Effective August 27, 2018, the Trump administration has issued new sanctions and export control restrictions against Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 ("CBW Act"), while issuing a number of targeted waivers and license exceptions to enable certain trade activities to continue. Today's actions follow an August 8 announcement that the administration had decided to pursue CBW Act sanctions on the Russian government in connection with the March 2018 assassination attempt against Sergei Skripal in the United Kingdom. The new measures have implications for both US and non-US companies engaged in trade involving any activities related to the following:
- Provision of commercial/dual-use goods, software or technology subject to US export controls on national security grounds
- Provision of defense articles and services
- Foreign assistance to Russia
- US government financing, credit or credit guarantees for Russia-related transactions
- Financing, logistical support or other assistance related to any of the above
In addition to their immediate impact, today's actions have implications for potential expansion of these restrictions in the near future if Russia does not take certain actions within the coming three-month timeframe.
Under the CBW Act, the United States can impose a range of sanctions against a government of a foreign country that has made substantial preparation to use or has used chemical or biological weapons. According to the State Department's official announcement, today's action reflects a US determination that the Russian government meets this criterion "[f]ollowing the use of a 'Novichok' nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal."
The sanctions imposed by the United States are effective August 27, 2018, and will remain in place for at least one year and until further notice. Notably, today's action imposes licensing restrictions for Russia on any items subject to the Export Administration Regulations ("EAR") that are subject to national security controls, which cover a very broad range of dual-use goods, software and technology. Whereas national security-controlled items were previously subject to case-by-case licensing review, the Commerce Department will now impose a policy of denial for these goods. However, the United States has also instituted several significant waivers that create exceptions to the national security-controlled restrictions. Exports and reexports of goods or technology:
- Are permitted if eligible under the terms and conditions of the following License Exceptions: GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS of the EAR. Exporters and reexporters should carefully review the terms and conditions of these license exceptions in order to ensure compliance.
- Will be reviewed on a case-by-case basis if related to new licenses:
- For commercial end users' civil end uses in Russia.
- Necessary for the safety of flight of civil fixed-wing passenger aviation.
- For deemed exports and reexports to Russian nationals. A deemed export to Russia is the release of controlled technology to a Russian national in the United States, while a deemed reexport to Russia is a release of controlled technology to a Russian national in a third country.
- For exports and reexports to wholly owned US subsidiaries in Russia.
- In support of government space cooperation and commercial space launches.
In addition to the National Security control provisions, the United States has also implemented the following sanctions:
- The termination of foreign assistance to Russia, except for urgent humanitarian assistance and food or other agricultural commodities or products.
- The imposition of an arms ban, whereby the United States will terminate (a) sales to Russia under the Arms Export Control Act of any defense articles, defense services, or design and construction services and (b) licenses for the export to Russia of any item on the United States Munitions List. There is an exception to this policy for issuance of licenses in support of government space cooperation and commercial space launches, which will be reviewed on a case-by-case basis. The United States is also terminating all foreign military financing for Russia under the Arms Export Control Act.
- The denial to Russia of any credit, credit guarantees or other financial assistance by any department, agency or instrumentality of the United States government, including the Export-Import Bank of the United States.
In response, Russia has threatened retaliatory actions, such as banning US politicians from Russia.
Under the CBW Act, Russia has three months to provide assurances as to its discontinued use of chemical and biological weapons. If Russia does not comply, the CBW Act calls for the imposition of a second round of harsher sanctions, including potential restrictions on multilateral development bank assistance, bank loans, imports, diplomatic relations, aviation and further restrictions on exports.