Since February 24, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has implemented numerous new export control restrictions in response to the invasion of Ukraine by the Russian Federation (Russia). These restrictions, which significantly curtail exports, reexports, and transfers (in-country) of technology, commodities, and software (collectively “Items”) destined to or transiting Russia or Belarus as well as to certain persons affiliated with Russia and Belarus, can be found in the Export Administration Regulations 15 C.F.R. Parts 730-774 (EAR). Although many of the amendments to the EAR were the subject of prior detailed Alerts, the following summary provides an overview of the key export controls currently in place, including controls implemented by the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC). This Alert is not intended to be and is not a detailed summary of the export controls implemented as a result of the invasion of Ukraine. Rather, it is a tool to help businesses, both U.S. and foreign, identify whether their transactions with Russia, Belarus, or Ukraine may now require a license, or be prohibited, under the wide-ranging export controls that have been imposed. Review of the regulations will be necessary to determine specific licensing requirements.

An overview of the sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), which apply in addition to the export controls summarized here, will be provided in a separate Alert.

I. Executive Summary

A. BIS License Requirements Relating to Russia

Exports (direct or indirect), reexports (from one third country to another), and transfers (in-country) (any transfer within any third country) of the following Items are subject to license requirements:

  • All Items on the EAR’s Commerce Control List
  • Luxury Goods (EAR99) listed in Supplement 5 to Part 746 of the EAR
  • Sector Specific Items (EAR99) listed in Section 746.5 and Supplements 2 or 4 to Part 746 of the EAR
  • Any Items subject to the EAR going to a military end-use or end-user
  • Foreign Produced Items that are subject to the EAR under the foreign direct product rules, including the specific Russia-Belarus rules in Section 746.8 and Sections 734.9(f) and (g) of the EAR
  • Any Item subject to the EAR if a person/entity on the BIS Entity List or Denied Persons List or other sanctioned persons list is involved in the transaction

For a detailed summary of each of these requirements, see Part II, below.

B. BIS License Requirements Relating to Belarus

Exports, reexports, and transfers (in-country) of the following Items are subject to license requirements:

  • All Items on the EAR’s Commerce Control List
  • Luxury Goods (EAR99) listed in Supplement 5 to Part 746 of the EAR
  • Any Items subject to the EAR going to a military end-use or end-user
  • Foreign Produced Items that are subject to the EAR under the foreign direct product rules, including the specific Russia-Belarus rules in Section 746.8 and Sections 734.9(f) and (g) of the EAR
  • Any Item subject to the EAR if a person/entity on the BIS Entity List or Denied Persons List or other sanctioned persons list is involved in the transaction

For a detailed summary of each of these requirements, see Part III, below.

C. License Requirements relating to the Covered Regions of Ukraine

Exports, reexports, and transfers (in-country) of the following Items are subject to license requirements:

  • All Items subject to the EAR, including EAR99 Items

The Covered Regions of Ukraine are: Crimea, the so-called Donetsk People’s Republic (DNR) and the Luhansk People’s Republic (LNR) regions of Ukraine.

For a detailed summary of each of these requirements, see Part IV, below.

D. DDTC License Requirements

  • All defense articles and defense services on the U.S. Munitions List (USML) contained in the International Traffic in Arms Regulations (ITAR) require licenses for export to Belarus and applications for such licenses have long been subject to a policy of denial
  • All defense articles and defense services on the USML require licenses for export to Russia and applications for such licenses are subject to a policy of denial, except for license applications related to government space cooperation, which will be considered on a case-by-case basis

For a detailed summary of each of these requirements, see Part V, below.

In addition to the additional information provided in Parts II through V regarding BIS export controls applicable to Russia, Belarus, and the Covered Regions of Ukraine and ITAR controls applicable to Russia and Belarus, further information on BIS list-based controls and compliance tips may be found in Parts VI and VII, below.

II. License Requirements Relating to Russia

Items subject to the jurisdiction of BIS under the EAR include most Items exported from the United States, U.S.-origin Items, wherever located, and foreign produced Items subject to the EAR under the De Minimis Rule or any of the applicable Foreign Direct Product Rules. The EAR’s jurisdiction is based upon the Item; both U.S. and foreign persons must comply with the EAR – including the EAR’s General Prohibition 10, which prohibits any transaction related to an Item that has been exported in violation of the EAR. For example, BIS has issued several public notices of Russian-owned aircraft that are subject to these prohibitions.

