US ready to take action for non-compliance of sanctions, but so far Asia is complying

THE United States is prepared to impose more sanctions against Russia and take action on non-compliance, but so far, there has been no breaches in Asia which has shown "substantial demonstration" of support and even self-sanctioning to help Ukraine, a senior US official said on Tuesday (Mar 29).

Matthew Borman, US Commerce Department Deputy Assistant Secretary for Export Administration, said at a teleconference on Monday: "The restrictions have been in place for roughly a month, a little bit over a month, and we certainly haven't seen any indication that there's non-compliance. In fact, we've seen the reverse."

"So far... we've seen very substantial demonstrations of compliance. Again, either allied governments imposing their similar controls, which means we don't have to be as concerned about exports from those countries and for the countries that haven't, we are continuing to see a lot of companies doing their own self sanctions."

In response to Russia's invasion of Ukraine, the US, together with its allies including Singapore, began to impose sanctions against Russia. These consist of two parts: (1) financial sanctions on a range of Russian financial institutions and individuals; and (2) export controls imposing stringent licence requirements and licensing policies, and limited licence exception availability, for exports of a wide range of items to Russia.

Major players are aware that there is a significant risk to their business if they do not comply with US sanctions because of the various actions that the US can take, ranging from restrictions of exports to potential fines and even criminal penalties, Borman said.

The US has been reaching out to allies, including those in Asia, to seek their cooperation to ensure that Russia will not be able to find workarounds by procuring key inputs like semiconductors.

Borman said the US also had discussions with Chinese Ministry of Commerce representatives in Washington to explain the scope of the controls and the implication of breaches. The US has also had an industry outreach for companies in China on this.

"The requirements are that they make sure that they understand whether items they seek to export to Russia, from China directly or even indirectly, are subject our jurisdiction."

Companies need to do 2 analyses of their exports: check that the US content in the export item to Russia must not exceed 25 per cent of the value of the overall product. The item must also not be produced with US software technology, or produced on a line that uses a US tool or piece of equipment, among others.