International Trade Enforcement Roundup | February 2023

Enforcement Policy Updates

OFAC Announces New Price Cap on Russian-Origin Petroleum Products

Price Capped. On February 3, Treasury Secretary Janet Yellen published a determination implementing a price cap on seaborne Russian refined oil products. On February 5, a second determination implemented two distinct price caps: 1) $45 a barrel for Discount to Crude Petroleum products of Russian Federation origin and 2) $100 a barrel for Premium to Crude petroleum products of Russian Federation origin. Companies purchasing seaborne refined oil products from Russia must pay at or below the price cap, or they will otherwise be barred from access to key services, including trading/commodities brokering, financing, shipping, insurance, flagging, and customs brokering. We wrote about the November 21 price cap in a December blog post. Notably. The price cap shows an enduring commitment by the United States and many allies to tighten the economic screws on Russia. The continued resolve shown by many Western nations portends new economic and trade restrictions and increasingly vigorous enforcement.

U.S. Expands Export Controls and Sanctions Marking the Anniversary of the War in Ukraine

More Restrictions Related to Russia. On February 24, OFAC and BIS expanded sanctions and export controls imposed on facilitators of the Russian war effort in Ukraine. Most notably, BIS expanded the scope of the Russian and Belarusian Industry Sector Sanctions to prohibit 322 new EAR99 items from being exported to Russia or Belarus without a BIS license and added 89 entities to the EL for their efforts to procure items for Russia’s defense industry. OFAC also designated over 100 individuals and entities to the SDN list, including several Russian banks, technology companies, and sanctions evaders. In conjunction with the BIS and OFAC actions, the White House announced the president had signed a proclamation significantly increasing tariffs on Russian metal, minerals, and chemical imports. The BIS press release can be found here. The OFAC press release can be found here. The White House press release can be found here. Notably. Many of the items now subject to licensing requirements are identified based on Harmonized Tariff Schedule (HTS) code. Export compliance programs need to recognize that HTS codes – and Schedule B numbers – are as important to track as ECCNs. It is also important to track ISO codes to ensure exports are not inadvertently sent to the wrong or a prohibited destination. U.S. Departments of Justice and Commerce Announce Creation of Disruptive Technology Strike Force Enforcement is Key. On February 16, the Departments of Justice and Commerce launched the Disruptive Technology Strike Force, which aims to keep sensitive technologies out of the hands of “nation-state adversaries.” The Strike Force will bring together experts from across the Departments of Justice, Commerce, Homeland Security, and U.S. Attorneys’ Offices to focus on enforcing export controls, prosecuting violators, enhancing private sector partnerships, “leveraging international partnerships,” and “strengthening connectivity between the strike force and the Intelligence Community.”

The full press release can be found here.

Notably. The multi-agency coalition will likely result in heightened enforcement action and more prosecutions. Companies should consider conducting a targeted risk assessment of export activity, especially export business in riskier countries and regions, and bolster compliance policies and programs to address identified risks. A carefully-devised compliance program is essential to protect against export violations, particularly in an environment in which U.S. enforcement resources are being increased.

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