member states jointly reaffirmed their commitment to comprehensively strengthening sanctions and embargoes against Russia. This series of measures not only directly affected the Russian market but also had a profound impact on global enterprises engaged in trade with Russia. For customers who needforeign tradeservice expert with 20 years of industry experience, this article will systematically analyze the core points of clothingExport Representationservices, it is crucial to understand and comply with these new regulations to ensure compliant operations and avoid potential risks.

Newly Added Embargo Items

According to the Export Administration Regulations (EAR), the Bureau of Industry and Security (BIS) of the US Department of Commerce has significantly expanded the scope of embargo items in Appendix 4 and Appendix 6, adding 522 six - digit HTS - coded items covering 19 chapters, including ores, mineral fuels, base metal products, and weapons and ammunition. This means that exports, re - exports, and transfers within Russia related to these items will be subject to stricter control.

Specific Case: A Chinese enterprise exports copper products (HTS code: 7408.11) to Russia. According to the new regulations, the enterprise must apply for an export license and faces a high risk of rejection.

EAR99软件禁运

BIS has added embargo requirements for specific EAR99 software, including enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and other office automation management software. These software are crucial for the production and management of various industries, and the embargo measures are bound to have a significant impact on the operations of Russian enterprises.

Practical Impact: An IT company provides ERP software services to Russian customers. After the new regulations come into effect, the company must stop its business in Russia; otherwise, it will face serious legal consequences.

CCD许可例外缩限

BIS has narrowed the scope of application of the consumer communications device license exception (CCD). After the adjustment, some consumer electronics products will no longer be eligible for the CCD license exception for export to Russia. This adjustment will have a relatively large impact on electronics suppliers.

Example: An electronics manufacturer originally sold smartphones to the Russian market through the CCD license exception. After the new regulations are implemented, the enterprise must re - evaluate its export strategy and apply for a new export license.

Update of the Entity List

In this new regulation, BIS has added 4 Chinese entities and 8 Hong Kong, China addresses to the Entity List, aiming to strengthen the control of the transfer of highly sensitive items to Russia. This measure reflects BISs determination to crack down on shell companies and circumvention of control.

Analysis: A Hong Kong companys registered address is added to the Entity List. Even if the company itself has no Russia - related transactions, it will face strict export controls, which may lead to business restrictions.

Sanctions on Information and Software Services

According to the new decision of the US Department of the Treasury under Executive Order 14071, Americans or entities in the US are prohibited from providing enterprise management software, design and manufacturing software, IT support services, and cloud services to Russia. These restrictions will directly affect the informatization construction and operations of Russian enterprises.

Practical Impact: A Chinese software company provides CAD design software to Russian customers. After the new regulations are implemented, the company must stop the relevant services; otherwise, it may face US sanctions.

Sanctions Guidelines for Foreign Financial Institutions

The US Department of the Treasury has updated the sanctions compliance guidelines for foreign financial institutions, emphasizing the secondary sanctions risks of Russia - related transactions. Financial institutions must strictly screen transaction participants to prevent providing financial services to sanctioned Russian entities.

Risk Warning: An international bank provides trade financing services to Russian customers. If the customers are involved in the sanctioned Russian military - industrial base, the bank will face serious secondary sanctions risks.

SDN清单更新

The US Department of the Treasury and Department of State have added more than 300 entities to the Specially Designated Nationals and Blocked Persons (SDN) List, including 46 Chinese entities. These entities are sanctioned for participating in the Russian sanctions - evasion network or directly supporting Russias sanctioned industries.

Case: A Chinese company is added to the SDN List for providing drone components to Russia. The company will face asset freezes and transaction restrictions, seriously affecting its international business.

The new round of US export controls and sanctions related to Russia has had a profound impact on global enterprises engaged in trade with Russia. Customers who need foreign tradeimport and exportagency services must pay close attention to these new regulations to ensure that their business operations comply with relevant laws and regulations and avoid serious economic and legal consequences due to non - compliant operations. Enterprises should strengthen compliance management, prudently assess export risks, and adjust their business strategies in a timely manner to cope with the increasingly complex international trade environment. We recommend that customers further understand the detailed content of these new regulations and seek professional legal and compliance advice when necessary to ensure the sustainable and compliant development of their businesses.

In the context of the increasingly complex current international trade environment, compliant operation is not only a guarantee for enterprise development but also an important means for enterprises to enhance their international competitiveness. We are committed to providing customers with professional foreign trade import and export agency services to help customers achieve business growth under the premise of compliance. If you have any questions about the new round of US export controls and sanctions related to Russia or need further assistance, please feel free to contact our professional team.