The U.S. is preparing to roll out a “substantial package” of new sanctions and export controls against Russia for its war in Ukraine, including by adding about 70 new entities to the Commerce Department’s Entity List and introducing more than 300 new financial sanctions against people, entities, vessels and aircraft, a senior administration official said. The measures, which will be coordinated alongside allies as part of the Group of 7 summit in Japan May 19-21, are aimed at closing “loopholes” used by Russia to evade sanctions and “extensively restricting categories of goods key to the battlefield,” the official said during a May 18 call with reporters.
The Bureau of Industry and Security announced a host of new Russia-related export controls, including measures that expand its Russian and Belarusian Industry Sector Sanctions, broaden its foreign direct product rule restrictions and add 71 new entities to the Entity List. Some of the changes, outlined in a 106-page final rule effective May 19, “better align” U.S. export controls with allies, place new export license requirements on additional “industrial items” and chemicals destined to Russia, and impose controls on certain electrical parts destined to Iran for use in unmanned drones. The Entity List changes, also effective May 19, add entities in Armenia, Kyrgyzstan and Russia for either supporting Russia’s military sector, diverting U.S.-controlled items to Russia or preventing a U.S. end-use check.
A series of export control indictments announced this week, including several for illegal shipments to China and Russia, only scratched the surface of prosecutions expected to be brought as part of the new Disruptive Technology Strike Force, said Matthew Axelrod, the Bureau of Industry and Security's top export enforcement official. “It’s just the beginning,” Axelrod said during a May 17 law conference hosted by the American Bar Association, Mayer Brown and American University. “I think you can expect to continue to see actions come out from the strike force as this work continues.”
DOJ this week unsealed indictments of six people for trying to illegally ship sensitive items from the U.S., including shipments of dual-use technologies and aircraft parts to Russia, isostatic graphite to Iran and trade secrets to China. The charges are the first enforcement actions brought by the Disruptive Technology Strike Force, a group launched by DOJ and the Commerce Department in February to investigate and prosecute criminal export violations (see 2302160019).
The House Foreign Affairs Committee could soon consider legislation that would harmonize various U.S. sanctions lists in a bid to help agencies better reach consensus when reviewing export license applications. Rep. Michael Waltz, R-Fla., said the Commerce Department has an outsized vote in adjudicating applications of sensitive exports and should be required to more carefully weigh input from other agencies, including the Defense and State departments.
The Bureau of Industry and Security needs much more funding to carry out its export control work, lawmakers and former officials said during a House hearing this week. Kevin Wolf, a former senior official at BIS, said Congress should consider doubling -- perhaps quadrupling -- the agency’s resources.
Members of the European Parliament are pushing for tighter enforcement of export controls surrounding spyware products, saying several countries -- including Cyprus, Greece and Bulgaria -- are routinely flouting the bloc’s export restrictions. They also criticized the European Commission for not doing enough to hold member states accountable for potentially violating the EU’s dual-use export controls (see 2105100013).
The EU is considering new sanctions on Chinese companies for supporting Russia’s military, the Financial Times reported May 7. The sanctions, which are expected to be discussed by EU member states this week, could target seven Chinese companies for selling equipment to Moscow that could be used in weapons, the report said. The list of companies reportedly includes two companies from mainland China, 3HC Semiconductors and King-Pai Technology, and five based in Hong Kong: Sinno Electronics, Sigma Technology, Asia Pacific Links, Tordan Industry and Alpha Trading Investments. Some of the companies are already subject to U.S. restrictions, including 3HC, which was added to the Commerce Department's Entity List in April for supplying Russia's military (see 2304120039). All EU member states would have to agree to the new measures before they take effect.
Although the U.S. continues to impose new sanctions and export controls against Russia, the Commerce Department’s $300 million penalty assigned to Seagate Technologies last month signals that the U.S. is increasingly prioritizing enforcement, particularly against China, law firms said this month. They also said the fine shows that Commerce is looking to strictly enforce its foreign direct product rule restrictions, even for violations of the rule that may not be obvious.
The Biden administration this week released a national strategy for critical and emerging technology standards and outlined plans to strengthen American leadership in international standards bodies. The administration hopes the strategy helps the U.S. better work with allies to develop technologies that are “more accessible and sold more broadly across the globe, furthering market reach and helping to drive growth in our economies,” a senior administration official said during a May 3 call with reporters.