Tradeology, the ITA Blog

Agnes Pawelkowska is an International Trade Specialist at the International Trade Administration’s Office of Russia, Ukraine and Eurasia.

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This blog is part of an ongoing series designed to provide U.S. exporters with information and resources on developments pertaining to U.S. sanctions and export controls in response to Russia’s aggression against Ukraine. Regulations and market conditions can change with little notice. Companies are encouraged to reach out to the Points of Contact listed at the end of this article for latest information.

As discussed in our previous blog, Russia’s unprovoked attack on Ukraine and the subsequent Western sanctions and export controls imposed have forced U.S. exporters to rethink the way they perceive the Russian market and conduct business in the country. It has also prompted all of us at the International Trade Administration (ITA) to consider how best we can support U.S. exporters as they seek to ensure their businesses are in compliance with the relevant laws and regulations. As such, ITA’s Office of Russia, Ukraine and Eurasia has compiled and centralized a series of resources that may be of assistance to U.S. exporters. Please see the complete document on the ITA Russia web page for additional details and read on for a high-level overview of the resources that the document contains.

U.S. Government Information & Resources

• While the United States government has imposed significant sanctions and export controls on Russia in response to its unlawful aggression against Ukraine, some U.S. companies can still do business in Russia.
• In addition to sanctions and export controls on Russia, the U.S. government has also imposed stringent restrictions on Belarus, including new export controls, in response to its substantial enabling of Russia’s attack on Ukraine.
• The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is the lead agency for implementing and enforcing sanctions. The Department of Commerce’s Bureau of Industry and Security (BIS) and its Export Administration Regulations (EAR) are the lead agents for implementing and enforcing export controls.

Export Controls

• Humanitarian aid, agricultural commodities, medicine, medical devices, and telecommunication devices which support the free flow of information are generally exempt from export controls.
• Apart from the above, to see if your transaction is affected, check out end users on the Consolidated Screening List (CSL) on ITA’s website. A search tool and a downloadable list are available.
• Make sure your product is properly classified and does not require a BIS license due to expanded export controls against Russia and Belarus. To find out more, call an export counselor at (202) 482-4811 (Washington D.C. outreach office), or at (949) 660-0144 (Western regional office), or e-mail EXDOEXS@bis.doc.gov.

Sanctions

• To see lists of sanctioned persons and sanctions programs, check out the OFAC website.
• Check with your financial institution before contracting for payment from Russia. More than 80% of Russia’s financial sector is currently sanctioned by the United States.

General Recommendations for U.S. Exporters Considering Russia or Belarus

• Sign up for automatic e-mail notifications from OFAC.
• Check the Federal Register for BIS, OFAC, and other USG actions and set up an account that will allow you to receive automatic e-mail notification of U.S. government actions regarding Russia.

ITA Points of Contact

• Russia: Policy Team Lead Tanner Johnson, tanner.johnson@trade.gov, (202) 790-7350
• Russia: Russia Desk Officer Agnes Pawelkowska, agnes.pawelkowska@trade.gov, (202) 336-9672
• Eurasia: Minister Counselor for Commercial Affairs Heather Byrnes, heather.byrnes@trade.gov, [90] (312) 457-7278

Janelle Santerre Weyek is a senior commercial officer in the Foreign Commercial Service at the International Trade Administration.

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You have probably heard of the World Bank and the IMF (also known as the International Monetary Fund). You also may have heard of some others, e.g., the Inter-American Development Bank, the African Development Bank, or the Asian Development Bank. These institutions are also known as multilateral development banks (MDBs). Although you may not have heard of is the European Bank for Reconstruction and Development (EBRD), now is a great time to learn.

Put simply, MDBs provide financial and technical support to developing countries seeking to strengthen their economic management and reduce poverty. Across the globe every year, these banks lend billions of dollars to countries seeking to improve their economies and the lives of their citizens. They also offer numerous business opportunities for U.S. companies to expand their international footprint while simultaneously supporting global economic development.

For the past 3 years, I have served as the International Trade Administration’s liaison to the EBRD in London. Established in 1991, the EBRD has invested over 160 billion euros in more than 6,000 projects. In particular, the EBRD is a leader in climate finance and has launched extensive programming that dovetails with the Biden-Harris Administration’s Partnership for Global Infrastructure and Investment and clean technology priorities, making EBRD an ideal partner for ITA in collaborating on targeted outreach to U.S. industry.

During my time at the EBRD, I deepened the relationship between ITA and the EBRD to better support U.S. business interests and expand opportunities for U.S. companies interested in competing for tenders issued by the EBRD. This May, my EBRD colleagues and I finalized an unprecedented memorandum of understanding through the ITA Strategic Partnership Program. This memorandum will help us to better support U.S. businesses interested in working with the EBRD in specific priority sectors, namely the digital economy, the green economy and clean tech.

