U.S. sanctions and export controls are having a “severe” impact on Russia even though Moscow has continued its war in Ukraine, said Erik Woodhouse, a senior sanctions official with the State Department. Woodhouse said the U.S. is hoping the restrictions eventually force Russia to reverse course and expects the impacts to grow over time.
The Bureau of Industry and Security last week charged a Montana resident and his two companies with violating U.S. export controls after BIS said he tried to ship controlled items knowing they would be used in Iran. Kenneth Scott and his companies, Scott Communication and Mission Communications, also made false or misleading statements to agents, failed to file Electronic Export Information and didn’t maintain the required export records, BIS said.
Lawyers are continuing to see an uptick in outreaches by the Committee on Foreign Investment in the U.S. related to non-notified deals, especially if they involve Chinese investors. Carl Valenstein, a CFIUS lawyer with Morgan Lewis, said some of his clients in the life sciences sector, even though they weren’t working with critical technologies, have recently been contacted by CFIUS.
Amid the rapid pace of Russia-related sanctions and export controls, regulators around the world are sometimes struggling or unwilling to provide timely and clear answers to industry questions about the trade restrictions, lawyers said. The issue is especially problematic in Europe, they said, where sanctions guidance may differ among the 27 EU member states and U.K. general licenses can be delayed or unhelpful.
The Bureau of Industry and Security June 8 issued a temporary denial order for three U.S. companies for their involvement in illegally exported technical drawings and blueprints to China. BIS said it suspended the export privileges for Quicksilver Manufacturing, Rapid Cut and U.S. Prototype for 180 days after they illegally exported materials used to 3D print satellite, rocket and defense-related prototypes, which are subject to strict export controls because of their “sensitivity and importance to U.S. national security,” BIS said.
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The Bureau of Industry and Security by now should have penalized Seagate Technologies for illegally exporting goods to Huawei, James Mulvenon, a China technology and military expert, wrote in a June 6 post for the Lawfare blog. Mulvenon said BIS’s “inaction” has emboldened other companies to export similar shipments and is indicative of a larger enforcement issue at BIS surrounding its foreign direct product rule for Huawei.
The U.S. and Canada this week announced an initiative to strengthen collaboration on Russia-related export controls. In a joint statement, the Bureau of Industry and Security and the Canada Border Services Agency said they will share more trade information to stop Russia from acquiring sensitive technologies, including through coordinated pre- and post-shipment verifications and audits. The two countries will also work more closely on inspections of exports, seizures and export control investigations.
A recent increase in U.S. sanctions against ransomware actors has helped to slow the effectiveness of cyberattackers and limit their profits, witnesses told the Senate Committee on Homeland Security and Governmental Affairs June 7. But the U.S. can do more to counter ransomware activity, they said, including working closer with allies to track ransomware payments and collecting better information from industry.
The State Department’s recent fine of a U.S. electro-optics equipment manufacturer (see 2202010058) highlighted a range of key takeaways for defense exporters, including the importance of the commodity jurisdiction process and recordkeeping, Torres Trade Law said in a June alert. The consent agreement also underscored the benefits of voluntarily disclosing violations, the firm said, which can significantly mitigate penalties.