February 23, 2024  – On February 23, 2024, the European Union (“EU”)  adopted a thirteenth package of restrictive measures (sanctions) against Russia after two years of its war of aggression against Ukraine. The measures aim at “further limiting Russia's access to military technologies” and to “drain the Russian war machine of its revenue sources and key goods and technology”. The new EU sanctions were implemented  through two Council Decisions and two Council Regulations.

According to a  factsheet on the impact of sanctions also published by the Commission on February 23, 2024, “[t]he prospects for the Russian economy for the medium to long term are bleak. Russia is now a war economy, internationally isolated, over‑reliant on state support, and more dependent than ever on energy resources and on the import of technology from China.” In this context, the latest round of EU sanctions seeks to tighten measures against Russia's military and defense sector, targeting further entities in third countries who supply equipment, as well as those responsible for the illegal deportation and military re-education of Ukrainian children.

1. Individual restrictive measures

New designations

On February 23, 2024, the EU  added 106 individuals and 88 entities to its restricted parties list through  Council Implementing Regulation 2024/753. The newly-listed entities include Russian companies active in the military and aviation sectors, especially those manufacturing missiles, drones, and high-tech components for weapons, companies and individuals supporting the provisions of armaments in Russia, as well as companies and individuals involved in the forced transfer and in deportation of Ukrainian children.

In total, as of today, 2144 individuals and entities have been placed on the EU restricted parties list under the Russian program in respect of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine.

Newly-designated individuals and entities are subject to an asset freeze and a prohibition from making funds and economic resources available to them, as well as, for individuals, a travel ban in the EU as of the date on which they were added to the EU restricted parties list.

2. Export-related restrictions

Dual-use (Annex I of Regulation 2021/821) and advanced technology items (Annex VII of Regulation 833/2014)

  • Extension of the list of entities subject to enhanced restrictions in relation to dual-use and advanced technology items  to cover an additional 17 new Russian companies and 10 non-Russian entities (Annex IV of Regulation 833/2014). Among the non-Russian entities, all trading in the area of electronic components, four companies are registered in the People's Republic of China (RG Solutions Limited, Guangzhou Ausay Technology Co Limited, Shenzhen Biguang Trading Co. Ltd and Yilufa Electronics Ltd.) and one each registered in Kazakhstan (TOO Elem Group), India (Si2 Microsystems Pvt Ltd), Serbia (Conex Doo Beograd-Stari Grad), Thailand (Thai IT Hardware Co. Ltd), Sri Lanka (Euro Asia Cargo (Private) Ltd.), and Turkey (Yildiz Çip Teknoloji Elektronik Elektrik Bilgisayar Malzemeleri Ticaret Sanayi Limited Sirketi).
  • The list of advanced technology items in Annex VII of Regulation 833/2014 was extended to include “Aluminum electrolytic fixed electrical capacitors” (excluding power capacitors) which have military applications (CN Code 8532 22).

Goods which could contribute in particular to the enhancement of Russian industrial capacities (Annex XXIII of Regulation 833/2014)

  • Extension of the list of goods which could contribute in particular to the enhancement of Russian industrial capacities listed in Annex XXIII of Regulation 833/2014 to cover every item with the tariff position 8504, meaning all “Electrical transformers, static converters (for example, rectifiers) and inductors” instead of only the goods within CN Codes 850432, 850433 and 850434. This amendment is one of the measures to enhance air defense in Ukraine, as these items can be used as drone components.
  • New exemption  - The EU introduced an exemption to article 3k  of Council Regulation 833/2014, for the performance until 25 May 2024 of contracts concluded before 24 February 2024, or of ancillary contracts necessary for the performance of such contracts, as to export of the “Electrical transformers, static converters (for example, rectifiers) and inductors” falling under CN codes 850410, 850421, 850422, 850423, 850431, 850440, 850450 or 850490.

3. Import-related restrictions

Iron and steel (Annex XXXVI of Regulation 833/2014)

  • Strengthening of international cooperation -The new package adds the United Kingdom to the list of partner countries excluded from the iron and steel imports restriction, in addition to Switzerland and Norway, by amending the Annex XXXVI of Regulation 833/2014.

4. New FAQs and Guidance on Sanctions Against Russia

Since our  last alert, the Commission has made several updates to its FAQs on the implementation of Regulations 833/2014 and 269/2014 on its  dedicated webpage, including these:

  • Restrictions targeting software: This new FAQ specifies what kind of services are prohibited by listing explicitly certain (i) software for the management of Enterprise (e.g., ERP or CRM), and (ii) design and manufacturing software (e.g., BIM or ETO).
  • Notification and authorization of tanker sales: This new FAQ sheds some light on the scope of the provision set forth in Article 3q of Council Regulation 833/2014, notably by defining what is meant by “other transfer of ownership” or “other arrangement entailing a transfer of ownership”. The Commission also shared a template of notification that can be used by the owner of a tanker in case of sales or other ownership transfer.
  • “No re-export to Russia” clause:  This new FAQ is provides guidance on the new requirement, adopted in the 12th package, to include a “no re-export to Russia” clause in contracts for the export of certain controlled items to third countries. The Commission stressed that Article 12g turns this practice of inserting sanctions clauses into a legal requirement for certain sensitive goods. This FAQ clarifies the application timeline of this new requirement for contracts concluded before and after December 19, 2023. It also defines what is meant by “adequate remedies” that should be included in such a clause pursuant to Article 12g. It finally provides an indicative template that EU operators can use.

The Commission also released an updated version of the Guidance for  EU operators on the implementation of enhanced due diligence to shield against Russia sanctions circumvention, as well as an updated  list of common high priority items.

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