Main Idea: Where goods are demonstrably for the use or benefit of handicapped persons, relief from general and additional duties is possible.

In ruling N328828 (Nov. 10, 2022), Customs and Border Protection (CBP) discussed the tariff classification of a Stainless Steel Grab Bar from China and its eligibility for duty-free treatment under the Nairobi Protocol.  The item’s construction ensured 1½ inches of space between the Grab Bar and the wall after installation.  The bar, which had a weight bearing capacity of 500 pounds, was designed and manufactured to provide safety and stability in the shower/bath for physically handicapped persons and was compliant with Americans with Disabilities Act (ADA) standards.  The manufacturer specialized in ADA-compliant safety grab bars and also produced other articles designed for handicapped persons (e.g., stair grab bars, safety hand bars with armrests, and swinging bathroom hand bars for hospitals and hotels).  The ruling requestor, Ever Home LLC, provided safety solutions and convenience to people requiring assistance with daily activities including standing, sitting, lying down or stabilizing, and specialized in selling safety shower grab bars for the physically disabled.

CBP first determined that the applicable primary subheading for the Grab Bar was 8302.41.6080 of the Harmonized Tariff Schedule of the United States (HTSUS), which provided for “Base metal mountings, fittings and similar articles… Other mountings, fittings, and similar articles, and parts thereof:  Suitable for buildings:  Other:  Of iron or steel, of aluminum or of zinc… Other.”  The rate of duty was 3.9% ad valorem. 

CBP then determined whether the Grab Bar was eligible for secondary classification and duty-free treatment under the Nairobi Protocol.  The Nairobi Protocol makes up Annex E to the international treaty known as the “Florence Agreement,” which the United States Congress codified under the “Education, Scientific, and Cultural Materials Act of 1982.”  The Nairobi Protocol’s codification established duty-free treatment for certain articles for the handicapped, which the United States implemented via the creation of subheadings 9817.00.92, 9817.00.94 and 9817.00.96, HTSUS.

In this ruling, CBP considered the Grab Bar’s eligibility for secondary classification under 9817.00.96, HTSUS, which applied to other articles specially designed or adapted for the use or benefit of physically or mentally handicapped persons (and parts and accessories thereof).  The relevant Chapter notes defined the term “blind or other physically or mentally handicapped persons” as including “any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.” (Emphasis added).  In its analysis, CBP referenced HRL 556449 (May 5, 1992), which applied subheading 9817.00.96, HTSUS, to grabrails “mounted to walls in and around showers and bath tubs” that were utilized for stabilization when entering or exiting showers or bath tubs.  CBP explained that, in past rulings, subheading 9817.00.96, HTSUS, applied to grab bars/rails in bathrooms that (i) have a sufficient gap from the wall for grasping, (ii) are capable of sufficiently securing/attaching to a wall, and (iii) are sufficiently strong to take the full weight of a typical adult that would otherwise fall.  These factors approximate some of the requirements for grab bars/raise in public water closets described under the ADA Accessibility Guidelines.  The instant Grab Bar satisfied these factors and CBP likely reasoned that the Grab Bar was for use by persons suffering from an impairment that substantially limited major life activities, like bathing (i.e., caring for oneself).  Therefore, CBP ruled that 9817.00.96 secondary classification applied to the Stainless Steel Grab Bar, and the goods would enter duty-free.

Finally, Chinese-origin goods typically are subject to additional duties under U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, pursuant to the ongoing trade action under Section 301 of the Trade Act of 1974.  However, additional Section 301 duties do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS (with some exceptions not applicable in this case).  Therefore, CBP also ruled that the Grab Bar—which was eligible for secondary classification under subheading 9817.00.96, HTSUS—was not subject to the additional duties.

On December 5th, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued new Compliance Program Guidelines (CPG) intended to provide an overview of an effective compliance program.

The CPG is broken down into elements covering the spectrum of ITAR compliance from company management commitment, registration, jurisdiction and classifications, authorizations, recordkeeping, violations, training, risk assessment, and audits and compliance monitoring.

