EU tightens Belarus sanctions, targeting dual-use, high-tech, mineral products, potash, wood, cement and steel products, machinery, tighten capital markets and insurance

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Authored by our Global Sanctions Team

On 2 March 2022, the EU published a wide-ranging package of new sanctions against Belarus in response to its involvement in Ukraine. The existing restrictions on dual-use items, potash, tobacco-related and mineral products have been expanded, and a full import ban now applies for wood, cement and steel products, rubber tyres and a wide range of machinery. Previous "grandfathering" clauses allowing the execution of prior contracts involving restricted trade, disbursements under existing loans to listed banks, and the provision of (re-)insurance services to certain parties no longer apply. The EU has also added more Belarusian parties to its asset freeze list.

 

Trade restrictions1

Effective on 3 March 2022, the existing restrictions on supplies of dual-use items and related services have been expanded to reflect those imposed on Russia,2 while those on trade in potash, mineral and tobacco products have also been tightened.

  • Dual-use, military and high-tech: Existing trade restrictions on supplies of dual-use items have been extended to a ban on export of all dual-use items, regardless of origin, to any person in Belarus or use Belarus.3 This ban also covers related financing or financial assistance, brokering services, technical assistance (including assembly, testing, training and repair) and other services relating to the manufacture, maintenance and use of such items. In line with EU Russia sanctions on these items, exemptions apply (subject to specific notification and authorisation requirements) in certain cases, such as for intergovernmental cooperation, humanitarian purposes or personal use for travel to Russia. Pre-existing contract activities may be permitted under Member State authorisation, to be requested before 1 May 2022. Similarly, the EU has imposed an export ban on a wide range of goods and technology considered to contribute to the development of Belarus's military and technological enhancement, including related assistance/services.4 As under the EU Russia sanctions, the extensive restrictions cover various items not normally covered by EU dual-use controls but which are covered in the US Commerce Control List; this includes items for the electronics sector (e.g., microprocessors, semiconductors), and information security, sensors, lasers, navigation/avionics, marine and aerospace/propulsion items. Similar exemptions and related notification and authorisation requirements generally apply as for dual-use items.
  • Tobacco: The list of items subject to supply restrictions has been expanded to now also including knives and cutting blades for use in machinery,5 and to related brokering services, technical assistance, financing or financial assistance (including financial derivatives and (re-) insurance). The previous grandfathering clause allowing contracts concluded prior to 25 June 2021 has been deleted with immediate effect, effectively now prohibiting all supplies of covered goods and services under such contracts as well.
  • Mineral products: The existing import restrictions on "petroleum oils and gaseous hydrocarbon products" now apply more broadly to "mineral products" (with the list expanded to include oils and other coal tar distillation products (tariff heading 2707).6 Execution of pre-25 June 2021 contracts is no longer permitted.
  • Potash products: The existing import restrictions on most potash products has now been extended to cover all potash products (i.e. the entire tariff subheading 3104 20), and pre-25 June 2021 contracts can no longer be executed.

Also effective from 3 March 2022, import/purchase and transport restrictions now apply to the following products, meaning they cannot be directly or indirectly imported, purchased, or transported, if originating in Belarus or exported from Belarus. Related technical assistance, brokering, financing or financial assistance (including financial derivatives and (re-)insurance are also prohibited. Contracts concluded before 2 March 2022 (and ancillary contracts) can only be executed until 4 June 2022:

  • Wood, wood articles and wood charcoal;7
  • Cement and articles of cement, concrete or artificial stone;8
  • All steel products;9
  • New pneumatic rubber tyres;10
  • A wide range of machinery.11

 

Access to EU capital and insurance market

From 3 March 2022, the capital market sanctions in place with respect to the Republic of Belarus, its public bodies, and five banks12 have been tightened. Drawdowns or disbursements under pre-25 June 2021 contracts are no longer permitted. The provision of insurance or re-insurance to the Belarus Government, its public bodies or natural legal persons acting on their behalf or at their direction under pre-25 June 2021 contracts is now prohibited.13

 

Asset freeze

In recent days, the EU has expanded its asset freeze list to include more Belarusian nationals.14 All funds and economic resources in the EU belonging to or controlled by these listed parties must now be frozen. Furthermore, no funds or economic resources may be made available – directly or indirectly (e.g., through companies owned or controlled by them) – to or for their benefit, unless authorized or exempt.

 

1 See Regulation 2022/335, available here, amending Regulation 765/2006, latest consolidated version available here, not yet reflecting recent amendments of Regulation 2022/212, available here.
2 See our alert here.
3 Previously, the ban only targeted military end-use and military end-users.
4 See new Annex Va.
5 See revised Annex VI.
6 See revised Annex VII.
7 See new Annex X, which covers the entire Chapter 44 of the EU Combined Nomenclature.
8 See new Annex XI, which covers tariff headings 2523 and 6810.
9 See new Annex XII, which covers the entire Chapters 72 and 72 of the Combined Nomenclature.
10 See new Annex XIII, only containing tariff heading 4011 at this stage.
11 See new Annex XIV, containing numerous headings of Chapters 84 and 85 of the Combined Nomenclature.
12 See Annex IX.
13 The existing exemption for the provision of compulsory or third party liability insurance for risks situated in the EU or provision of insurance to Belarusian diplomatic/consular missions in the EU remains in place.
14 See Council Implementing Regulations 2022/332 here and 2022/353.

 

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© 2022 White & Case LLP

 

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