Russia Export Controls Working Quicker Than Expected, BIS Official Says
U.S. export controls against Russia have proven to be effective more quickly than expected, said Thea Kendler, the Bureau of Industry and Security's assistant secretary for export administration. While the U.S. restrictions have hit key Russian industrial and defense inputs, Kendler said a major reason behind their success has been the substantial buy-in from allies in Europe and Asia.
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“Unlike financial sanctions, our export controls measures were never expected to have immediate effects,” Kendler told an American Conference Institute conference audience this week. But she pointed to several signs that the restrictions have already had significant impacts on Russia’s defense industry, including the fact that Russia's two major tank plants have stopped work due to a “lack of foreign components.” She also said Baikal Electronics, a Russian fabless semiconductor company, has been “cut off from the integrated circuits needed to support its domestic communications equipment,” including surveillance items.
“Even Russian carmaker Lada has shut down production as U.S. and partner countries’ export controls have deprived the company of necessary parts and supplies,” Kendler said. Data shows that “compared to the same time period last year, U.S. exports to Russia of items subject to new licensing requirements have decreased by 99% by value.”
This has proven that daily discussions with allies and multilateral trade restrictions are effective, Kendler said. She said she and senior BIS official Matt Borman (see 2203300039) speak with at least one foreign counterpart every day. “The relationships we are strengthening now will extend well past [the] current crisis,” Kendler said. “In fact, in terms of export controls, we are closer to our allies than we have been in decades.”
BIS is also focused on convincing countries that haven’t yet imposed Russia export controls to do so, Kendler said. “If that isn’t likely for their system,” she said, we’re helping them and their industries understand how our foreign direct product rules will work in their countries.” BIS recently created two new FDP rules, which impose licensing restrictions on certain foreign-produced goods made with certain levels of U.S.-origin content (see 2202240069).
To help incentivize countries to adopt similar controls, the agency also created a list of countries that have imposed similar restrictions and are excluded from certain license requirements (see 2203040075). “Our work to build this coalition is not yet done,” Kendler said. “I expect to be able to announce additional like-minded export controls countries soon.”