On Saturday (September 30, 2023), new UK and EU trade sanctions tightening the restrictions on the import of Russian-origin iron and steel products will come into effect.
While certain measures are already in place in relation to a number of listed iron and steel products (Listed Iron and Steel Products) that are of Russian origin, the new measures prohibit the import (UK and EU) or purchase (EU only) of Listed Iron and Steel Products that are processed in third countries and incorporate Listed Iron and Steel Products that are of Russian origin, in order to reduce sanctions circumvention.
The UK’s Guidance on third country processed iron and steel measures (UK Guidance) explains that the new UK sanctions prohibit an import of such Listed Iron and Steel Products into the UK if it meets all of the following criteria, being that the product:
- is listed in Schedule 3B of the Russia (Sanctions) (EU Exit) Regulations 2019;
- has been “altered, transformed in any way; or subjected to any type of operation or process” in a third country (i.e., a country that is not the United Kingdom, the Isle of Man or Russia); and
- incorporates one or more Schedule 3B iron and steel products of Russian origin.
Importantly, given the new measures were first announced in April 2023, there are no exceptions or transitional periods for any goods caught by them.
Helpfully, the UK Guidance also contains scenarios which provide examples of how the rules may be applied in practice and sets out the tariff codes for the relevant iron and steel products caught by the new measures.
According to the UK Guidance, traders can apply for a license if they want to import banned iron and steel processed in a third country into the UK after September 30, 2023 and can refer to statutory guidance on Russia sanctions for information on license applications and penalties for sanctions violations.
In the UK Guidance, the government advises all parts of the supply chain for third country processed iron and steel imports to the UK to undertake necessary due diligence to ensure sanctions compliance and importers to include assurances regarding import origin in contractual agreements. Traders are also advised to be prepared to have documentation available to demonstrate a good’s supply chain history.
It is therefore recommended that companies potentially caught by the new measures consult the UK Guidance carefully and seek legal advice if necessary.
The EU is imposing a phased introduction of the new measures, with the restrictions being implemented in three phases – from September 30, 2023, April 1, 2024 and October 1, 2024 – depending on the specific tariff code of the imported iron and steel products.
The European Commission has issued guidance (in the form of FAQs) on documents that may be considered as sufficient evidence of the origin of the inputs. However, since the customs authorities of EU member states may require additional evidence in the event of reasonable doubt, there is discussion in the EU about the uncertainty as to how each member state is going to apply these restrictions.