In the introduction, DDTC states, “The purpose of an ITAR Compliance Program (ICP) is to establish robust policies and procedures to ensure that organizations and their staff who engage in ITAR-controlled activities do so in compliance with the ITAR, Title 22 of the Code of Federal Regulations in parts 120- 130, issued pursuant to the Arms Export Control Act (AECA) (22 U.S.C. § 2751 et seq.), as amended. Operating an effective ICP helps organizations integrate ITAR requirements into their business and research processes and helps mitigate the risk of violating the regulations.”

You can find the new guidelines here.

On Wednesday, November 23, the Office of the U.S. Trade Representative (USTR) extended exclusions from Section 301 tariffs for 81 medical care products from China for a sixth time. The tariff exclusions for these products were initially granted in December 2020 and had been extended multiple times throughout the COVID-19 pandemic. The tariff exclusions for these specific products are now set to expire at the end of February 2023.

Section 301 (Title III of the Trade Act of 1974, 19 U.S.C. §§2411-2420) authorizes USTR to take action to encourage foreign countries to abandon or mitigate unfair trade practices that affect U.S. commerce. In 2018, USTR determined that China’s acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation were “unreasonable or discriminatory and burdened or restricted U.S. commerce”. In order to counter them and obtain their elimination, the Trump Administration used Section 301 authorities to impose four rounds of increased tariffs on approximately two-thirds of all U.S. imports from China, sparking a heavily publicized and controversial trade war with Beijing.

In a draft Federal Register notice, USTR stated that “in light of the continuing efforts to combat COVID, the U.S. Trade Representative has determined that a 3-month extension of the 81 COVID related product exclusions is warranted”. Earlier this month, USTR opened a comment period on Section 301 tariffs imposed on China by the Trump Administration, which covered approximately $370 billion worth of Chinese goods at the peak of the US-China trade war. USTR’s comment period will be open until January 17, 2023 – interested parties can submit their comments via USTR’s web portal at https://comments.USTR.gov.

Crowell & Moring, LLP continue to monitor this development and the potential impact to businesses and consumers moving forward.

Main Idea: Subheading 9817.60.0000 provides a significant duty-saving opportunity for importers, so long that the subheading’s very specific requirements are met.

In ruling N273612 (Mar. 31, 2016), U.S. Customs and Border Protection (CBP) discussed the tariff classification of various equipment and goods used for the Copa América Centenario, referred to in English as the 2016 Centennial Copa America. The Centennial Copa America was an international men’s football (soccer) tournament held in the United States in celebration of the centenary of CONMEBOL (South American Football Confederation) and the Copa América (Spanish and Portuguese for America Cup).   The items under review included the following:

  • Soccer goals, nets, balls, stadium seating, food for team/family members, display racks;
  • Audio/media equipment;
  • Uniforms/banners/pictures;
  • Furniture/Office equipment;
  • Promotional materials tied to the event;
  • Timing equipment;
  • Venue equipment and materials to run the event, such as whistles, stretchers;
  • Medical/Training materials such as bandages;
  • Sponsor’s goods, materials and equipment to run the event;
  • Team training materials, equipment, tools, uniforms or accessories required for use or to be used to execute the games;
  • Hospitality items that assist an accredited member in displaying the culture of their country, team, sport or bid for future hosting of the event;
  • Broadcasters and Media accredited parties’ material, equipment and goods needed or used in conjunction with the event; and
  • Personal items of the accredited family members.

CBP considered whether the equipment and goods are classified under subheading 9817.60.0000 of the Harmonized Tariff Schedule of the United States (HTSUS), which allows, in part, for duty free importation of articles not intended for sale or distribution to the public, but belonging to participants, officials, accredited members, teams and delegations of an international athletic event held in the United States.  Specifically, subheading 9817.60.0000 provides:

“Any of the following articles not intended for sale or distribution to the public: personal effects of aliens who are participants in, officials of, or accredited members of delegations to, an international athletic event held in the United States, such as the Olympics and Paralympics, the Goodwill Games, the Special Olympics World Games, the World Cup Soccer Games, or any similar international athletic event as the Secretary of the Treasury may determine, and of persons who are immediate family members of or servants to any of the foregoing persons; equipment and materials imported in connection with any such foregoing event by or on behalf of the foregoing persons or the organizing committee of such an event, articles to be used in exhibitions depicting the culture of a country participating in such an event; and, if consistent with the foregoing, such other articles as the Secretary of the Treasury may allow.”

