BIS Launches Outreach Effort for Russia Export Controls, Preparing Guidance
The Bureau of Industry and Security has started a large-scale industry outreach effort to ensure companies understand compliance requirements under the new Russian export controls, including direct talks with U.S. and foreign businesses and work on new guidance. The effort, previewed by BIS officials this week, underscores the significant export control and regulatory undertaking by the agency since late February, which has resulted in hundreds of pages of new Russian and Belarusian export restrictions.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
“I know unprecedented is a tired word we're not supposed to use anymore, but for us, that was unprecedented,” Hillary Hess, BIS’s regulatory policy director, said during a March 14 Regulations and Procedures Technical Advisory Committee meeting. “I don't think we've ever put through that many rules that quickly.”
Since Russia invaded Ukraine, BIS has issued a host of new regulations, including two new foreign direct product rules, new restrictions against Russian state-owned entities and military end-users, and new controls on oil refinery equipment and luxury goods, and added 91 entities to the Entity List (see 2202240069, 2203040020 and 2203110056). It has also worked to coordinate most of those restrictions with a long list of allies.
“I think this is probably unprecedented in our history,” Matt Borman, BIS’s deputy assistant secretary for export administration, said during the meeting. “It seems to me that doing five rules in two weeks is something we've never done before.”
BIS is preparing a new set of frequently asked questions to improve understanding of the new regulations, compliance obligations and exemptions. The agency hopes to issue the first set of FAQs “hopefully” within the next week, Borman said, and plans to release more on a rolling basis.
The agency has also begun an outreach effort to speak with the largest domestic and foreign suppliers to Russia, said Matthew Axelrod, the agency’s lead export enforcement official. BIS also has already spoken to trade associations, freight forwarders and universities “all across the United States” and beyond, Axelrod said, including manufacturers and distributors in countries that could backfill U.S. export controls -- especially in China.
“We know from the data we have from before the rules were implemented who the big exporters and foreign suppliers of Russia and Belarus are,” Axelrod said, “and we're reaching out to them to make sure they understand the new rules and are complying with them.” So far, he said, the agency has completed nearly 250 outreaches.
Axelrod, who was confirmed by the Senate in December, said he wants to increase BIS’s profile. More awareness of export controls, he said, will translate into more deterrence and compliance.
“When I started this job, I said that we here in BIS were sort of the secret weapon of national security. And now due to the tragic events unfolding in Ukraine, we're a little less secret,” Axelrod said. “But we do want to continue to raise the profile of the work we do here because we think that has important programmatic benefits to get companies to understand the importance of investing in compliance.”
He said BIS will be very interested in participating in upcoming industry conferences, both to speak about the new Russia export controls and to raise awareness about the agency’s enforcement efforts. “I’m going to be doing a lot of that,” he said. “We'd much rather prevent sensitive technology from going on the front end as opposed to us having to enforce it on the back end.”
Borman said BIS already has “participated in events that have covered well over 400 participants both in the U.S. and abroad, and we've got more scheduled." The agency is particularly interested in conducting outreach with foreign businesses that may be impacted by the agency’s new foreign direct product rules, he said, which imposes licensing restrictions on certain foreign-produced items that are made with certain U.S.-origin content.
Another priority, Borman said, is making sure the export controls imposed by the U.S. and its allies are implemented consistently. BIS is “in the process of establishing mechanisms to do that,” he said. “This is really a very substantial undertaking.” He urged industry to provide feedback to BIS of any cases where “there is not alignment” between allied countries and “therefore there is the potential for backfill or undercutting” of export restrictions. “We'd be very interested in knowing that,” he said, “because those are the kinds of things that we would want to then take up with our allies.”
Although BIS in its Federal Register notices predicted an increase of more than 1,000 license applications per year just from its new foreign direct product rules, the agency hasn’t yet seen a significant uptick, Borman added (see 2203080050). “We have had some,” he said, “but not, so far, any appreciable number.” He said BIS has actually seen a larger increase in export applications for shipments to Ukraine.
“Obviously, we didn't change restrictions or control policy for Ukraine,” Borman said. “But because of the situation on the ground, there's a higher level of interest in exports being made to Ukraine to help them defend themselves and protect themselves.”