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On December 16, 2024, the EU issued its 15th package of sanctions against Russia, new designations under the Belarus sanctions regime, and the first designations under the hybrid threats sanctions regime adopted in October 2024. These updates are summarized below.

 

1. Asset Freeze Measures

Russia (Regulation 269/2014)

New designations: 54 individuals and 30 entities are now subject to asset freeze measures in recognition of their actions against Ukraine, and EU persons are prohibited from dealing with any funds or economic resources which are owned, held or controlled by such individuals and entities. Those targeted include:

  • shipping companies involved in the transportation of Russian crude oil and oil products by sea;
  • senior managers of various energy companies;
  • individuals and entities involved in the trading of Russian crude oil; and
  • various other entities and individuals, such as Russian defense suppliers, a civilian Russian airline and a Russian private jet company, Chinese and Hong Kong companies supplying drone and microelectronic components to Russia, individuals responsible for child deportation, propaganda and circumvention, as well as two senior officials of North Korea.

New derogation for central securities depositories (CSDs): This allows the release of frozen cash balances held with EU CSDs where such cash balances are no longer due to persons designated under EU sanctions against Russia and to enable CSDs to fulfill their legal obligations to participants. The addition of this derogation is in response to Russian counter measures that enable the seizure of EU CSD assets held in Russia.

Availability of the licensing ground to authorize divestment activity by certain designated persons has been extended until June 30, 2025.

Belarus (Regulation 765/2006)

New designations: 26 individuals and 2 entities are now subject to asset freeze measures. Those targeted include the executives and owners of a Belarusian logistics company, members of the Belarusian judiciary, businesspersons, individuals involved in the circumvention of EU sanctions, and heads of correctional institutions.

Hybrid Threats (Regulation 2024/2642)

First designations: 16 individuals and 3 entities involved in misinformation campaigns, Wagner Group operations, and Russian intelligence activities are now subject to asset freeze measures under the EU’s hybrid threats regime.

 

2. Trade and Sectoral Measures

52 additional vessels now subject to the EU port access ban and maritime transport services prohibitions: These vessels are now subject to anti-circumvention measures targeting ships that are circumventing the oil price cap, supporting Russia’s energy sector or are involved in transporting maritime equipment for Russia or stolen Ukrainian grain.

32 new entities added to the EU “Entity List”: The EU Entity List includes companies subject to a licensing ban for: (i) the export of dual-use goods and technology; and (ii) goods and technology that may contribute to the technological advancement of Russia’s defense and security sector. The additions include entities located in Russia, China, Hong Kong, India, Iran, Serbia and the United Arab Emirates.

Extension of licensing ground and exemption to ensure Croatian and Czechian energy supply: Croatian sanctions authorities can now, subject to certain conditions, authorize the purchase, import or transfer of certain Russian oil until December 31, 2025. In addition, the exemption allowing Czechia to import and transfer certain Russian oil products into other EU member states (subject to certain overall volume limits) has been extended until June 5, 2025.

Extensions to derogations to facilitate exits from Russia: The availability of derogations that enable EU operators to conduct certain activities prohibited under EU Russia trade sanctions but necessary for divestments from Russia has been extended until December 31, 2025. These derogations are accompanied by a recommendation that EU operators: (i) consider winding down their operations in Russia as soon as possible; and (ii) avoid starting any new businesses in Russia, due to the “risk of maintaining business activities” there, which stems from Russian countermeasures and increased legal uncertainty in the country.

 

3. Russian Litigation and Liability Protections

New prohibition against recognition and enforcement of Russian Article 248 decisions: Article 248 decisions are also known as “anti-suit injunctions” and prevent parties from pursuing legal proceedings outside of Russia.

Enhanced safeguards for EU CSDs and their employees for compliance with EU sanctions introduced (barring cases of proven negligence).

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Colleagues Nancy A. Fischer, Matthew R. Rabinowitz, Zachary C. Rozen, Samantha Franks, Erin Kwiatkowski and Marcus Burden recently broke down the key points of a U.S. Department of the Treasury Final Rule that establishes significant new parameters for U.S. outbound investments in sensitive technologies within countries of concern.
TAKEAWAYS

Click here to read the full client alert.

 

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On September 23, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) released for public inspection a Notice of Proposed Rulemaking that seeks to prohibit the sale or import of connected vehicles (CVs) with certain hardware and software that have a sufficient nexus to the People’s Republic of China (PRC) or Russia. If the Vehicle Connectivity System (VCS) hardware and the VCS and Automated Driving System (ADS) software are designed, developed, manufactured or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia, the transactions outlined below would be prohibited.

