New US export rules designed to freeze Russian tech

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The United States on Thursday restricted exports to Russia of a wide range of U.S.-made goods as well as foreign-made goods built with U.S. technology, following the invasion of Ukraine .

Here’s how the rules should affect U.S. tech companies, according to six U.S. trade law experts.

What technology is newly banned from exporting to Russia?

American companies must now obtain licenses to sell computers, sensors, lasers, navigational tools and telecommunications, aerospace and marine equipment. The United States will deny almost all requests.

“We expected something drastic, and it was certainly drastic,” said Ama Adams, partner at law firm Ropes & Gray.

The new rules also require companies making technology products overseas with US tools to apply for a US license before shipping them to Russia.

A similar restriction was first applied in recent years to companies shipping to Chinese tech giant Huawei, to great effect.

Which US companies will be most impacted?

Many companies may choose to suspend all sales to Russia out of an abundance of caution, legal experts have said.

U.S. exports to Russia were limited to about $6.4 billion last year, according to U.S. census data, with machinery and vehicles among major categories in recent years.

The most serious technological blows for Russia could come from restrictions on foreign products.

For example, the Semiconductor Industry Association (SIA), which represents American chipmakers, noted that “Russia is not a significant direct consumer of semiconductors” and that Russia’s communications and technology spending “totaled only about $25 billion in the multi-trillion global market”. ” in 2019.

But many products made in Asia and destined for Russia include chips made with American tools. More than two dozen members of the European Union, along with the United Kingdom, Canada, Japan, Australia and New Zealand, impose similar export restrictions to limit Russia’s options.

How will Russia be affected?

Emily Kilcrease, senior fellow at the Center for a New American Security and former deputy deputy US trade representative, said the restrictions would freeze Russian technology to where it is today.

“You won’t be able to bring new technology into the country,” she said.

William Reinsch, a trade expert at the Center for Strategic and International Studies and a former Commerce Department export chief, expects the impact to slowly escalate.

“Eventually they will suffer, but maybe not for months,” he said. “It’s not an immediate body blow.”

The restrictions and sanctions are not as comprehensive as US trade actions against Iran and North Korea, but they could have wider consequences globally as Russia is more closely tied to the global economy , lawyers said.

Which technology is not covered by the new restrictions?

The measures include exclusions for consumer goods such as household electronics, humanitarian goods and technology necessary for flight security. Mobile phones are allowed as long as they are not sent to Russian government employees or certain subsidiaries.

Consumer encryption technologies are also not restricted, which a lawyer described as a sign that the United States and its allies do not want to disrupt protesters and the media.

Nothing prevents the United States from later extending the sanctions to other items.

South Korea was not among the partner nations on the rules, and its help would be important in blocking Russia’s access to chips from there, Ms Kilcrease said.

A senior US administration official said Thursday that more countries should join.

The South Korean Embassy in Washington did not immediately respond to a request for comment.

South Korea said on Thursday it would join in unspecified multilateral economic sanctions against Russia in response to its military operations in Ukraine, but did not plan to adopt unilateral measures.

Which companies could benefit from the new rules?

Ms Kilcrease and legal experts expect Chinese tech firms to want to fill some gaps created by restrictions on Western tech companies, although Ms Kilcrease said US rules would discourage them. But the senior US administration official said China could not meet Russia’s crucial military needs, especially for the most advanced chips. — Paresh Dave and Jeffrey Dastin/Reuters

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