I was a little disappointed not to win a Golden Globe for best international trade-related newsletter last night, but maybe next year I’ll get some love from the Hollywood press.
This week’s update is on the shorter side, as the regulatory freeze at the federal level and the absence of key government appointees both continue to limit the breaking news on the export controls and sanctions front.
Russia Sanctions: US Preparing New Wave of Navalny-Related Sanctions
The Biden Administration is apparently readying a new set of sanctions on Russia for the ongoing punishment of Alexei Navalny, using a sanctions package prepared during the prior administration but never implemented (wow, I wonder why). It may take some time for the sanctions to be effective, however, as the Biden team wants to coordinate actions with the EU and believes the prior package is too unilateral in nature.
According to a Politico article, the sanctions will be based on not only the Magnitsky Act targeting particular individuals, but also may include sanctions based on the use of poisoning agents on Navalny in violation of WMD proliferation controls.
Iran Sanctions: Wanting a Deal, but Unsure How to Get One
The Washington Post published a good analysis last week of where things stand in trying to get negotiations going with Iran again. Most importantly, the IAEA managed to ease some of the pressure on both sides by continuing to monitor Iran’s nuclear infrastructure despite a new Iranian law that would have barred IAEA inspections entirely.
The money quote in the analysis is here:
“The irony of the situation is that we almost have a mirror image in Tehran and Washington,” Ali Vaez, Iran project director of the International Crisis Group, said during a Monday press call hosted by the European Leadership Network. “You have two governments who would have loved to restore the [nuclear deal] status quo ante with a push of a button if they could but they have to deal with parliamentary opposition which reflects broader political resistance to the deal.”
This is spot on and both sides will have to keep an eye on their internal domestic political landscape while sorting out how to move forward.
Similarly, there are signs that the Iranians are being more agreeable in private while being belligerent in public. Early last week, the EU proposed a multi-party discussion about Iran’s nuclear program and at first the Iranians suggested they might be willing to participate. But the Washington Post reported today that Iran has rejected that idea for now. Although a public Iranian statement rejected the idea of multi-party nuclear talks immediately, a private statement was “more nuanced than an outright refusal.” European diplomats suggest that Iran is willing to talk now about getting the JCPOA back in full effect, but don’t yet want to bring other issues to the table.
China Restrictions: Proposed Commerce Rule Restricting Certain Technology-Related Transactions May Go Into Effect
Before leaving town, the prior administration pushed out a proposed rule that would allow the Commerce Department to ban certain international technology-related transactions if they posed a threat to US supply chain security. Observers at the time, myself included, thought it was likely that the new administration would at least delay implementation. But a Wall Street Journal article says that the rule will in fact go into effect in late March.
Reasonable people can differ as to whether the rule is a good idea or not, but one line in the article reminded me about how arbitrary the government can be in the export control space, and how little it sometimes understands the compliance requirements of businesses. The article says:
One person familiar with the matter said administration officials have signaled to the business community that they won’t enforce the rule aggressively. That could soften the impact, although business representatives say the rule will still subject firms—especially smaller ones—to significant new compliance costs and uncertainty.
The “don’t worry, we won’t enforce this very aggressively” vague assurance is completely unhelpful in any practical sense. Compliance personnel simply can’t hope for the good graces of enforcement agencies when they’re trying to comply with governing law. Similarly, companies are often required to represent that they are in compliance with the law as part of things like financing documents. There’s no “fingers crossed” provision of those representations where a company can say “well, the government probably won’t come after us.” Either enforce the rule or don’t.
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