New Russia Sanctions

Effective August 27, 2018, the US State Department issued sanctions against the Russian Government under the Chemical and Biological Weapon Act. The State Department initially announced the sanctions on August 8, 2018. The CBW Act requires the implementation of five initial sanctions as described in our previous alert. However, the State Department has waived the application of some of these sanctions in the interests of national security.

In addition to other waivers described below, the sanctions allow export licensing under the pre-sanction licensing policy for wholly-owned US subsidiaries, deemed exports and reexports, flight safety, space flight, and commercial end-uses. A summary of the State Department CBW Act sanctions and waivers follow:

1. Foreign Assistance: Termination of assistance to Russia under the Foreign Assistance Act of 1961, except for urgent humanitarian assistance and food or other agricultural commodities or products.
   • The State Department has waived this restriction.
2. Arms Sales: Termination of (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.
   • The State Department has waived this sanction with respect to the issuance of licenses in support of government space cooperation and commercial space launches. Licenses will be issued on a case-by-case basis and consistent with export licensing policy for Russia prior to the enactment of these sanctions.
3. Arms Sales Financing: Termination of all foreign military financing for Russia under the Arms Export Control Act.
   • No waiver.
4. Denial of United States Government Credit or Other Financial Assistance: 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.
   • No waiver.
5. Exports of National Security-Sensitive Goods and Technology: Prohibition on the export to Russia of any goods or technology on that part of the control list established under Section 2404(c)(1) of the Appendix to Title 50.
   • Several waivers are enacted with regards to this sanction.
     1. License exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS will still be available for exports of national security sensitive goods and technology to Russia.
     2. New license applications for goods related to the following will be considered on a case-by-case basis under the export licensing policy for Russia prior to the enactment of these sanctions:
        1.  Wholly-owned US subsidiaries,
        2.  Safety of flight of civil fixed-wing passenger aviation,
        3. Deemed exports/reexports to Russian nationals,
        4. Space flight (i.e. government space cooperation and commercial space launches),
        5.  Commercial end users and civil end uses.
     3. New license applications for state-owned and state-funded enterprises will be reviewed on a case-by-case basis, subject to a presumption of denial.

   After all the waivers, the sanctions really will bite only exports of national security items to Russian state-owned and state-funded enterprises and should not affect exports to passenger aviation and space flight even for Russian state-owned and state-funded enterprises. In short, unless the Administration imposes additional sanctions in three months’ time, its bite on commercial business with Russia should be limited. Please note, however, these measures still need to be implemented by the various government agencies, such as the Bureau of Industry and Security, which will provide more guidance on implementation.

   The CBW Act requires additional sanctions within three months dependent on the President certifying to Congress that the Russian government 1) no longer uses chemical or biological weapons in violation of international law or its own nationals; 2) provides reliable assurances that it will not in the future engage in any such activities; and 3) allows on-site inspections of the United Nations or other impartial observers or other reliable means to ensure the Russian government is not violating international law or using CBW on its own nationals. These additional sanctions are described in our August 10, 2018, alert.