Biden hits Russia with tough export restrictions, reducing access to global tech

U.S. President Joe Biden delivers remarks on Russia’s attack on Ukraine, in the East Room of the White House in Washington, U.S., February 24, 2022. REUTERS/Leah Millis

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WASHINGTON, Feb 24 (Reuters) – The Biden administration on Thursday announced sweeping export curbs on Russia, hammering its access to global exports of goods ranging from commercial electronics and computers to semiconductors and parts of plane.

The controls, announced by the Commerce Department and first reported by Reuters, rely on a dramatic expansion of the so-called Foreign Direct Product Rule, requiring companies making high- and low-tech items overseas with American tools to apply for a license in the United States. states before shipping to Russia. Read more

The measures also direct the Commerce Department to deny nearly all of these license applications.

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In a White House speech announcing the new controls, President Joe Biden said they would “impose significant costs on the Russian economy both immediately and over time,” noting that allies, including 27 members of European Union such as France, Germany and Italy, as well as the UK, Canada, Japan, Australia and New Zealand, had joined the response to maximize its impact.

“Between our actions and those of our allies and partners, we estimate we will cut more than half of Russia’s high-tech imports,” he said.

Biden’s announcement came as Ukrainian forces battled Russian invaders nearly across the country’s perimeter on Thursday after Moscow launched an assault by land, sea and air in the biggest attack on a European state since World War II. world. Read more

Under export restrictions announced Thursday, U.S. suppliers are also expected to obtain licenses for certain items bound for Russia that do not currently require them, such as parts for civilian aircraft.

These license applications, in turn, will be subject to a strict “denial policy” review standard, which means that the administration will only approve them in rare cases.

By far the most sweeping measure is the expansion of the Foreign Direct Product Rule, or FDPR, for Russian buyers. The move was inspired by restrictions imposed on Chinese telecommunications giant Huawei Technologies Co Ltd (HWT.UL) under President Donald Trump.

“This is the most complex export control rule ever written,” said former Commerce Department official Kevin Wolf. “Many companies may choose to simply avoid dealing with Russia to avoid the risk of a mistake.”

Under the new measures, Russian companies listed as so-called military end users for their alleged links to the Russian military, including a handful of aircraft manufacturers, will be added to a commercial blacklist known as list of entities. This will broaden the scope of items that businesses would need licenses to obtain.

Washington is also using an additional extension of FDPR to significantly expand the scope of products that would require US approval when sent to Russian military end users. It subjects to U.S. licensing requirements all items made overseas with U.S. tools and destined for companies that support the Russian military.

The measures include exclusions for consumer goods such as household electronics, humanitarian goods and technology necessary for flight security. Consumer communication devices, such as cell phones, are also permitted as long as they are not sent to Russian government employees or certain subsidiaries.

Cordell Hull, a former Commerce Department official, predicted that the rules, while “meaningful,” would be difficult to enforce.

Speaking at a virtual event hours before the rules were released, Matthew Axelrod, Commerce Department’s assistant secretary for export enforcement, pledged to “enforce these tough penalties aggressively. “.

The export restrictions were combined with new sanctions against major Russian banks, including the country’s two largest lenders, Sberbank (SBER.MM) and VTB (VTBR.MM), aimed at limiting access to Russia to the American financial system.

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Reporting by Alexandra Alper and Karen Freifeld; Additional reporting by Caitlin Webber; Editing by Kirsten Donovan; Editing by Jonathan Oatis and Alistair Bell

Our standards: The Thomson Reuters Trust Principles.

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