Status of EU sanctions against Russia and simplification of aid deliveries to Ukraine

Overview

Due to Russia's attack on Ukraine, the EU has adopted various sanctions measures, some of which also affect the movement of goods between the EU and Russia. At the beginning of April, the EU issued the 5th sanctions package.

Export restrictions

In the wake of Russia's seizure of Crimea, the EU enacted sanctions in 2014, which were successively expanded with the renewed attack in 2022. A military goods embargo has been in place since 2014, according to which both the export of military goods to Russia and the import of military goods from Russia are prohibited. Furthermore, the export of any goods is subject to authorization if the exporter knows that the goods will be used for military purposes in Russia. The export of various technological goods and goods used for oil production or refining is also prohibited. Furthermore, the export of luxury goods to Russia has been banned. In general, the export ban applies to luxury goods whose value exceeds EUR 300 per item. The following goods, for example, are considered luxury goods: Caviar, champagne, coats, pearls, diamonds, silverware, various electrical appliances, vehicles worth more than EUR 50,000 per item, watches and musical instruments.

Import restrictions

The EU has also imposed import bans on various goods. Since mid-March 2022, the import of listed iron and steel products as well as wood into the EU has been banned. The import of coal and other solid fossil fuels, fertilizers, cement, silver, seafood, spirits and caviar is also banned. For contracts concluded before 9 April 2022, this ban does not apply until 10 July 2022 (for coal until 10 August 2022).

On 4.5.2022, the EU Commission presented the 6th sanctions package against Russia, which includes an oil embargo. There is a transitional period of six months for Russian crude oil imports and a transitional period until the end of the year for Russian refined products. It is not yet clear whether there will be longer transition periods for some EU countries such as Hungary or Slovakia.

Restrictions on freight transport

Transport companies established in Russia are no longer allowed to provide transport services in the EU. Exceptions only apply if the transport is in connection with the purchase or import of natural gas, oil and various metals.

Withdrawal of the WTO Most Favoured Nation clause

WTO members may not discriminate between their trading partners. For example, if the EU grants one country a lower tariff on a product, this lower tariff must also apply to all other WTO member countries. This is known as the most favoured nation (MFN) clause. The EU in cooperation with the G7 countries and some other countries (Albania, Australia, Iceland, South Korea, Moldova, Montenegro, New Zealand, North Macedonia and Norway) has decided to no longer grant Russia MFN status as of 15 March 2022. Imports from Russia to the EU will thus be subject to a higher tariff, which will weaken the competitive situation for Russia. The EU has not yet decided how high the tariffs will be and which goods will be affected. Canada can possibly be used as a benchmark, since the country has announced that a tariff of 35 % shall apply to all imports from Russia to Canada.

Simplification of aid delivery to Ukraine

In principle, under EU customs law there is no simplification for the export of aid deliveries, therefore the general rules apply: Exports that do not exceed a value of EUR 1,000 or 1,000 kg can be declared orally for export at the customs office of exit (customs office where the goods leave the EU). All exports with a value exceeding EUR 1,000 or 1,000 kg must be declared electronically in advance to the customs authorities. However, the EU has decided to simplify aid deliveries to Ukraine: non-commercial aid deliveries, even above EUR 1,000/1,000 kg, can be declared orally for export directly at the customs office of exit (eg Vienna airport). However, a list of the goods of the aid delivery must be submitted.

Conclusion

It is the company’s own responsibility to check whether it is affected by sanctions and to comply with them. Companies that have business relations with Russia should therefore regularly check the current status of EU sanctions against Russia. Due to the volatile situation, it is difficult predict further sanction measures. However, due to Russia's unabated attacks, the EU does not rule out further sanction measures, for example in the energy sector. In addition to the oil embargo, a gas embargo is also being discussed.