Sanctions & Export Controls: under control

In June 2020, the European Commission published an Opinion as a reaction on requests of member states on the interpretation of EU Russia sanctions. In the US, an Italian national was sentenced to federal prison for attempting to evade US national security sanctions, by trying to obtain industrial equipment from the US on behalf of a Russian energy company in violation of US sanctions. This, and more, in this newsletter.

1.         The Netherlands

On 22 June 2020, the Dutch ministry of Foreign Affairs (“DMFA”) published the report “State of the European Union 2020”. The report mentions that external factors are increasingly influencing how the European Union (“EU”) shapes its internal policies. The COVID-19 crisis made this [quote] “painfully clear” [unquote], with regard to shortcomings in the security of supply of medical goods (Report DMFA, p. 3). To prevent shortages of strategic goods in the future, it is important that the EU investigates and addresses vulnerabilities in the system of relevant global value chains. Most importantly, the EU needs stable access to strategic products. The report states that in many cases, this can be achieved through diversification. In this way, the EU can continue to reap the benefits of openness and comparative benefits with a sufficient level of security of supply.

In 2018, a Working Paper of the International Monetary Funds was published with regard the economic benefits of export diversification in small states (McIntyre, Xin Li, Wang, & Yun, 2018).

On 24 June 2020, a historic overview was published with all rejected export license applications for military goods, in the Netherlands. More about this in our upcoming The Netherlands newsletter of the second quarter of 2020.

2.         Europe & the United Kingdom

On 11 June 2020 the President of the United States of America (“US”) signed an executive order authorising the possible imposition of economic sanctions and visa restrictions on certain persons associated with the International Criminal Court (“ICC”). On 12 June 2020, the Swiss government published a press release stating that Switzerland regrets the more severe measures that the US decided on 11 June 2020 against the ICC. On 16 June 2020 the EU expressed grave concerns about the announced measures of the US and reconfirms its unwavering support for the ICC. On 15 June 2020 a press release of the European Commission (“EC”) was published, stating that the EC backs an international initiative to facilitate trade in healthcare products with a group of World Trade Organization partners. On 16 June 2020 the EU published its Conclusions on EU External Action on Preventing and Countering Terrorism and Violent Extremism.

In June 2020, the United Kingdom (”UK”) published Brexit related sanctions regulations on four countries:

In June 2020, the UK Government also published Cyber (Sanctions) (EU Exit) Regulations 2020. According to a news article of 17 June 2020 on the website of the UK Institute of Export & International Trade, the practicalities of export controls compliance can seem daunting to even the most experienced business. To help avoid these pitfalls, the Export Control Profession Board has compiled a series of “10 common mistakes” articles.

3.         Russia

According to a 17 June 2020 article of Russian News Agency TASS, the US sanctions against Nord Stream 2 target the German economy: “Sanctions against the Nord Stream 2 project discussed in [US] Congress are designed to directly hit the German economy, Russian Foreign Ministry Spokeswoman Maria Zakharova said at a briefing on [17 June 2020]”. On 18 June 2020, the EU renewed its Crimea and Sevastopol sanctions for one year. In June 2020, the UK government published Russia Guidance for the financial and investment restrictions in Russia (Sanctions) (EU Exit) Regulations 2019. On 18 June 2020, a press release of the US Department of Justice was published, regarding an Italian national, who was sentenced to federal prison for attempting to evade US national security sanctions. According to the news article, “the defendant tried to obtain industrial equipment from the US on behalf of a Russian energy company in violation of US sanctions”. The US Attorney for the Southern District of Georgia, Bobby L. Christine, said: “We will prosecute to the fullest extent of the law those who threaten our national security”.

EC Opinion: Russia Sanctions (d.d. 19 June 2020)

On 19 June 2020, the EC published an Opinion as a reaction on requests of member states on the interpretation of EU Russia sanctions. In this Opinion the EC referred to a European guidance document, in which it identified a number of criteria which should be taken into account to determine whether a legal entity is controlled by another entity, that is to say, whether the latter “is able to and effectively asserts a decisive influence over the conduct of the other entity in question” (EC Opinion 19 June 2020, p. 2). In the Opinion the EC identified the following criteria:

  1. the power to appoint or remove a majority of the members of the administrative, management or supervisory body of such legal person or entity;
  2. using all or part of the assets of a legal person or entity;
  3. sharing jointly and severally the financial liabilities of a legal person or entity, or guaranteeing them;
  4. having influence as regards corporate strategy, operational policy, business plans, investment, capacity, provision of finance, human resources and legal matters;
  5. putting in place or maintaining mechanisms to monitor the commercial conduct of the legal person or entity;
  6. other indicia such as sharing a business address or using the same name which could cause third parties to have the impression that the two entities are in fact part of the same undertaking” (EC Opinion 19 June 2020, pp. 2-3).

According tot the Opinion, entities (A) who are “under control” of a sanctioned party (B), are also considered “sanctioned”, even though these entities (A) are not listed as a sanctioned party (B).

4.         United States of America

In a press release of 15 June 2020, US Secretary of Commerce Ross announced a new rule ensuring US industry’s ability to more fully contribute to standards-development activities in the telecommunications sector. In a 17 June 2020 press release of the White House, it was announced that President Trump signed into law, the “Uyghur Human Rights Policy Act of 2020,” which condemns human rights violations of specified ethnic minority groups in China and other purposes, including specified authority to impose sanctions on certain foreign persons. That same day – on 17 June 2020 – the US renewed its sanctions against North Korea for one year.

On 19 June 2020, the Singapore Police Force published a news article stating that a Singaporean managing director and a Malaysian shipping manager from a commodity trading company, were charged in court. The managing director was charged with falsification of papers and is alleged to have sold sugar to customers from North Korea.

On 24 June 2020, a press statement of US Secretary of State Pompeo was published, regarding sanctions on Iranian tanker captains for assistance to the regime of Venezuelan president Maduro. The US sanctioning five Iranian ship captains, who delivered approximately 1.5 million barrels of Iranian gasoline and related components to Venezuela, according to the press statement. On 25 June 2002, news agency Reuters published an article, stating that the Trump administration has determined that top Chinese firms, including telecoms equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military, laying the groundwork for new US financial sanctions.

Should you wish to receive more information about one of the topics described in this newsletter, such as the Opinion of the EC regarding the interpretation of EU Russia sanctions, please contact BenninkAmar Advocaten at: or via telephone at: +31203085918

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