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On September 12, 2024, the UK government published the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 (the “Regulations”), granting the UK’s trade sanctions enforcement body, the Office of Trade Sanctions Implementation (OTSI), new implementation and enforcement powers effective from 10 October 2024. The Regulations also grant the Department for Transport (DfT) corresponding powers in relation to aircraft and shipping sanctions (i.e., sanctions relating to the movement, registration and ownership of aircrafts and ships).

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On September 13, 2024 USTR announced modifications to the tariffs originally imposed under Section 301 of the Trade Act of 1974 to pressure China to eliminate unreasonable policies and practices related to technology transfer and intellectual property protection. The changes reflect a comprehensive review of the duties required by statute.

USTR’s announcement follows its May 14, 2024 report on the four-year anniversary review of the Section 301 tariffs. The May 14, 2024, report stated that USTR would continue existing Section 301 tariffs on most products and proposed new or increased tariffs on products in certain strategic sectors, including lithium-ion batteries, lead acid battery parts, electric vehicles, critical minerals, permanent magnets, semiconductors, solar cells, ship-to-shore cranes, steel and aluminum and medical and personal protective equipment. USTR proposed granting certain limited exclusions for solar manufacturing equipment and for machinery used in domestic manufacturing.

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On September 12, 2024, the Biden Administration announced a number of new trade-related measures related to imports of Chinese-manufactured goods. This announcement comes as the latest action in the Biden Administration’s efforts to reinforce American manufacturing and supply chains.

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On September 5, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule imposing significant new export controls on quantum computing, cryocooling systems, semiconductor equipment, and additive manufacturing technologies. These controls are meant to align U.S. regulations with recent regulations adopted by several close U.S. allies and are intended to address national security concerns related to the proliferation of sensitive technologies. BIS is currently accepting comments on the interim final rule until November 5, 2024.

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On 24 June 2024, the EU adopted its 14th package of sanctions against Russia. The latest measures include:

  • The designation of 116 additional individuals and entities across a number of industries for their responsibility in undermining Ukraine’s territorial integrity, sovereignty, and independence.
  • A limited ban on contracts with Russian state energy companies and additional support for countries with energy needs to curb reliance on Russia.
  • Anti-circumvention measures, including requirements for EU parent companies to use “best efforts” to ensure that non-EU subsidiaries do not undermine EU sanctions.
  • A ban on the use of “System for Transfer of Financial Messages” (SPFS) (a Russian equivalent of SWIFT) by EU entities operating outside of Russia and a new power for the EU to designate third-country users of SPFS outside of Russia, which will then be subject to a transaction ban.
  • Comprehensive bans on port access by vessels contributing to Russian warfare, non-scheduled flights by controlled by Russian entities, and road transport of goods with 25% or more Russian ownership.
  • An amendment to the existing import-related restrictions concerning Russian diamonds.
  • Further import and export controls impacting Russia’s military-industrial complex and cultural property goods from Ukraine.
  • A requirement for the rejection of intellectual property rights applied for by Russian residents, nationals or entities.
  • A prohibition on accepting funding from the Russian state and its proxies by EU political parties, foundations, NGOs and media service providers.
  • An exemption to the ban on providing software services to Russia in cases where entities are controlled by an EU parent company and other select regions or services are provided by employees who were hired prior to February 2022.
  • A requirement for enhanced reporting, confidentiality requirements, and the promotion of voluntary self-disclosures.
  • Measures to allow EU operators to claim compensation in EU commercial and civil courts for damages caused by Russian companies further to sanctions.

These measures are summarized in further detail below.

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On May 28, 2024, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR) to better implement the Biden-Harris Administration’s policy aimed at increasing support for the Cuban people. These amendments enhanced authorizations for internet-based services to promote internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to financial services. In conjunction with these amendments, OFAC issued six new, Cuba-related Frequently Asked Questions (FAQ) and amended eight Cuba-related FAQs. These FAQs are available here.

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On May 14, 2024, the U.S. Trade Representative (USTR) published the Four-Year Review of Actions Taken in the Section 301 Investigation (“Report”), which addresses the four-year review of China-related tariffs under Section 301 of the Trade Act of 1974, as amended (“Trade Act”) (19 U.S.C. 2411). Our previous alert on this report is available here.

On May 22, 2024, USTR published a Federal Register notice which requests comments on the proposed modifications and machinery exclusion process discussed in the May 14 report. The notice does not address the status of the current exclusions from the Section 301 duties, which are due to expire at the end of May.

Below, we discuss the proposed modifications detailed in the USTR Federal Register notice. Continue reading →