Commentary: Compliance confusion

The State Department adds to the export compliance officer’s headaches with latest round of Russian sanctions.    The U.S. State Department’s Bureau of International Security and Nonproliferation on Monday published a Federal Register notice listing the latest sanctions applied to Russia for alleged recent poisoning attempts by agents against dissident nationals in the U.K.
   Specifically, the sanctions are pursuant to the 1991 Chemical and Biological Weapons Control and Warfare Elimination Act and are applied to U.S. exports to Russia, including foreign assistance, arms sales, arms sales financing, denial of U.S. government credit and other financial assistance, and exports of national security-sensitive goods and technology. 
   Fair enough, but laden throughout the notice are plenty of exemptions, leaving one to wonder why the State Department bothered to implement the sanctions in the first place. 
   For example, the State Department said assistance to Russia under the 1961 Foreign Assistance Act is terminated, “except for urgent humanitarian assistance and food or other agricultural commodities or products.” Are there crop shortages that threaten a Russian famine? Not that we’re aware of.
   The State Department notice waives the application of U.S. arms export controls to Russia when it comes to programs involving U.S.-Russia space cooperation and commercial launches. Makes sense.
   Other exemptions to the notice involve exports and re-exports of technology related to the safety of passenger aircraft, “deemed exports” involving the hiring of Russian nationals, the handling of exports and re-exports to U.S.-owned subsidiaries in Russia, and exports and re-exports to commercial and state-funded end users. 
   The good news for U.S. exporters is that existing export licenses for Russia, at this time, are not revoked. A U.S. exporter can also still use Commerce Department license exceptions eligible for Russia that were in effect prior to the sanctions issued in the State Department’s Aug. 27 Federal Register notice. License exception CIV (civilian end user for civilian end use) is the most common of the exceptions if eligible under each ECCN (export control classification number) and going to “a civilian end user for civilian end use. The other license exception most likely used by U.S. exporters involves ENC (eligible encryption items). 
   But just because there are plenty of exemptions to the rule doesn’t mean that the State Department’s action takes the compliance heat off U.S. exporters to Russia. In fact, it states that “licenses shall be issued on a case-by-case basis, consistent with export licensing policy for Russia prior to enactment of these sanctions.” 
   These latest measures will be implemented by the various government responsible departments and agencies with export control regulatory oversight and will remain in place for at least one year and until further notice. 
   “You should expect inordinate delays due to different marching orders for each of the licensing agencies and a foreign policy based on impulse,” warned longtime export control compliance consultant Paul DiVecchio.
   Meanwhile, U.S. exporters to Russia more than ever must have a robust internal export compliance program and ensure that the same razor focus applies to each overseas subsidiary and third-party logistics services provider that handles those shipments. 
   The Trump administration, as well as Congress, will likely continue to ratchet up the sanctions against Russia, especially for its repeated U.S. election meddling, leaving U.S. exporters increasingly vulnerable to export control regulation violations.