The newest EU sanctions package against Russia expands export sanctions and stresses corporate responsibility
The European Union´s 14th sanctions package against Russia further expands the export sanctions; from now on, several products groups are more thoroughly covered by the sanctions than before. In this package, road freight within the EU is also prohibited for companies with Russian ownership of a quarter or more.
The European Union´s newest sanctions package against Russia expands the product groups subject to export sanctions.
– In order to enforce the sanctions efficiently it is key that the product groups subject to sanctions are clear and unambiguous. We have brought this up regularly when the new sanctions packages have been prepared, and it is good that the products groups have been expanded in almost every package. From the point of view of sanctions enforcement, it has been rather frustrating if for example only one out of two corresponding products has been subject to sanctions even if the end use is the same, says Sami Rakshit, Director General of Finnish Customs.
In the current sanctions package, the expanded list of goods covered by the sanctions includes e.g. chemicals, plastics and parts for excavators and tractors. The export sanctions have also been expanded to cover all vehicles similar to ATV’s.
Goods now subject to sanctions were exported from Finland for almost 5 million euros in total between January and May this year. Mostly goods classified as plastics were exported, to the total value of 3.3 million euros.
– The new sanctions package’s impact in euros on Finland’s exports will be rather small, because Finnish companes have very widely withdrawn from the Russian market in a socially responsible manner. In my opinion, it is therefore likely that the new sanctions will have a bigger impact on the activities of companies in many other EU countries, says Rakshit.
Follow-up of methods for preventing sanctions circumvention
In order to prevent sanctions circumvention, the EU bans the establishment of new road freight companies with Russian ownership of 25 per cent or more. After a transitional period, this ban will apply to all transport companies that have the same ownership structure and that have been set up after 8 April 2022. These companies are no longer allowed to undertake goods transports within the EU or transiting through the EU. Upon request, the transport company must present proof of its ownership structure.
The new sanctions package also stresses follow-up of the impact of the methods for preventing sanctions circumvention. Companies will be subjected to follow-up of the re-export restrictions established in the 12th sanctions package. Companies active in the EU countries must, through contractual terms, make sure that goods exported to an area outside the EU or sold to operators outside the EU (by them or their subsidiaries) do not end up in Russia as re-export.
– In order for the sanctions to have an impact, all Member Countries must comply with them as agreed. I think that this sanctions impact follow-up, applying to all Member Countries, is very welcome. The follow-up also makes it possible to identify problems, to prevent sanctions circumvention more effectively and thus to improve the impact of the sanctions, Rakshit concludes.
The re-export ban applies to e.g. various technology (Annexes XI, XX, XXXV and XL of the sanctions regulation) and to firearms and related supplies listed in Annex I of the sanctions regulation.
The new sanctions were published in the Official Journal of the European Union on 24 June 2024. The sanctions package entered into force at midnight on Tuesday, 25 June.
Press release by the Ministry for Foreign Affairs (24 June 2024): EU expands sanctions against Russia and tackles sanctions circumvention