CBP found that the 2016 Centennial Copa America tournament was an international sporting competition viewed by millions around the world, and qualified as an international athletic (sport) event under subheading 9817.60.0000, HTSUS.  As such, CBP determined that the equipment and goods were classifiable under subheading 9817.60.0000, HTSUS.  The rate of duty is free.  Additionally, per U.S. Note 8, Subchapter XVII, Chapter 98, HTSUS, CBP noted that while the articles would be free of taxes and fees that may otherwise be applicable, they were not exempt or excluded from routine or other inspections as may be required by CBP.

On Saturday, November 12, 2022, Commissioner of U.S. Customs and Border Protection, Chris Magnus, resigned following tensions between Magnus and Department of Homeland Security Secretary Alejandro Mayorkas over how to handle increasing numbers of migrant people at the southern border. DHS officials have reported that Secretary Mayorkas informed Magnus on Wednesday that he should either resign or be dismissed. Following initial reports that Magnus had no intention of resigning, he stated Saturday evening, “I resigned because I believe this decision provides me with the best path for advancing my commitment to professional, innovative and community-engaged policing.” Troy Miller, who previously served as acting commissioner before Mr. Magnus, has returned to the role of acting commissioner following Magnus’ resignation. In his previous tenure as Commissioner, he led the agency through major challenges, such as the COVID-19 pandemic, hurricane relief efforts, and Operation Allies Welcome, which is the substantive efforts to assist refugees fleeing Afghanistan. Between December 2021 and November 2022, Acting Commissioner Miller fulfilled the role of v’s Deputy Commissioner, where he acted as the agency’s senior career official, and oversaw the daily operations of U.S. Customs and Border Protection’s mission, such as matters related to trade, travel, and national security. Prior to his tenure as director, Acting Commissioner Miller began his career in 1993 as a Customs Inspector. Other titles Miller has held include Acting Assistant Commissioner at the Office of Intelligence and Investigative Liaison, the Executive Director of the National Targeting Center (NTC), and Director of Field Operations for U.S. Customs and Border Protection’s New York Field Office. Additionally, Muller was awarded the Meritorious Executive Presidential Rank Award in 2021 and the Distinguished Executive Presidential Rank Award in 2016.

Main Idea: Subheading 8714.20.0000, Harmonized Tariff Schedule of the United States (HTSUS), covers parts and accessories exclusively for “carriages for disabled persons,” but does not cover items that have multiple uses even if one of the uses is acting as a carriage for disabled persons.

In ruling N328762, (Nov. 8, 2022) U.S. Customs and Border Protection (CBP) considers the tariff classification of three (3) types of wheelchair accessories and a multi-use bath belt from the Netherlands.

The first wheelchair accessory is the Moduform Dynamic Arm Support, which is designed as a mobile support for elbows, forearms, and hands that attaches to either a manual or power wheelchair. It provides the user with upper extremity support, functional dynamic range of motion at the shoulder, and a flexible hand support. It can be adjusted for a customized orthotic fit, and is comprised of an elbow pad, forearm pad, hand block and strap, base board, quick release adapter plate, and a pivot plate with fasteners.

The second accessory is the Flex-Shaft Joystick Handle. The handle is constructed of polyurethane synthetic rubber and is specifically designed with a mounting hold to fit power wheelchairs.

The third accessory is the Tri-Lock Midline Joystick Mounting Hardware, which is designed to safely mount the Flex-Shaft Joystick Handles on the wheelchair, while minimizing any damage to the wheelchair.

