Export Enforcement Five Continues Heightened Controls for Russia

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Oct. 2, 2023
By: Marvin E. McPherson

Export controls and sanctions is the number one tool used by the U.S and partnering countries in the war against Russian aggression. As reported by the Office of the United States Trade Representative, exports of U.S good continue to decline from 2022 statistics. U.S. goods exports to Russia in 2022 were $1.7 billion, down 74.0 percent ($4.7 billion) from 2021. Hower, evasion of the same sanctions is at an all time high.  As previously written, the U.S Senate has introduced several bills to Combat Vessel Evasion and Strengthen Export Controls.

The governments of Australia, Canada, New Zealand, the United Kingdom, and the United States known as the “Export Enforcement Five” (E5) issued a joint guidance listing Harmonized System (HS) codes that present that will be reviewed under a higher scrutiny for risk of evasion from sanctions or export controls.

The guidance list of 45 prioritized Harmonized System codes into four tiers, with tier one and two being of the highest priority. The HS description and Representative parts include:

Tier 1: Integrated circuits (also referred to as microelectronics).

Tier 2: Electronics items related to wireless communication, satellite-based radio navigation, and passive electronic components.

Tier 3: This tier is divided into electronic and non-electronic items to provide greater clarity to the different industries that may work with these items.

Tier 4: Manufacturing, production and quality testing equipment of electric components and circuits.

These HS codes have been identified as being essential to Russia for the manufacturing and testing of electronic components and circuits.

The guidance also identifies suspicious import patterns in countries outside the Global Export Control Coalition (GECC), such as:

·       the company never received exports prior to February 24, 2022;

·       the company received exports that did not include any of the tier one and tier two HS codes prior to February 24, 2022; or

·       the company received exports involving the tier one and tier two HS codes prior to February 24, 2022, but also saw a significant spike in exports thereafter.

 Companies that conduct transactions involving the prioritized HS codes should take a risk-based approach and ensure a proper and thorough review of the end user. If you have any questions about potential transactions involved the listed HS codes or your companies’ compliance program, please contact any attorney at Barnes Richardson and Colburn.