All Items on the EAR’s Commerce Control List (“CCL”) require a BIS license for export (direct and indirect), reexportation (one third country to another), or transfer (in-country) (any transfer within any third country) (15 C.F.R. Section 746.8(a)(1)) if the intended end-user is in Russia or the Item will transit Russia

As of April 8, any Item listed in any of the ten CCL categories requires a BIS license when destined for Russia, regardless of end-use or end-user. The license requirements for Items in Categories 3-9 of the CCL were imposed February 24, 2022, and the license requirements for Items in Categories 0-2 of the CCL were imposed on April 8. The permitted uses of license exceptions are very limited, although, for example, certain carve-outs for some mass market Items classified under ECCNs 5A992 or 5D992 may apply.

Deemed exports and deemed reexports are not subject to these license requirements.

Items, including EAR99 Items, subject to Russian Industry Sector Sanctions require a BIS license (15 CFR Section 746.5)

A BIS license is required for the export, reexport and transfer (in-country) to or within Russia of any Item listed in Section 746.5, Supplement 2 to Part 746 of the EAR (for certain oil and gas related end-uses) or listed in Supplement 4 to Part 746 of the EAR. As of May 9, 2022, there were over 485 Items set forth in Supplement 4. The Items listed in Supplement 4 are identified by Schedule B number, Schedule B description, Harmonized Tariff Schedule (HTS) code, and HTS description. The license requirement is based upon the HTS description. This means that Items covered more generally by the HTS Codes or Schedule B numbers in Supplement 4 are not subject to the Section 746.5(a)(1)(ii) license requirement unless described in the “HTS Description” column of Supplement 4.

EAR99 Luxury Goods require a BIS license (15 CFR Section 746.10)

Effective March 11, 2022, a BIS license is required for exports, reexports, and transfers to or within Russia of certain luxury goods subject to the EAR as well as to designated Russian oligarchs or other persons, regardless of their location.

The approximately 400 luxury goods are listed in Supplement 5 to Part 746 of the EAR; they include certain spirits, tobacco products, clothing items, jewelry, leather items, plastic items, vehicles, antiques, sporting goods, and other goods. They are identified by Schedule B number, the 2-digit Schedule B chapter head, and a 10-digit commodity description.

EAR99 Items to Military End-Uses and End-Users require a BIS license (15 C.F.R. Sections 744.21 and 744.22)

A BIS license is required for the export, reexport, or transfer to or within Russia of all Items subject to the EAR (with exceptions for food and medicine designated as EAR99) to military end-uses and end-users, including military intelligence end-uses and end-users. This includes foreign produced Items subject to the EAR as well as U.S.-origin Items. Military end-use and military end-user are broadly defined in the EAR.

BIS has designated over 145 Russian and Belarusian entities/individuals as military end-users. They now are on the BIS Entity List. No license exceptions, except for limited use of License Exception GOV, are available to overcome this license requirement.

Use of License Exceptions has been Severely Limited

The availability of license exceptions has been severely limited for transactions involving Russia. Even when a license exception is available, the terms and conditions of its use are very restrictive. It is important to review each specific control carefully as the availability and scope of license exceptions differs among the various controls.

Certain Foreign Produced Items Require a BIS License

There are two ways that foreign produced Items (commodities, technology, and software) can be subject to the EAR – i.e., under the De Minimis Rule or under the Foreign Direct Product Rules. These complex rules are summarized below; the applicable regulations should be consulted in order to determine whether the rules may apply to a specific foreign produced Item. If a foreign produced Item is subject to the EAR, it may be subject to the same export license requirements as if the Item was exported from the United States.