The Aeromesh® Rapid-Dru Bath Belt, is a two-piece support belt designed to be fastened to either a wheelchair or shower chair. Each strap is made of 100% polyester knit, dyed gray, Aeromesh® fabric.

The manufacturer of the products, Bodypoint Inc., suggests that all four (4) items are classified under subheading 8714.20.0000, HTSUS, which provides for “Parts and accessories of vehicles of headings 8711 to 8713: Of carriages for disables persons.” Bodypoint also suggests that the Aeromesh® Rapid-Dru Bath Belt is alternatively classified under subheading 9402.90.0020, HTSUS, which provides for “Medical, surgical, dental, or veterinary furniture (for example, operating tables, examination tables, hospital beds with mechanical fittings, dentists’ chairs); barber’s chairs and similar chairs. Having rotating as well as both reclining and elevating movements; parts of the foregoing articles: Other: Other: Other.”

CBP agrees with Bodypoint’s suggestions in part, and states that the applicable subheading for the Moduform Dynamic Arm Support, the Flex-Shaft Joystick Handle, and the Tri-Lock Midline Joystick Mounting Hardware is 8714.20.0000, HTSUS, which provides for “Parts and accessories of vehicles of headings 8711 to 8713: Of carriages for disables persons.” The general rate of duty is free.

However, CBP disagrees that the “Aeromesh® Rapid-Dry Bath Belt” is classifiable under 8714.20.0000, HTSUS, or alternatively under subheading 9402.90.0020, HTSUS.

CBP notes in its decision that the Aeromesh®Rapid-Dry Bath Belt is not designed specifically for use only with a wheelchair or a shower chair. The support belt is designed to be secured to either a wheelchair or a shower chair. Additionally, the support belt is not an integral or a component part, without which wheelchairs or shower chairs cannot function. While the belt can be used on a wheel chair, its universal usage on multiple chairs makes it unlikely that it will be used as an accessory exclusively to a wheelchair, as its design permits the accessory to accommodate any chair where support for a disabled person is required.

Based on this reasoning, CBP determines the applicable subheading for the “Aeromesh® Rapid-Dry Bath Belt Support Belts” is 6307.90.9891, HTSUS, which provides for “Other made-up articles, including dress patterns: Other: Other: Other: Other: Other.” The rate of duty is 7 percent ad valorem.

On November 10, 2022, the U.S. Department of Commerce (“Commerce”) announced that it has reclassified Russia as a nonmarket economy, meaning that it will no longer treat Russia as a market economy in antidumping (AD) proceedings. This is an unprecedented move because it is the first time that Commerce upgraded a country to market economy and then downgraded it to nonmarket status.  Commerce had been treating Russia as a market economy since 2002.  Commerce’s decision to downgrade Russia’s market economy status means that it will have the ability to apply the “full force of the U.S. AD law to address the market distortions caused by increasing interference from the Russian government in their economy.”[1] Specifically, the application of Commerce’s “non-market methodology” in antidumping proceedings is essentially a summary finding that the Department cannot rely on the costs reported by Russian manufacturers in the dumping calculation.  This generally results in significantly higher duty rates through the use of surrogate costs from comparable market economy producers. Russia joins 11 other countries classified as nonmarket economies by the Department of Commerce, including China, Vietnam, and nine former Soviet republics.

 In October 2021, Commerce had reviewed Russia’s market economy status and decided to maintain Russia’s market economy status, although it had expressed disappointment with Russia’s lack of progress toward a more market-oriented economy since attaining the designation in 2002. Russia’s new nonmarket economy status was triggered in large part by petitions submitted on June 30, 2022, from CF Industries Nitrogen LLC, an Illinois-based fertilizer producer and its subsidiaries. The company claimed that both Russia and Trinidad and Tobago “are exporting illegally subsidized fertilizer to the U.S. at unfairly low prices and underpricing their goods by as much as 433.37%”.[2] In its petition, CF Industries highlighted Russian President Vladimir Putin’s two-decade hold on power and stated that Russia’s “move from a centrally planned economy toward a market-based system has stalled and, in many areas, reversed in recent years.” In response, Commerce launched an investigation to assess whether the Russian Federation operates as a nonmarket economy, which concluded with its announcement on Thursday.

