In Europe and the United States, the rules regarding the export and import of Personal Protective Equipment (“PPE”) have been relaxed to supplement shortages. the question is whether non-PPE-related products will follow. This newsletter will address this question, as well as other recent sanctions and export control matters.
On 14 April 2020 the European Commission (“EC”) announced that it would (i) narrow down the export authorisation requirements to protective masks only and (ii) extend the geographical and humanitarian exemptions. In the press release of 14 April 2020, only one single product category was mentioned: protective facial masks. According to the EC, this is the only remaining category where an export authorisation is necessary in order to secure an adequate supply to protect the health of European citizens.
On 16 April 2020, a joint press statement by the Croatian Presidency and the EC following an informal meeting of EU Trade Ministers was published. The ministers welcomed the proposal of the EC for a new export authorisation measure for specific items of PPE. The ministers supported the changes to the product scope and the wider exemption from the export authorisation requirements as well as its 30-day duration.
On 15 April 2020, the European Parliament published a joint motion for a resolution which “insists that the use of export authorisations must not, under any circumstances, turn into de facto export bans; emphasises the importance of maintaining access to scarce medical products for developing countries; stresses that the export of Personal Protective Equipment (PPE) must get to those who need it most and not those who can afford to pay the highest price” (consideration #46). However, on 24 April 2020 the EC published a new export authorisation scheme for PPE. The list of products that require export authorisation doesn’t only contain masks (see EC press release of 14 April 2020), but also spectacles and protective garments. That same day, 24 April 2020, the EU published in its Official Journal, Regulation (EU) 2020/568, making the exportation of the following products subject to the production of an export authorisation: (i) protective spectacles and visors, (ii) mouth-nose-protection equipment, and (iii) protective garments.
On 9 April 2020 the United Kingdom published two notices with changes and further clarification on the Export Control Joint Unit’s (“ECJU”) remote compliance checks. The ECJU administers the UK’s system of export controls and licensing for military and dual-use items. The two notices cover (i) remote compliance checks, and (ii) the processing of applications for export control licences. A couple of days earlier – on 6 April 2020 – the Department of Health & Social Care of the UK published guidance on the export control process for PPE. The UK also implemented the European rules regarding PPE (Regulation (EU) 2020/568) and the British regulation came into force on 26 April 2020. It will initially last for 30 days, until (and including) 25 May 2020.
On 10 April 2020, the Federal Emergency Management Agency (“FEMA”) of the US published a Temporary Final Rule in the Federal Register, the daily journal of the US Government. FEMA is issuing a temporary rule to allocate certain scarce or threatened materials for domestic use, so that these materials may not be exported from the US without explicit approval by FEMA. The rule covers five types of PPE and is effective for 120 days, after 10 April 2020:
- N95 filtering facepiece respirators;
- Other filtering facepiece respirators;
- Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
- PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and;
- PPE gloves or surgical gloves.
COVID-19 as mitigating factor and exemption in sanctions matters
On 16 April 2020, the US Office of Foreign Assets Control (“OFAC”) published a fact sheet that summarises existing exemptions and authorisations to provide humanitarian assistance in the context of the Iran, Syria, North Korea, Cuba, Venezuela, and Russia/Ukraine-related sanctions programs.
On 20 April 2020, OFAC acknowledged that some companies might need to temporarily reassign sanctions compliance resources if they face technical or personnel challenges due to the COVID-19 virus. OFAC encourages persons, including financial institutions and other businesses, affected by COVID-19 to contact OFAC as soon as practicable, if the person believes it may experience delays in its ability to meet deadlines associated with regulatory requirements administered by OFAC. Should businesses face technical and resource challenges caused by COVID-19 and choose, as part of its risk-based approach to sanctions compliance, to account for such challenges by temporarily reallocating sanctions compliance resources consistent with that approach, OFAC will evaluate this as a factor in determining the appropriate administrative response to an apparent violation that occurs during this period, according to OFAC. OFAC will address these issues on a case-by-case basis.
Other COVID-19-related measures and bans
Because of the outbreak of COVID-19, many countries around the world prohibited the export of PPE without a license. Some countries have also prohibited the export of other, non-PPE, products. For example, in April 2020, in Romania exports of wheat, barley, oats, corn, rice, wheat flour, soybeans, sunflower seeds, sunflower oil, sugar, bakery products, soybean meal, and other oilcakes to non-EU destinations, have been suspended through the state of emergency until mid-May 2020. Will other countries follow with similar bans? Often, the (temporary) export ban of a certain product goes hand in hand with the “ramping up” of the production of the same product. This is already shown with protective facial masks. On 20 April 2020, news agency CNN said the White House is preparing to use the Defense Production Act to give an American medical supplies company federal funding so it can ramp up its production of swabs needed for COVID-19 virus testing.
Arms & weapons
Since 1 April 2020, the German Federal Office for Economic Affairs and Export Control – “Bundesamt für Wirtschaft und Ausfuhrkontrolle” (“BAFA”) – has an “Elektronisches Kriegswaffenbuch” (“eKWB”), a so-called “war weapons book”. This obligates all persons and entities that deal with war weapons to report their stocks and changes in stocks to BAFA, every six months.
On 20 April 2020 the Dutch Minister for Foreign Trade and Development Cooperation and the Minister for Foreign Affairs answered parliamentary questions of members of the Dutch House of Representatives about arms imports from Turkey.
On 20 April 2020 the Office of the Under Secretary of State published a paper for Arms Control and International Security of the US, the first of a new series of papers. This offers thoughts on US priorities for “next-generation arms control” involving both Russia and China.
On 27 April 2020, the US Department of Commerce announced new export control actions to prevent efforts by entities in Russia, China, and Venezuela to acquire US technology that could be used in development of weapons, military aircraft, or surveillance technology through civilian supply chains, or under civilian-use pretences, for military end uses and military end-users.
On 2 April 2020 Reuters published a news release containing the message that the Trump administration is tightening rules to prevent China from obtaining advanced US technology for commercial purposes and then diverting it to military use. It seems that the Trump administration wants to ban “dual-use” tech sales to China.
On 7 April 2020 the EU renewed its Iran human right sanctions for one year, until 13 April 2021.
On 10 April 2020 OFAC amended the North Korea Sanctions Regulations. Several news agencies, including the Financial Times, reported in the beginning of April 2020, that the US bought ventilators from a Russian company under sanctions. The US Department of Treasury says it can license transactions for foreign policy or national security purposes.
On 21 April 2020 the Supreme Court of the Netherlands ruled in a case concerning the deliberate transportation of military goods without a license by a legal person (in this case a professional air cargo carrier) in the Netherlands. The Dutch Supreme Court referred the decision back to the Court of Appeal of Amsterdam. The EU has renewed its Myanmar/Burma-sanctions for one year, until 30 April 2021 (see Council Implementing Regulation (EU) 2020/562, 23 April 2020 & and Council Decision (CFSP) 2020/563, 23 April 2020).
Should you be interested in more information about one of the topics of this newsletter, or have any other question relating to sanctions or export control, please contact BenninkAmar Advocaten at: firstname.lastname@example.org.