US, EU Have 'Leapfrogged' TTC Goals, Official Says
Russia’s war on Ukraine has greatly accelerated U.S. and EU collaboration on export controls, officials said, even surpassing some of the short-term goals of the Trade and Technology Council formed last year. Because of the highly coordinated controls, officials from both sides speak frequently and are able to discuss a range of shared export control issues, the officials said, including enforcement, licensing and the future of multilateral regimes.
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“Frankly, we have leapfrogged compared to what we were planning to do less than six months ago,” Denis Redonnet, the EU’s chief trade enforcement officer, said during an April 13 event hosted by the German Marshall Fund.
The TTC, which includes an export control working group, held its inaugural meeting in September 2021 (see 2109270027 and 2109290083) and is planning another meeting in May. Before Russia invaded Ukraine in March, EU officials said the bloc hoped to use the upcoming meeting to flesh out ideas around increasing information sharing (see 2203230026). But, Redonnet said, some of those goals have already been met.
“It's very clear that what's happened over the last few months has accelerated massively a number of transformations which enable us to engage in a much more affirmative manner with allies,” Redonnet said.
Thea Kendler, the Bureau of Industry and Security's assistant secretary for export administration, said the agency has daily discussions with the EU and other allies on export restrictions. The U.S.’s new export control relationships will “carry us well past this current crisis,” Kendler said. “Our view here is that we are closer to our allies on export controls than we have been in decades.”
The two sides are also thinking about whether existing multilateral export control regimes, including the Wassenaar Arrangement, are the best forums for future collaboration on export restrictions. Kendler said Wassenaar doesn’t have a process to remove a member state, such as Russia. “We have never been in a situation before where we have had a regime member -- I don't think -- invade another regime member,” Kendler said.
“I don't think that we are at a point where we want to talk about replacing a regime,” she said. “But I certainly think that we are in the beginning stages of thinking about what comes next and how we can adjust our export controls to match the current environment of the world.”
She declined to say which countries would make up a potential new regime, saying it would only be speculation. “But I do think we should be thinking broadly about how we think about the goals and the issues of the world, the national security issues we're facing, that such a regime or such an arrangement could confront,” Kendler said.
The EU also believes there are “certain limitations in the scope and the functioning of the existing multilateral export control regimes,” Redonnet said. But he also said the bloc doesn’t yet have a plan for establishing a new export control coalition and isn’t sure whether abandoning Wassenaar is the correct decision. “I think we've got to look at the issues of functional regimes properly in a careful manner going forward,” he said.
Both Redonnet and Kendler said they are seeing sustainable compliance with the new Russian export restrictions. The EU is specifically seeing a “fair amount of over-compliance” from companies who are wary of reputational risks from doing business in Russia, Redonnet said. He said that’s having a “significant chilling effect on trade flows, going up above and beyond sanctioned trade.”
The bloc is also receiving many questions about license exceptions and other types of exemptions, Redonnet said, which sometimes can be applied differently across member states. He said the EU will be “adding and building additional guidance” to exporters “relatively rapidly, because we are starting to get these kinds of questions.”
BIS has also seen mostly compliance with U.S. export controls, Kendler said. But she also said the agency “won’t hesitate” to take enforcement action against violators, pointing to the temporary denial orders issued by Commerce last week against three Russian airlines (see 2204070012).
“We can impose company-specific license requirements at the very least, and we can bar trading in U.S. goods,” Kendler said. “And that's before we get to criminal consequences under the Department of Justice.”