Russia’s new nonmarket economy status is likely to significantly raise tariffs for Russian imports such as aluminum, steel, and chemicals into the United States, which have already fallen drastically following U.S. sanctions and trade restrictions in response to Russia’s invasion of Ukraine. According to official data from Commerce, the United States imported $12.5 billion worth of Russian goods in between January and September of this year, which is roughly half the level achieved during the same time period in 2021.  

[1] https://www.trade.gov/press-release/us-department-commerce-revokes-russias-market-economy-status-antidumping-proceedings

[2] https://www.law360.com/articles/1405407/feds-fertilizer-probe-to-decide-if-russia-is-market-economy

UK Releases General License Permitting Agricultural Commodities Exports: On November 4, 2022, the UK’s Office of Financial Sanctions Implementation (“OFSI”) issued a new general license under its Russia sanctions regime. This license permits exporters of agricultural commodities and UK Department of International Trade License holders: (1) to receive funds and economic resources from any person, including UK-sanctioned persons (“Designated Persons”), to export, sell, produce and transport agricultural commodities to any persons or entities, including Designated Persons; and (2) to make available funds or economic resources to various persons and entities, including Designated Persons, in connection with the export, sale, production and transport of agricultural commodities, or obtaining insurance or reinsurance for such transactions. Individuals engaging in such activities must provide written notice to HM Treasury within seven days of commencing such activities.  The license does not authorize Designated Persons to transfer funds or economic resources to other Designated Persons.

U.S. Issues New Licenses and Guidance: On November 10, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published General License (“GL”) 8D, which supersedes GL 8C.  GL 8D authorizes certain transactions related to energy otherwise prohibited by Executive Order (“EO”) 14024, from November 10, 2022, to May 15, 2023.  The scope of the license remains the same as 8C, and authorizes energy transactions with: (1) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (aka “VEB”); (2) Public Joint Stock Company Bank Financial Corporation Otkritie; (3) Sovcombank Open Joint Stock Company; (4) Public Joint Stock Company Sberbank of Russia; (5) VTB Bank Public Joint Stock Company; (6) Joint Stock Company Alfa-Bank; (7) any entity in which one or more of the previously-listed entities own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest; or (8) the Central Bank of the Russian Federation.

Also on November 10, 2022, OFAC published GL 53 and Frequently Asked Question (“FAQ”) 1096. GL 53 authorizes U.S. persons to engage in any transaction “ordinarily incident and necessary” to the official business of diplomatic or consular missions of the Government of the Russian Federation, including transactions relating to compensating employees of Russian missions, such as payment of salaries and expenses, to the extent such transactions are prohibited by Directive 4 under EO 10424.  FAQ 1096 explains that GL 53 applies to Russian missions located in or outside of the U.S., and further states that “[n]on-U.S. persons may engage in transactions that are authorized for U.S. persons under [GL 53] without risk of sanctions under E.O. 14024.”

EU Guidance: On November 9, 2022, the European Commission added one new FAQ to their guidance on asset freezing under the EU Russian sanctions regime.  The new FAQ offers guidance on how EU authorities approach shares of an EU bank owned by EU-listed persons.  The guidance provides that such shares qualify as “funds” under EU sanctions, and “therefore must be frozen” if they belong to or are controlled by an EU-listed person.  Additionally, the Commission explains that voting rights are an intangible economic resource and must also be frozen.

U.S. Revokes Russia’s Market Economy Status: On November 10, 2022, the U.S. Department of Commerce (“Commerce”) revoked Russia’s status as a market economy in its antidumping proceedings, which status Russia has held since 2002.  This means Russia now joins the U.S. non-market economy list, denoting countries where prices are set by authorities rather than market forces.  The Commerce Department stated that, “This decision gives the United States the ability to apply the full force of the U.S. [anti-dumping] law to address the market distortions caused by increasing interference from the Russian government in their economy.”

