【European Uni】Luxury Goods at the Heart of the New Sanctions Package

The European Union and certain G7 partners, notably the United States and the United Kingdom, have jointly announced a series of additional economic sanctions and individual measures against Russia.

These economic sanctions notably target restrictions on imports from Russia of certain product categories (certain steel products for the European Union, various products of Russian origin in the United States, an increase in import duties to 35% targeting hundreds of products in the United Kingdom) as well as the prohibition on exporting to Russia certain items considered luxury goods.

Furthermore, discussions are ongoing within the European Union concerning the suspension of Most Favored Nation treatment for Russia.

The fourth package of economic and individual sanctions, which entered into force on March 15, 2022, includes, notably, a general prohibition on selling, supplying, transferring, or exporting, directly or indirectly, to any natural or legal person in Russia or for use in that country, the targeted products.

The sanction targets:
• Luxury items listed in Annex XVIII of Regulation (EU) 2022/428: a list of over 400 so-called luxury items, identified by their nomenclature codes from the Combined Nomenclature (CN) and divided into 22 categories.
and
• Items with a value exceeding €300 per unit (is this the export value?), unless otherwise indicated in the aforementioned annex: higher values are specified for electrical and electronic appliances, vehicles and other means of transport, and musical instruments.

Products covered include those from the leisure, cosmetics, jewelry, electronics, luxury, automotive, and art sectors:
• Horses
• Cutlery made of precious metals
• Caviar
• Tableware
• Truffles and truffle-based preparations
• Lead crystal articles
• Wines, beers, spirits, and liqueurs
• Household electronic items
• Cigars and cigarillos
• Electrical/electronic or optical sound and image recording and reproduction apparatus
• Perfumes, eau de toilette, and cosmetics
• Vehicles, cable cars, chairlifts, ski lifts, traction mechanisms for funiculars, motorcycles, as well as their accessories and spare parts
• Leather goods, saddlery, and travel goods, handbags
• Clocks, watches, and their parts
• Clothing, clothing accessories, and footwear
• Musical instruments
• Carpets and tapestries
• Works of art, collectors’ items, and antiques
• Pearls, stones, jewelry, and goldsmiths’ or silversmiths’ wares
• Articles and equipment for sports
• Coins and banknotes not having legal tender status
• Articles and equipment for billiards, automatic bowling games (e.g., bowling alleys), casino games, and games operated by inserting a coin or banknote

The U.S. Bureau of Industry and Security (BIS) published, on March 11, restrictions on exports, re-exports, and transfers of 393 luxury items (new Supplement No. 5 to Part 746 of the EAR). Sectors covered notably include leisure, alcohol, cosmetics, jewelry, luxury, textiles, automotive, and art.

A license issued by the BIS is now required to export, re-export, or transfer the luxury items covered by the EAR:
• To Russia or Belarus, regardless of the end-user or end-use concerned, or
• To Russian and Belarusian individuals sanctioned by the Office of Foreign Assets Control (OFAC), regardless of their location.

This licensing requirement applies regardless of value unless otherwise indicated in the aforementioned supplement (i.e., value exceeding $1,000, “wholesale” price). This value requirement applies mainly to clothing, clothing accessories, and footwear.

The United Kingdom’s ban on the export of luxury goods has been announced but has not yet been officially published. However, everything suggests that this list will target the same type of goods as those covered by the United States and the EU.

This new sanctions package requires particular attention due to the diversity of listed products and its broad scope.