Import controls; what does this mean for me?

Import controls play a crucial role in world trade, especially in the context of sanctions. In this blog post, we discuss what import controls can do for you. Through recent developments, we discuss its importance on your international trade. Again with a focus on European entities.

Normally in export control, you don’t expect this specialist to also have an opinion on what is being purchased. Still, this is certainly relevant. Your specialist’s timely response to global developments gives you a big advantage over the competition. It can help you prevent violations of sanctions laws.

Russian Sanctions: Import Ban and Additional Controls

First of all, there are import bans from European Russian sanctions, for example, in which Regulation 833/2014. It contains various import restrictions not only from Russia itself. Some examples include iron and steel products (annex XVII), gold (annex XXVI), and a range of products from which Russia makes money according to annex XXI. This includes caviar, artificial wax, wood and wood products, paper and cardboard, tools, various engines, pumps, centrifuges and various machines.

Iron and steel products in particular have been subject to an increased due diligence requirement for companies since the last sanction update. This is especially true when these products are supplied from a third country. Like Turkey or another non-Union country. More information on this topic can be found in the EU FAQ. This states that in all cases, the importing party is required to prove (!!!) that the product does not contain steel or iron originally from Russia, as listed in Annex XVII. It is important to note that these products, which can be imported from any country, are subject to a burden of proof. An MTC (mill test certificate) or several in the case of composite products is considered adequate proof.

Supply Chain Due Diligence

German Supply Chain Due Diligence has previously been discussed in a post. There is also now a proposal for European policy on the table. It is important in this legislation that human rights are taken into account, and this of course applies especially to your purchases from third countries.

A U.S. concrete example is the Uyghur Forced Labor Prevention Act (UFLPA), aimed at addressing forced labor in the Uyghur region. The goal is to ban the import of goods produced using forced labor in the region.

UFLPA enforcement focuses on conducting due diligence on supply chains to identify any links to forced labor in the Uyghur region. Products originating from the Uyghur region, or suspected to involve forced labor, require additional due diligence. This can include goods such as textiles, clothing, electronics, agricultural products. For more details, I refer to this article where the impact for business is discussed.

European entities and Chinese export controls

Another recent development relates to export controls issued by the Chinese government. European entities are affected by export controls on gallium, germanium and, more recently, graphite. These controls impose restrictions on the export of these materials from China. These products may be relevant. As in the case of the most recent restrictions on graphite, which is important for electric batteries. Where China produces 65% of the world’s natural graphite. This means that even if you do not export any of these products yourself from China, you may still be affected by restrictions when importing finished products containing graphite, gallium or germanium.

Why is it important

Understanding import controls is essential for companies operating in international markets. Failure to comply with import controls can have serious consequences. Consider both legal and reputational risks. Take China, where there is no direct import ban on these products. But where you may face restrictions on your imports because of export restrictions imposed elsewhere in the world.

To ensure compliance and prevent problems in your supply chain, implement effective controls and procedures.

Here are some important steps companies can take to ensure compliance with import controls:

1. Stay informed: Keep track of the latest developments on sanctions and changes in import regulations and/or export control measures in your supply chain. Regularly follow official sources, industry news and consult advisors (feel free to contact us).
2. Conduct Due Diligence: Conduct thorough due diligence. Includes checking suppliers, customers and intermediaries. Know the origin and nature of imported products.
3. Implement Internal Controls: Establish robust internal controls. To monitor and track activities. This can include screening transactions, maintaining proper documentation and implementing risk-based compliance programs.
4. Training and awareness: Provide training to employees involved in related activities. Increase the awareness level within your company about the importance of compliance and the potential risks of non-compliance.

By understanding the importance of controls and implementing effective compliance measures, companies can actively trade in the complex world of international trade with limited risk. This while complying with legal requirements and thus gaining a commercial advantage.

Conclusion

Import controls are essential elements in sanctions regimes, and recent developments have highlighted their importance in international trade. Companies must be proactive and comply with these controls to avoid legal and reputational risks. By staying informed, performing due diligence, implementing internal controls and providing training, companies can ensure compliance while successfully navigating the dynamics of global trade.

In short if you want more information about export control, sanctions and compliance and what it means for you, please take Contact us.