IRS-CI Releases Annual Report Illustrating Focus on Russian Sanction-Evaders: On November 3, 2022, the IRS Criminal Investigation division (“IRS-CI”) released its 2022 annual report, which states that IRS-CI joined Taskforce Kleptocapture, a multi-agency taskforce focused on Russian oligarchs and other sanctions evaders.  The report notes that, as of September 2022, the agency had identified nearly 50 individuals and entities as potential targets for sanctions-related enforcement, and that IRS-CI is working with OFAC and other agencies to identify individuals and entities to add to OFAC’s Specially Designated Nationals and Blocked Persons List.

Main Idea: Classification of apparel items requires a specifically robust understanding and reading of the applicable Section and Chapter notes, as noted by the unisex and water repellant provisions of Chapter 62.

In ruling N328725 (Oct. 28, 2022), U.S. Customs and Border Protection (CBP) discusses the tariff classification of a unisex children’s jacket from Vietnam.  The jacket is reversable, constructed with 100% nylon woven fabric on both sides and treated with durable water repellent.  The jacket at issue is identified as a unisex jacket and contains the following varying features on each side:

  • Side 1: The jacket’s back panel, sleeves, yokes, and hood are constructed from 100% nylon woven fabric, which is quilted in horizontal rows to a nonwoven manmade batting.  The quilted side features a full front opening with a reverse coil zipper extending to the base of a scuba-type hood, an internal storm flap, long sleeves with an elasticized hem, and a hemmed bottom. In contrast, the front panels are unquilted. 
  • Side 2: On this side, the 100% nylon fabric is unquilted and the inside serves as an insulated quilted lining.  This unquilted side features a full front opening with a reverse coil zipper that extends to the base of a scuba-type hood, an outer storm flap, zippered welt pockets, and a hemmed bottom.

CBP states that Note 9 to Chapter 62 of the Harmonized Tariff Schedule of the United States (HTSUS) provides the following:

“9. Garments of this chapter designed for left over right closure at the front shall be regarded as men’s or boys’ garments, and those designed for right over left closure at the front as women’s or girls’ garments. These provisions do not apply where the cut of the garment clearly indicates that it is designed for one or other of the sexes.

Garments which cannot be identified as either men’s or boys’ garments or as women’s or girls’ garments are to be classified in the headings covering women’s or girls’ garments.”

CBP determines that the garment at issue is classified under the women’s or girls’ subheading because the jacket does not have a directional closure, is not designed for one specific gender, and comes in sizes that accommodates both sexes.  

In addition, as noted above, the jacket is identified as being “water repellent.”  Additional U.S. Note 2 to Chapter 62 of the HTSUS provides, in relevant part, that for classification purposes:

“[T]he term “water resistant” means that garments classifiable in those subheadings must have a water resistance (see current version of ASTM D7017) such that, under a head pressure of 600 millimeters, not more than 1.0 gram of water penetrates after two minutes when tested in accordance with the current version of AATCC Test Method 35. This water resistance must be the result of a rubber or plastics application to the outer shell, lining or inner lining.”

CBP determines that the provided the jacket passes the water resistant test specified under Additional U.S. Note 2 of Chapter 62, the jacket is classifiable under subheading 6202.40.7000, HTSUS, which provides for “Women’s or girls’ overcoats, carcoats, capes, cloaks, anoraks (including ski-jackets), windbreakers and similar articles (including padded, sleeveless jackets), other than those of heading 6204: Of man-made fibers: Anoraks (including ski-jackets), windbreakers and similar articles (including padded, sleeveless jackets): Other: Other: Other: Other: Water resistant.”  The duty rate is 7.1% ad valorem.

CBP additionally determines that should the jacket fail the water resistance test, it is classifiable under subheading 6202.40.7521, HTSUS, which provides for “Women’s or girls’ overcoats, carcoats, capes, cloaks, anoraks (including ski-jackets), windbreakers and similar articles (including padded, sleeveless jackets), other than those of heading 6204: Of man-made fibers: Anoraks (including ski-jackets), windbreakers and similar articles (including padded, sleeveless jackets): Other: Other: Other: Other: Other: Girls.”  The rate of duty is 27.7 % ad valorem.

