Exporting to Russia: What You Need to Know

History, Trade and Exporting to Russia

Since the turn of the 20th century, the United States’ history of exporting to Russia has varied. Pre-Cold War exporting to Russia included aid and limited trade throughout both world wars, as detailed in the infographic, U.S. /Russia Export Relationship. During the Cold War, trade growth stagnated. Then, with the end of the Cold War and communism, the U.S. formally entered into trade with Russia and trade grew exponentially. Before the Russian invasion of Ukraine in 2022, Russia was ranked as a top 40 U.S. export destination.

Despite U.S. and international sanctions limiting business in the energy, defense and financial services industries, thousands of U.S. firms continued conducting business in Russia, often using Russia as a regional base to work across Eurasia. U.S. companies cited Russia’s 144 million consumers, $29k+ GDP per capita (as measured in purchasing power parity), growing middle class, and highly educated and trained workforce as attractive features of its business environment.

Russia also integrated itself into international supply chains as a major supplier of raw materials and commodities including titanium, uranium, fertilizer, wood and wood products, platinum and platinum group metals, and hydrocarbons.

However, in 2022, all of this changed.On February 24, 2022, Russia launched an unprovoked, full-scale invasion of Ukraine that continues to the present day. In addition to destroying the lives of hundreds of thousands and the livelihoods of millions, it has also affected global trade significantly.

Presently, companies across the globe cannot justify exporting to Russia given the legal and reputational risks involved. For U.S. exporters specifically, new laws and sanctions have led to an exodus from the country—more than 1,000 companies have curtailed operations in Russia since the invasion. Actions include new BIS export controls as well as OFAC economic sanctions imposed on Russian entities, individuals and industries.

The Russian government has retaliated by passing restrictive laws affecting businesses, threatening and harassing employees at international companies, and prosecuting foreign businesspersons on politically motivated grounds.

According to the U.S. Commercial Service, in the months following the invasion, there was a 70 to 80% drop in U.S. exports to Russia. While the long-term, multiple-year effects of sanctions, export controls and other measures affecting trade are uncertain, in 2023, U.S. export statistics showed an approximate 90% drop in U.S. exports compared to 2021, the last year before Russia re-invaded Ukraine.

When assessing whether or not to do business in a country, the geopolitical, market dynamics and rule of law all point to this: for exporters, Russia is “not open for business.” There is no expectation that the country will be recommended for exporting in the near future. U.S. firms exporting anywhere, but specifically in this region, must conduct careful due diligence on potential business partners to ensure they are in compliance with the law.

The Challenges of Exporting to Russia

According to the Commercial Service, exporters must be aware that transportation and logistics is increasingly complex in the aftermath of Russia’s invasion of Ukraine. Maritime carriers have suspended operations in Russia due to operational and safety concerns, and the White House announced a ban on Russian-flagged, owned or operated vessels entering U.S. ports on April 21, 2022. It is reasonable to factor in the likelihood of increased transit time and expense due to these regulatory obstacles.

Furthermore, the Russian government has created a list of 49 “unfriendly countries” that includes the United States—including all G7 member states and all 27 European Union member states. Some Russian laws and governmental decrees apply specifically to these countries.
The bottom line: While it is possible to move cargo to/from Russia, it is difficult.

Export Assistance

The U.S. Commercial Service in Russia suspended operations on July 15, 2021, due to the Russian government’s ban on locally employed staff. Russia’s invasion of Ukraine in 2022 has severely affected bilateral commercial relations. Until the conflict is resolved, there will be limited resources for exporters interested in this region. The Office of Russia, Ukraine and Eurasia (ORUE) is available for consultations about resources available to U.S. companies.

Export Compliance Issues When Exporting to Russia

From the International Trade Administration:

In response to the Russian Federation’s (Russia’s) invasion of Ukraine, the Bureau of Industry and Security (BIS) has taken swift and severe action to impose stringent export controls on Russia. These restrictions have also been applied to Belarus in response to its substantial enabling of Russia’s invasion. BIS actions build on existing restrictions in place on Russia since its occupation of Crimea. In particular, BIS has imposed controls on a range of items subject to the Export Administration Regulations (EAR) that did not previously require export licenses when destined for Russia or Belarus, and both countries have been made subject to broad in-country transfer controls, and to a license review policy of denial.

Restrictions on Russian ‘military end users’ and ‘military end uses’ cover all items subject to the EAR with exceptions for food and medicine designated as EAR99. The export, re-export, and transfer (in country) of luxury goods is restricted to all end users in Russia and Belarus and to certain Russian and Belarusian oligarchs and malign actors located worldwide. Two new Foreign Direct Product (FDP) rules establish controls over certain foreign-produced items. Partner countries that have committed to implementing substantially similar measures are not subject to the two new FDP rules.

Exports, re-exports and transfers (in-country) from the following countries are not subject to these rules: Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, and the United Kingdom.

Product Classification for Export Controls

It’s important to understand the regulations covering exports to Russia. You must be concerned with complying with export regulations no matter where you ship, exporting to Russia—even when it’s allowed—is extremely different from shipping to Canada. It’s a part of the world where more items are controlled, so you need to understand what is required of you and what you risk if you don’t do your job in complying with those regulations.

The first step in ensuring export compliance is determining who has jurisdiction over your goods: the U.S. Department of Commerce under the Export Administration Regulations (EAR) or the State Department’s International Traffic in Arms Regulations (ITAR).

If your goods fall under the jurisdiction of the Commerce Department—which most products do—you must determine if your export requires authorization from the Bureau of Industry and Security (BIS, part of the Commerce Department). To make that determination, first answer the following questions:

What is the Export Control Classification Number (ECCN) of the item?
Where is it going?
Who is the end user?
What is the end use?
There are three ways to classify your products for export controls: You can self-classify your products, submit a SNAP-R request for a ruling, or rely on the product vendor to provide the information. Learn about that process in our article, Export Codes: ECCN vs. HS, HTS and Schedule B. By classifying your product correctly, you’ll be protecting yourself from potential fines, penalties and even jail time.

Export License Determination

Next, companies must use the ECCN codes and reasons for control described above to determine whether or not there are any restrictions for exporting their products to specific countries. Once they know why their products are controlled, exporters should refer to the Commerce Country Chart in the EAR to determine if a license is required.

Although a relatively small percentage of all U.S. exports and re-exports require a BIS license, exporting to Russia does require a license, and BIS has tightened the availability of license exceptions. Additionally, virtually all exports and many re-exports to embargoed destinations and countries designated as supporting terrorist activities require a license. Countries fitting that bill are Cuba, Iran, North Korea and Syria.

Part 746 of the EAR describes embargoed destinations and refers to certain additional controls imposed by the Office of Foreign Assets Control (OFAC) of the Treasury Department.
Shipping Solutions Professional export documentation and compliance software includes an Export Compliance Module that uses the ECCN code for your product(s) and the destination country to tell you if an export license is required. If indicated, you must apply to BIS for an export license through the online Simplified Network Application Process Redesign (SNAP-R) before you can export your products.

There are export license exceptions, like low-value or temporary exports, that allow you to export or re-export, under stated conditions, items subject to the Export Administration Regulations (EAR) that would otherwise require a license. These license exceptions cover items that fall under the jurisdiction of the Department of Commerce, not items controlled by the State Department or some other agency.

Russian Industry Sector Sanctions

In addition to using ECCN and USML classification codes to determine export restrictions, the U.S. announced Russian Industry Sector Sanctions based on Schedule B codes and Harmonized Tariff Schedule (HTS) codes to restrict the export, re-export or in-country