Effects of Russian sanctions causing import restrictions

Evidence on iron and steel imports

All of a sudden, a shipment from China, Turkey or another country is held at customs. What’s going on? You have been purchasing iron and steel products from reliable suppliers for years. These products can vary from pipes, profiles, steel plates, steel wire, various ship supplies, kitchen supplies to simple products like nails, screws, bolts and nuts.

And now it’s stuck at customs?

Turns out, there are Russian sanctions that ban the import of a lot of steel and iron. Okay, but you’re not doing business with Russia. Your partner is in China or Turkey. So, what does this have to do with your procurement?

Everything… You need to be able to prove that the steel and iron used does not come from Russia. If you want to continue doing business without delay, you need to be able to prove that your supplier complies with our rules. Does this also apply to a bolt or nut? Yes!!! The effects of Russian sanctions also affect you.

In brief as of September 30, 2023, Article 3g of EU Regulation 833/2014 has been amended to include an obligation to provide proof of origin. Since then, importers of imports from third countries (such as China, Turkey) are required to provide this proof. So, the imported products listed in the sanctions legislation are not of Russian origin.

Effects of Russian sanctions

Because what started as a simple amendment to prevent diversion, is much more complex than expected. Because the goal was clear. To prevent prohibited products from entering the European Union via third countries such as China and Turkey. But how? The regulation only mentions “proof”, but how do you prove this and will customs be satisfied with it?

For example, it is not enough to simply state the origin ‘China’ or ‘Turkey’. Fortunately, there is an FAQ on this topic, as we mentioned in a previous blog.

But many months later there is still no update and the situation remains unclear for many parties.

Implications of imports from China and Turkey

If you import goods from China, Turkey or any other country, and these goods are listed in Annex XVII of the sanction regulation 833/2014, then proof is necessary upon import.

The proposed method is to have a MTC (Mill Test Certificate). Many producers of steel and iron products are aware of the European requirements and provide this.

However, obtaining a practical solution often proves challenging. Regrettably, there has been no update from the government since the prior announcement. It seems that customs within the European Union interpret the matter differently from one country to another. A supplier’s declaration is frequently accepted, but keep in mind that it’s not a guarantee. Always rely on the MCR.

Points of attention for import restrictions

It is important that you are well aware of the implications of Russian sanctions for you. Even if you have never done business with Russia. Also consider the very current No-Russia clause. In summary, some guidelines to ensure that you do not violate sanction legislation:

• Ensure a contract that contains clauses in this area.
• Check whether your party is on sanctioned lists.
• Investigate your supplier: what is on the website? Do you see a link with Russia?
• Discuss with the supplier before placing a PO and ensure that they fully cooperate and deliver MTC for each product of items that are on the sanctioned annex.
• If this is not possible, then discuss an alternative such as the use of a supplier’s declaration.

No supplier declaration? That’s a red flag

So, if your supplier persists in a simple CN or TR origin notification on the packing list despite your request and is not willing to do more, this is a clear warning. It should ring alarm bells for you. As we often say, if it looks like a duck and sounds like a duck, it’s probably a duck. So, if there’s a red flag, there’s often something going on.

Now that these sanctions were introduced months ago. For producers in the iron and steel industry who deliver internationally, this has been well known for a long time. If they don’t want to cooperate, chances are they source their raw materials at least partially from Russia. This is somewhat understandable for them; this is not prohibited in these countries and the purchase price is much lower as Russia needs to get rid of their goods and is willing to sell at lower prices. The same is seen with oil from Russia.

Our advice is: if a supplier is hesitant and not willing to cooperate, opt for another supplier, even if it is slightly more expensive. The chance that you will never receive the goods is simply too great.

Conclusion

In conclusion, with export control, we often think of export, but in the case of sanctions, restrictions apply just as much to import. The import restrictions on nails, bolts and nuts from countries like China and Turkey pose a major challenge for importers of these products or producers who sporadically purchase these products. Your reliable partner may not be the right one and may not be able or willing to comply. Finally, make sure everything is well coordinated before you purchase, to avoid unnecessary costs and ensure that you actually receive the product. If after reading this piece you are curious whether you have everything in order in the field of export control, or if you are unsure whether the sanctions against Russia affect your operations? Feel free to contact Trade Controls Compliance, we are happy to help.

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