This first-of-its-kind memorandum of understanding mean for ITA and U.S companies advances three key objectives:

1. The memorandum will facilitate engagement between EBRD borrowers and U.S. industry decision-makers. That is, it will facilitate engagements that will put U.S. businesses in the room with clients of the EBRD, this will help to inform U.S. industry of the bank’s goals and objectives, as well as opportunities to get involved.
2. The memorandum can provide immense opportunities for U.S. small and medium-sized businesses (SMEs). This is because the memorandum focuses specifically on increasing engagement on the EBRD’s Green Cities Program, which is a strong match for U.S. industry and U.S. small, medium-sized, women-owned, and minority-owned businesses, as the program has municipal-level opportunities of the appropriate size and scale for diverse enterprises looking for new business.
3. Enhanced public engagement and counseling with U.S. businesses that target projects with international development financing. As a result of this memorandum, ITA is organizing a series of best practices roundtables and webinars that will involve ITA and EBRD clients, EBRD decision-makers and program leads that will take place over the next several months and throughout the fall of 2022.

While we’re just getting started on this partnership, I am very excited about the increased programming and support to boost U.S. businesses access and exposure to opportunities through this new partnership between ITA and the EBRD.

Please visit trade.gov to learn more about ITA’s work with multilateral development banks or check out ITA’s Guide to Doing Business with the Multilateral Development Banks.

Evan Johnson and Agnes Pawelkowska are international trade specialists at the International Trade Administration’s Office of Russia, Ukraine, and Eurasia.

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Russia’s latest unprovoked attack on Ukraine, and the Western sanctions that have followed, have had profound impacts on the global economy and forced businesses operating in Russia to re-think their way forward. Although numerous U.S. companies have successfully operated in Russia for many years, many are deciding to either withdraw from the market or suspend their operations in Russia, regardless of the significant economic losses incurred.

In a series of market intelligence pieces, we’ll try to address some of the pressing questions, offer insights, and share updates on how the International Trade Administration and its U.S. and Foreign Commercial Service are working to support U.S. exporters as they navigate these complex considerations.

What is the current economic situation and is it sustainable to do business in Russia since its invasion of Ukraine?

The United States first levied sanctions after Russia first invaded Ukraine in 2014, seizing Crimea and supporting separatists in Ukraine’s eastern Luhansk and Donetsk regions.  During the 2014-2021 period, most businesses outside of a few targeted sectors were able to adjust over time. However, the new international sanctions adopted beginning in February 2022 have been much more swift, severe, and comprehensive, forcing companies to reconsider their business operations in the Russian market. Payment transactions, letters-of-credit, insurance, foreign exchange operations, profit repatriation, new investment, international travel and staffing, and logistics all have become much more complicated. In light of these developments, U.S. companies with regional headquarters in Moscow have had to consider alternative arrangements to sustain their presence in the broader Eurasia region. Although some companies have chosen to stay in Russia while temporarily suspending operations, others have found that the already challenging business environment in Russia has become increasingly unstable and unpredictable virtually overnight. Complicating matters further, Russia has threatened Western companies with retaliatory measures, including proposals to seize the assets of Western companies that decide to leave Russia.

What are U.S. companies doing?

As it becomes increasingly difficult to conduct and plan business in Russia, there are a number of relocation alternatives and alternative markets to consider for companies who would like to sustain their presence in the Eurasia region. Some Russian citizens and businesses have already started to move to Central Asia and the Caucasus. Multilateral development banking institutions have shown renewed interest in supporting regional renewable energy, infrastructure, and agricultural projects.

U.S. companies rethinking investment positions in Russia may want to consider industries ripe for growth in Central Asia. Kazakhstan and Uzbekistan are currently courting U.S. companies in the extractive industries, and firms able to supply the engineering, mining, oil and gas, construction, and infrastructure sectors have good opportunities to expand their presence in the region. These nations not only possess an abundance of natural resources, but both countries are touting their political and economic reforms as selling points that could appeal to U.S. companies looking to shore up footholds in a region made difficult by the sanctions and export controls imposed against Russia.

Opportunities are also ripe for U.S. exporters in agriculture/agribusiness, environmental technology and healthcare sectors.

How is the U.S. government able to help?

Whether U.S. companies are looking to understand the complexities of sanctions and export controls or considering reorienting their regional sales plans or operational footprints, the U.S. government has resources to assist companies conduct due diligence and to consult directly with the agencies responsible for developing and implementing these actions.

For example, the Treasury Department’s Office of Financial Asset Control (OFAC) offers consultations on specific sanctions questions. Commerce’s Bureau of Industry and Security (BIS) export counselors can also consult on specific questions regarding a business’ products and the export control lists that BIS administers. Furthermore, the Commerce Department’s Consolidated Screening List search tool is the most comprehensive due diligence tool for checking entities and individuals against the U.S. government’s sanctions and export control lists.

An upcoming segment will take a look at the current business environment in Ukraine. The U.S. government continues to coordinate humanitarian and other relief to Ukraine. To learn more or get involved, visit our Ukraine: Support and Engagement page.