As efforts ramp up to apply more economic pressure on Russia in the wake of recent reports of atrocities committed in Ukraine, a March 24 directive from the Office of Foreign Assets Control (OFAC) of the U.S. Treasury appears to effectively remove Russian fertilizer from possible sanctions.
The new general license from the OFAC outlines a list of vital products that are exempt from Russian Harmful Foreign Activities Sanctions Regulations, including agricultural products, medicines, and medical products. The list of agricultural products includes fertilizers and organic fertilizers; seeds for food crops; reproductive materials for the production of food animals; and food products, including raw, processed, and packaged foods, live animals, vitamins and minerals, and food additives or supplements.
The license notes that existing sanctions on certain individuals, companies, and Russian financial institutions remain in effect, however, and the license does not authorize “the opening or maintaining of a correspondent account or payable-through account for or on behalf” of any sanctioned entities.
According to the Economic Times, the reason for the new license is the “shortage in the world market against the backdrop of a disruption in the logistics of supplies from Russia.” Most Black Sea exporting ports appear to be closed as the war continues, however, and the Russian Industry and Trade Ministry in early March announced that Russia was temporarily suspending fertilizer exports to “unfriendly” countries (GM March 11, p. 1).
The Fertilizer Institute (TFI) sent an alert to members regarding the license, but recommended that companies “consult with qualified legal counsel” before engaging with any matters covered in the guidance “to ensure compliance with all applicable laws and regulations.”
On April 7, the U.S. Congress gave final approval to legislation revoking normal trade relation status from Russia and Belarus, Bloomberg reported. The House passed the bill 420-3, just hours after the Senate cleared it on a rare 100-0 vote. The bill is now awaiting President Joe Biden’s signature.
According to Bloomberg, the bill would put Russia and Belarus in the same category as pariah states such as North Korea and Cuba, adding to the growing list of economic barriers erected by the U.S. and its allies to punish Russian President Vladimir Putin’s government over the invasion of Ukraine.
“This is another tightening of the noose around Vladimir Putin, and we will make him pay,” Rep. Earl Blumenauer (D-Ore.), who co-authored the bill, said on the House floor. Rep. Kevin Brady (R-Texas) said the legislation “will stop American dollars from funding Putin’s bloodletting.”
The bill allows the U.S. to impose large tariff increases on goods from Russia and Belarus. Under the legislation, the tariffs on iron and some steel products could be raised to 20 percent from 0 percent. Plywood could face a 50 percent levy, and some reaction engines could have import taxes of 35 percent, Bloomberg reported.
Biden last month banned imports of signature Russian products, including oil, gas, vodka, seafood, and industrial diamonds. The Senate also passed a bill on April 7 to bar U.S. imports of Russian oil, gas, and coal, which the House was expected to take up the same day.
The U.S. on April 6 also announced a new sanctions package that will ban all new investment in Russia, increase sanctions on financial institutions and state-owned enterprises in Russia, and sanction Russian government officials and their family members.
In addition, the U.S. Treasury on April 5 stated that it will no longer allow Russia to pay down its debt using dollars stockpiled at American banks. While Washington had imposed sanctions on the Russian Central Bank freezing their foreign currency at U.S. banks, the Treasury Department had previously allowed Russia to use those reserves to repay its debt.