OFAC Guidance: On October 31, 2022, the Office of Foreign Assets Control (“OFAC”) published Frequently Asked Question (“FAQ”) 1094, confirming that Russian crude oil loaded onto a vessel at the port of loading for maritime transport prior to December 5, 2022, is not subject to a to-be-determined oil price cap, provided that the oil is unloaded at port of destination prior to January 19, 2023.  FAQ 1094 also confirms that U.S. service providers can continue to provide services related to the maritime transport of Russian crude oil purchased above the price cap if it is loaded onto a vessel at the port of loading prior to 12:01 am December 5, 2022, and unloaded at the port of destination prior to January 19, 2023, at 12:01 am.

UK General License Updates:

On October 28, 2022, the UK released two General Licenses under its Russia and Belarus sanctions regimes.  The first, General License INT/2022/2252300, permits designated persons (“DPs”) and entities owned or controlled by DPs to pay legal fees to law firms and counsel until its expiration on April 28, 2023.  General License INT/2022/2252300 also authorizes UK financial institutions to process payments authorized by the license.  The general license placed a cap of £500,000, VAT included, on pre- and post-designation legal fees, a £1,500-per-hour cap for “Counsel” rates (including VAT), and a schedule of maximum permissible rates for “Legal Advisers.”

On October 30, 2022, the UK issued a second license, General License INT/2022/2305324, “Securing Energy for Europe”, which permits a person (an individual, or a body of persons corporate or unincorporated) to grant a “Category 5 loan,” or enter into an arrangement to grant such a loan, to Gazprom Germania or any of its Subsidiaries, and to carry out any activity necessary to effect this, including, but not limited to, loans for certain listed purposes relating to, among other things, gas and power trading, purchases of gas, and clearing services relating to Gazprom Germania. 

New UK Designations: On November 02, 2022, the UK designated Alexander Abramov and Alexander Frolov, Russian oligarchs who have been targeted for their involvement in the extractive, transport, and construction sectors.  The UK also designated Airat Shaimiev and Albert Shigabutdino, the co-owners of the TAIF Group, for controlling 96% of Russia’s chemical and petrochemical processing, including the production of crude oil.

New UK Russian Sanctions Package: On October 29, 2022, the UK updated its Russian and Belarus sanctions regimes via Amendment 15, which expands the  types of loans, to include so-called “category five loans,” and credit now prohibited from being granted directly, or indirectly, to all Russian-owned companies, both in and outside of Russia, if such loans or credit have a maturity exceeding 30 days.  Category five loans may be extended to companies incorporated or constituted outside of Russia that were in existence on October 29, 2022, or entities owned by such a person.  These new prohibitions effectively replace the EU’s previous restrictions on “category three loans,” as of October 29, 2022.  Amendment 15 also prohibits the export, supply, and delivery of all goods critical for the functioning of the Russian economy.  Amendment 15 further prohibits the export of G7 items, and prohibits the import into the UK of Russian gold, including gold processed in a third country, and liquid natural gas that was exported from Russia on certain dates.

Consumer Appliances Imports Into Countries Neighboring Russia Spark Export Control Evasion Concerns: On October 29, 2022, media outlets reported that a sudden spike in European exports of washing machines, refrigerators, and electric breast pumps to countries neighboring Russia, may be part of a Russian efforts to circumvent export controls to acquire chips and other components necessary for Russia’s military equipment.  EU trade data reported that the export of electric breast pumps to Armenia has nearly tripled in the first half of 2022, despite a 4.3% drop in the country’s birth rate, and the country imported more washing machines from the EU during the first eight months of 2022 than the past two years combined.  Similarly, Kazakhstan reportedly imported $21.4 million worth of refrigerators from the EU through August 2022, more than triple the amount for the same period last year, indicative of Russian efforts to evade EU’s restrictive measures.