  • De Minimis Rule (15 C.F.R. Section 734.4). The De Minimis Rule provides that a foreign-produced Item that derives more than 25 percent[1] of its value from controlled U.S.-origin Items is subject to the EAR. As of April 8, for Items destined to Russia, any U.S.-origin Item on the EAR’s CCL would qualify as controlled content for the purpose of calculating whether more than 25 percent of the foreign made Item’s value is derived from controlled Items under the De Minimis Rule.
  • Foreign Direct Product Rules (“FDPRs”) (15 C.F.R. Sections 746.8 and 734.9). Under the FDPRs, if the foreign produced Item is the “direct product” of certain U.S.-origin controlled technology or software, then it can be subject to the EAR. There are two specific FDPRs that subject a broad range of foreign produced Items to the EAR when destined for Russia. The first one applies to any end-user in Russia and the second one, which is more restrictive, relates to military end-users and end-uses.
    • Russia/Belarus Foreign Direct Product Rule: See 15 CFR Section 746.8(a)(2) and Section 734.9(f). Foreign-produced Items subject to the EAR under this FDPR include any foreign-produced Item that is a direct product of U.S.-origin technology or software classified under any ECCN on the CCL (or produced by a plant or “major component” of a plant that is itself a direct product of such U.S. technologies and software) and that has an export classification other than EAR99.
    • Russia-Belarus Military End User Foreign Direct Product Rule: See 15 CFR Section 746.8(a)(3) and Section 734.9(g). When there is knowledge that the foreign-produced Item is a direct product of any technology or software on the CCL and “will be incorporated into, or used in the ‘production’ or ‘development’ of any ‘part,’ ‘component,’ or ‘equipment’ produced, or ordered by an entity” that is designated as a Russian military end-user per a footnote 3 designation on the Entity List, then a BIS license is required, unless the foreign produced Item is EAR99 food or medicine.
    • Exception: As of the date hereof, there are 37 countries excluded from the application of the Russia/Belarus FDPRs. These countries are excluded due to their participation in the global coalition standing with Ukrainian people against the Russian invasion and Belarusian complicity. They include the 27 states of the European Union, as well as Australia, Canada, Iceland, Japan, Liechtenstein, New Zealand, Norway, Switzerland, South Korea, and the United Kingdom.

In most cases, BIS will review license applications related to Items subject to these license requirements under a policy of denial.

III. License Requirements Relating to Belarus

The license requirements and restrictions on use of license exceptions imposed on transactions involving Belarus largely mirror those imposed on Russia with one key difference: the Russian Industry Sector Sanctions do not apply to Belarus and no comparable set of controls have been imposed as to Belarus. For a summary of the license requirements and availability of license exceptions relating to Belarus, please see the above discussion of controls applicable to Russia.

IV. License Requirements Relating to Covered Regions of Ukraine

Export license requirements applicable to Crimea have been in place for several years (15 C.F.R. 746.6), as have related sanctions. As of February 21, 2022, these requirements were extended to cover all Items subject to the EAR (other than food and medicine designated as EAR99 and certain software and Internet-based personal communications) destined to the Donetsk or Luhansk People’s Republic of Ukraine (the DNR and LNR regions, respectively). That day, President Biden issued an Executive Order prohibiting U.S. persons from engaging in new investment in the DNR and LNR regions, as well as engaging in trade, including export, import, reexport, sale or supply, of goods, services or technology, with the DNR and LNR regions. U.S. persons, wherever located, are prohibited from approving, financing, facilitating, or guaranteeing transactions by foreign persons that cannot be performed by U.S. persons as a result of the Executive Order. Licenses from both BIS and OFAC may be required for any export, reexport, or transfer (in-country) involving the LNR or DNR regions.

V. DDTC License Requirements

All defense articles and defense services on the USML have long required licenses for export to Belarus and applications for such licenses remain subject to a policy of denial. Since March of 2021, all defense articles and defense services on the USML have been subject to license requirements for export to Russia and applications for such licenses are subject to a policy of denial, except for license applications related to government space cooperation, which will be considered on a case-by-case basis.

Most license exemptions are not available for exports to Russia, although certain exemptions may be used in support of government space cooperation.

VI. The Entity List and Denied Persons List

BIS has added more than 260 Russian and Belarusian entities/individuals to its Entity List and over 145 of those have been designated as military end-users. A license must be obtained from BIS if a transaction involves an Item subject to the EAR and a listed entity.

Use of license exceptions is not permitted. As a general rule, licenses applications will be approved only on an exceptional basis for transactions involving a person on the Denied Persons List or Entity List.

VII. Keys to Compliance

Three important steps for compliance are:

  • Determine the export control jurisdiction and USML category or CCL classification number (ECCN) of any technology, commodity, or software destined, directly or indirectly, for Russia or Belarus and determine license requirements and availability
  • If the Item is not on the USML or EAR’s CCL, then verify its Schedule B number, Schedule B description, HTS code, and HTS description, and review the relevant BIS supplements
  • Conduct sanctioned person screening at the time of the order and prior to the export, reexport, or transfer (in-country) to verify that no party to a transaction is covered by any applicable sanctioned persons list, including BIS’s Denied Persons List or Entity List or OFAC’s List of Specially Designated Nationals and Blocked Persons