The US Commerce Department’s Bureau of Industry and Security (“BIS”) is issuing a final rule amending the Export Administration Regulations, 15 C.F.R. Part 730 et seq. (“EAR”), to impose a license requirement on the export, reexport, or transfer by any person of virtually all “items subject to the EAR” to or within the Crimea region of Ukraine. The final rule will come into effect tomorrow, January 29, 2015, upon publication in the Federal Register. It is intended to complement the comprehensive embargo of Crimea implemented on December 19, 2014 by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”), pursuant to Executive Order 13685. See our prior blog posts on the OFAC sanctions against Crimea here and here.
The license requirement for Crimea will be implemented pursuant to a new § 746.6 of the EAR. It will apply not only to exports from the United States, but also reexports from other countries and transfers within Crimea by any person, including non-US persons, of “items subject to the EAR.” (“Items subject to the EAR” include US origin goods, software and technology, as well as foreign-made items with de minimis controlled US content.) The only exclusions are for food or medicine designated as EAR99. License applications for exports, reexports, or transfers of all other “items subject to the EAR” to or within Crimea will be subject to a presumption of denial, except for items authorized under OFAC General License No. 4, which will be subject to case-by-case review. Items eligible for General License No. 4 and eligible for case-by-case review include agricultural commodities not meeting the definition of “food,” medical supplies, and medical supply replacement parts, all of which must be designated as EAR99.
In addition, the BIS final rule includes a “savings clause” allowing shipments previously eligible for export under an EAR License Exception or without a license (NLR) to proceed, provided (i) they are on dock for loading, on lighter, laden aboard an exporting/reexporting carrier, or en route aboard a carrier to a port of export/reexport on January 29, 2015, and (ii) they are exported/reexported before February 1, 2015. If a shipment does not satisfy these requirements, a license will be required from BIS. If the shipment would otherwise be within the scope of OFAC General License No. 5 (which authorizes certain wind-down activities in Crimea by US persons), the BIS final rule suggests that the applicant note this fact on the license application to BIS.
Under new § 746.6 of the EAR, only the following License Exceptions will be available for Crimea:
Ms Stafford Powell advises on all aspects of outbound trade compliance, including compliance planning, risk assessments, licensing, regulatory interpretations, voluntary disclosures, enforcement actions, internal investigations and audits, mergers and acquisitions and other cross-border activities. She develops compliance training, codes of conduct, compliance procedures and policies. She has particular experience in the financial services, technology/IT services, travel/hospitality, telecommunications, and manufacturing sectors.
Ms. Contini focuses her practice on export controls, trade sanctions, and anti-boycott laws. This includes advising US and multinational companies on trade compliance programs, risk assessments, licensing, review of proposed transactions and enforcement matters. Ms. Contini works regularly with companies across a wide range of industries, including the pharmaceutical/medical device, oil and gas, and nuclear sectors.