The Commerce Department’s Bureau of Industry and Security (BIS) and the State Department’s Directorate of Defense Trade Controls (DDTC), the two offices in charge of issuing export licenses for controlled dual-use and defense items, information, and services, have both announced that export licenses will not be granted for exports destined for Russia until further notice. To help you determine what this means for your business, here’s a list of the key effects of these recent announcements:

  • Existing export licenses will not be effected by the current freeze.
  • Items classified as EAR99 (items that do not need a license from BIS or DDTC), a category that includes most purely commercial items, will not be effected by the freeze.
  • Only new license applications will be frozen (BIS and DDTC have both indicated that they will continue to review the applications, but will refrain from issuing any licenses).
  • However,  “deemed exports,” or the release of controlled information to employees of companies within the United States, are technically considered to be “exports” under the regulations, companies should assume  that applications for deemed exports that involve employees who are Russian nationals will be put on hold as well.

Since the crisis in Ukraine is still developing, each day could bring new, stricter prohibitions on trade with Russia. It therefore is imperative that companies check the BIS and DDTC websites for changes in their policies and also keep an eye out for any new Executive Orders issued by the President. Keep in mind that both BIS and DDTC have the authority to revoke existing licenses, an action that their British counterpart, the United Kingdom’s Export Control Organization, has already taken. BIS alerts can be found here and DDTC alerts here. I will also make you aware of any major changes in US policy towards trade with Russia via this blog.

In the meantime:

  • Export compliance managers should revise policies and procedures so that exports to Russia are scrutinized more closely in light of the fact that they now may have to be put on hold;
  • Companies should also take these potential limitations into account when contracting with Russian parties because they may limit their ability to honor contractual obligations; and
  • Human resources managers should be cautious in extending employment offers to Russian nationals. At a minimum, they should include language in offer letters alerting prospective employees that changing BIS and DDTC policies may delay or derail plans to hire them.

Have a great day.