On March 11, President Biden issued an executive order banning imports of Russian seafood, spirits, and non-industrial diamonds due to Russia’s conflict with Ukraine. This ban follows earlier sanctions imposed on Russian oil, gas, and coal that cut off about 60% of U.S. imports from Russia.
The ban was effective immediately on Friday, notwithstanding any contract entered into or license or permit granted prior to the date of the executive order. Importers of goods potentially subject to the executive order should be prepared to provide documentary evidence to Customs and Border Protection (CBP) before import that a contract or other written agreement existed on or before March 10, 2022. Direct delivery privileges have been revoked for the subject merchandise for the duration of the executive order.
According to a White House fact sheet, the latest trade sanctions are expected to block more than $1 billion in Russian revenues. The U.S. is also banning the export of luxury goods to Russia, such as high-end watches and clothes, jewelry, top-shelf liquor, and luxury vehicles. The export restrictions are valued at nearly $550 million per year.
These steps are being taken as part of a move by America to revoke normal trading relations with Russia, stripping them of “most favored nation” (MFN) status under World Trade Organization (WTO) rules. MFN status is meant to equalize the trade treatment of all of a country’s trading partners and has been a baseline for global trade. Currently, Cuba and North Korea are the only countries lacking MFN status.
Allies in the Group of Seven (G7) leading nations and the European Union are also planning to follow suit and no longer provide Russia with MFN status. This would allow the U.S. and its allies to impose steep tariffs on Russian goods or restrict imports.
The group of leading western nations may impose further restrictions on imports and exports of goods and technologies with Russia. Deringer will keep you updated as more information becomes available.