[co-authors: Atsushi Oshima and Griffin Boyle]
On March 1, 2021, the U.S. Secretary of State determined pursuant to Section 306(a) of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW Act”) that the government of Russia “has used chemical or biological weapons in violation of international law or lethal chemical or biological weapons against its own nationals.”1 The determination was made in response to the attempted assassination of Russian opposition figure Aleksey Navalny in August 2020 and his subsequent imprisonment in January 2021.2 Pursuant to this determination, the Department of State imposed sanctions against Russia to remain in place for at least one year and until further notice.3
As part of the CBW Act sanctions, the following changes came into effect on March 18, 2021:
On March 18, 2021, the DDTC published a final rule that imposed restrictions on exports of defense articles and defense services to Russia.4 Specifically, the final rule:
Licenses or other approvals for exports of defense articles and defense services falling within the above exceptions may be issued on a case-by-case basis consistent with U.S. foreign policy and national security considerations.
In addition, the final rule provides for a Russia-specific exemption for certain exports by or for the U.S. government (e.g., pursuant to an international agreement) when such export is in support of “government space cooperation.”6 The ITAR also provides limited exemptions generally applicable to all countries subject to the policy of denial (e.g., for personal protective gear and certain items for official use by the U.S. government).7
As a result of these amendments, all new and pending applications for a license or authorization to export defense articles, including technical data, or defense services to Russia is subject to a policy of denial, unless one of the limited exceptions or exemptions described above applies.8 The DDTC has clarified that to qualify for case-by-case review, approvals for “commercial space launches” must be issued – not just submitted – by September 1, 2021.9 In addition, the policy of denial applies to licenses and approvals for not only exports but also for transfer, reexport and retransfer of defense articles or defense services to Russia or “to any person acting on its behalf,” which include transfers of non-U.S. satellites that contain ITAR-controlled components.10 The policy of denial also applies to license applications in furtherance of previous approved agreements and their amendments,11 as well as to brokering activities involving Russia.12
An existing license or other approval for export to Russia remains valid, unless revoked by the DDTC.13 The policy of denial under § 126.1(l) applies only to exports to Russia. License applications related to temporary imports from Russia will continue to be adjudicated on a case-by-case basis.14
On March 18, 2021, BIS announced that it would adopt a presumption of denial in reviewing license applications for exports or reexports of NS-controlled items to Russia. However, the pre-existing licensing policy continues to apply to certain categories of exports and reexports pursuant to a partial waiver of the CBW Act sanctions on national security grounds. The items covered by the waiver are:15
BIS further suspended license exceptions Service and Replacement of Parts and Equipment (RPL), Technology and Software Unrestricted (TSU), and Additional Permissive Reexports (APR) for use with NS-controlled items destined to Russia.
Lastly, because of the ITAR amendments discussed above, Russia has been automatically included in a more restrictive country group (Country Group D:5) under the EAR.16 Placement of a country in Country Group D:5 generally limits the availability of license exceptions under the EAR for exports and reexports of certain items.17
As noted above, the new policies of denial for Russia exports under the ITAR or the EAR contain an exception for commercial space launches prior to September 1, 2021. Companies wishing to make use of this exemption, including suppliers of ITAR components in non-U.S. satellites destined for Russia, should submit their license applications as soon as possible, and likely prior to July 1, 2021, as the DDTC will only apply the case-by-case review to licenses approved granted by September 1, 2021, and it remains unclear whether BIS will follow suit.
The DDTC’s current guidance states:
You should plan to submit any license applications far enough in advance to enable DDTC to complete its case-by-case review of the application prior to September 1, 2021. Average license processing timelines generally range from 35-45 days and exports involving countries listed in ITAR § 126.1 often require additional time to review.18
Companies should also factor in additional processing time caused by a likely marked increase in similar license applications.
Exporters to Baikonur Cosmodrome should be aware of the risk of export or reexport to Russia. Although the Baikonur Cosmodrome is located on Kazakhstan soil, the spaceport is leased by the Kazakh government to Russia until 2050 and managed jointly by the Roscosmos State Corporation (a Russian state corporation) and the Russian Aerospace Forces. In this regard, the ITAR prohibits unauthorized export, transfer, reexport and retransfer of defense articles or defense services to Russia or “to any person acting on its behalf,” and the new policy of denial applies to the application of licenses in such cases as well.19 The relevant DDTC guidance notes that applicants “should consider whether it is possible to conduct exports to Baikonur without exporting any defense articles, including technical data, to Russian persons.”20
Additionally, unlike BIS’s policies for deemed exports and deemed reexports to Russian nationals, the ITAR amendments do not contain a general (i.e. non-space specific) carve-out for deemed exports and reexports. This likely means that any deemed export or deemed reexports to Russian nationals related to commercial space launches will only be subject to case-by-case review until September 1, 2021.
Both the EAR and the ITAR contain carve-outs for U.S. government space programs. Provided that they fall under the condition of the carve-outs, exports in support of U.S. government space programs (such as the International Space Station (ISS)) are unlikely to be affected by these amendments.
Russia plays a significant role in the space industry, and the commercial space launches exception for license applications under both the ITAR and EAR is only available until September 1, 2021, less than three months away. As the exemption applies, at least at the DDTC, to licenses granted by that date, and the license review process can take months for the U.S. government to complete, it is critical that U.S. exporters in the commercial space industry and their non-U.S. subsidiaries and partners review their Russia-related ITAR and EAR licensing needs, including the evaluation of the current use of EAR license exceptions RPL, TSU and APR for Russia, and to submit necessary license applications as soon as possible, and likely prior to July 1, 2021.
1 See “Determinations Regarding Use of Chemical Weapons by Russia Under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991.” 86 FR 14804 (March 18, 2021).
2 See “U.S. Sanctions and Other Measures Imposed on Russia in Response to Russia’s Use of Chemical Weapons.” State Department Fact Sheet (March 2, 2021).
3 See footnote 1. The CBW Act sanctions targeting Russia also includes the termination of foreign assistance, arms sales, and arms sales financing, as well as the denial of U.S. government credit or other financial assistance.
4 See “International Traffic in Arms Regulations: Addition of Russia.” 86 FR 14802 (March 18, 2021).
5 See ITAR § 126.1(l).
6 See ITAR § 126.4(a)(2) and (b)(2).
7 See ITAR §§ 123.17, 126.4(a)(1) or (3) and (b)(1), and 126.6.
8 See “ITAR / USML Updates FAQs – Russia.” DDTC website.
9 See “ITAR / USML Updates FAQs – Russia.” DDTC website.
10 See ITAR § 126.1(e)(1).
11 See “Summary of Changes to International Traffic in Arms Regulations § 126.1 – Russia.” DDTC Factsheet (April 12, 2021).
12 See ITAR § 129.7(d) and “ITAR / USML Updates FAQs – Russia.” DDTC website.
13 See “ITAR / USML Updates FAQs – Russia.” DDTC website.
14 See “ITAR / USML Updates FAQs – Russia.” DDTC website.
15 See “Russia: Implementation of Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act) Sanctions.” 86 FR 14689 (March 18, 2021).
16 See Note 1 to Country Group D:5 in Supplement No. 1 to part 740 of the EAR, which provides that Country Group D:5 includes all countries subject to a U.S. arms embargo under ITAR § 126.1.
17 See EAR § 740.
18 See “ITAR / USML Updates FAQs – Russia.” DDTC website. BIS has not issued guidance relevant to this issue at the time of this alert.
19See ITAR § 126.1(e)(1).
20 See “ITAR / USML Updates FAQs – Russia.” DDTC website.