Tightening of Belarus sanctions takes them closer to Russia sanctions
Following the adoption of the 14th sanctions package against Russia, the EU has also extended the sanctions against Belarus (Regulation (EC) No 765/2006) and harmonised them with the Russian sanctions. As sanctioned goods continue to reach Russia via Belarus, the EU’s focus was on minimising the risk of circumventing the existing sanctions against Russia by harmonising the two sanctions regimes. On the export restrictions side, the goods annexes in particular were harmonised and the requirement of a ‘no Belarus’ clause was introduced. Furthermore, import bans on diamonds, gold and certain raw materials were harmonised. After publication of the Regulation (EU) 2024/1865 in the Official Journal on Sunday, the amendments came into force on Monday, 1 July 2024.
A. Tools to combat the circumvention of sanctions
The EU is now placing stricter requirements on EU companies with regard to Belarus, too, in order to prevent the circumvention of sanctions.
I. ‘No Belarus’ clause
EU companies must include a ‘no Belarus’ clause in contracts on exports of certain goods to third countries in accordance with Article 8g of Regulation (EC) No 765/2006. This mirrors the well-known ‘no Russia’ clause, which was introduced in Regulation (EU) No 833/2014 as part of the 12th sanctions package in December 2023.
In line with Article 12g of Regulation (EU) No 833/2014, the ‘no Belarus’ clause applies to goods and technology listed in Annexes XVI, XVII and XXVIII that are suitable for use e.g. in the aerospace industry, items of common high priority in accordance with Annex XXX of Regulation (EC) No 765/2006, as well as firearms and ammunition in accordance with Annex I of Regulation (EU) No 258/2012. Exporters of such goods are now obliged to contractually prohibit their customers in third countries from exporting or reexporting them to or for use in Belarus. Besides this, they must ensure appropriate remedial measures if this obligation is breached (Article 8g(5) of Regulation (EC) No 765/2006).
A ‘no Belarus’ clause is not required for exports to partner countries listed in Annex Vba[1] or for certain exempted CN codes. Furthermore, Article 8g(2)(b) of Regulation (EC) No 765/2006 contains a legacy contract privilege. Contracts entered into before 1 July2024 do not need to include the ‘no Belarus’ clause until their contractually agreed expiry date. In contrast to Article 12g(2) of Regulation (EU) No 833/2014, the EU has refrained from setting a deadline for fulfilment of the contracts.
There is no obligation to include a ‘no Belarus’ clause in relation to intellectual property and trade secrets transfers, as is now stipulated for Russia in Article 12ga of Regulation (EU) No 833/2014.
The EU Commission intends to assess the extent to which the obligation to include this clause has an impact on deterring circumvention in the future. The EU Commission also intends to examine whether it is appropriate to extend the obligation to subsidiaries of EU companies in third countries.
II. Risk assessments in relation to items of common high priority
Starting from 2 January 2025, EU companies that export war-related items listed in Annex XXX to third countries must also assess the risks of potential (re-)exports to or for use in Belarus (Article 8ga(1) of Regulation (EC) No 765/2006). EU companies are required to introduce mechanisms to identify and assess the risks, as well as to document and, if necessary, adapt this process. Appropriate strategies, controls, and procedures to minimise and effectively manage the risks must also be implemented. The EU companies concerned are also obliged to ensure that their subsidiaries in third countries fulfil these requirements, even if the EU parent company itself does not export goods listed in Annex XXX.
These requirements do not apply to EU companies that only transfer Annex XXX goods within the EU or export them to the partner countries listed in Annex Vba.
III. Due diligence obligations for EU companies to monitor their subsidiaries
In addition, new due diligence obligations apply to EU companies in relation to Belarus. This stems from the Commission’s fears that the effectiveness of the sanctions will be reduced by the fact that EU subsidiaries in third countries do not generally fall within the scope of the sanctions (cf. Article 10 of Regulation (EC) No 765/2006). Therefore, EU companies are now required to ‘undertake their best efforts’ to ensure that their subsidiaries in third countries do not participate in sanctions circumvention.
This extends the scope of application of the Belarus regulation considerably beyond traditional EU jurisdiction. Still, an attribution standard for sanctions violations by subsidiaries in third countries, which has since been discussed for Russia, has not been introduced for the time being. Furthermore, Article 8i of Regulation (EC) No 765/2006 does not indicate what specific measures EU companies must take. It therefore remains to be seen whether the EU Commission and/or the national competent authorities will specify the requirements in more detail.
IV. Transit bans
For the first time, the EU has banned the transit of certain goods through Belarus in order to prevent them from being diverted to Russia. This affects military goods (Article 1f(1a) Regulation (EC) No 765/2006), dual-use goods and technologies in accordance with Annex I of the Dual-Use Regulation (Regulation (EU) 2021/821), goods that may contribute to the enhancement of Belarus’s industrial capacities (Article 1bb(2) of Regulation (EC) No 765/2006 and Annex XIX), goods related to the aerospace industry (Article 1sa(1a) of Regulation (EC) No 765/2006), firearms (Article 1ba(1a) Regulation (EC) No 765/2006) and machinery according to Annex XIVa (Article 1s(1a) of Regulation (EC) No 765/2006). In some cases, the EU has specified exemptions, authorisation requirements and existing contract privileges.
B. Goods and service-related sanctions
Since Russia and Belarus form a customs union, sanctioned goods can move freely from one country to the other. In the EU’s view, it was therefore necessary to harmonise the sanctions against Russia and Belarus in order to close any loopholes.
However, complete harmonisation of the Belarus sanctions with those imposed on Russia was met with resistance from certain EU countries, including Germany, meaning that in some cases only a watered-down version has been adopted.
I. Import restrictions
On the import side, there is now an import ban on diamonds originating in and exported from Belarus, as well as diamonds that have been transited through Belarus. The EU has also introduced an import ban on gold paralleling Article 3o of Regulation (EU) No 833/2014.
There is now also an import ban on goods listed in Annex XXVII that enable Belarus to diversify its sources of income, including in particular coal, helium and mineral products. The import ban is similar to that in Article 3i of Regulation (EU) No 833/2014 for goods that generate significant revenue for Russia.
II. Export bans
The EU has extended the ban on the export of dual-use goods and technologies. In line with the sanctions imposed on Russia, any transfers of property rights or trade secrets are now also affected (Article 1e(2)(c) of Regulation (EC) No 765/2006).
With regard to goods related to the aerospace industry, the EU has extended the existing export ban to transfers of intellectual property rights and trade secrets in line with the sanctions against Russia and created new authorisation options (Article 1sa(4c), (6a) and (6b) of Regulation (EC) No 765/2006).
The export of listed luxury goods is also prohibited. However, the list of affected goods is shorter than for the sanctions applying to Russia. For example, exports of wines and other alcoholic beverages, perfumes and cosmetics, luxury leather goods and other clothing as well as jewellery remain permitted.
The EU has also imposed export restrictions on goods and technologies for maritime navigation and goods that may contribute to the enhancement of Belarus’s industrial capacities.
III. Service-related sanctions
The goods-related sanctions are accompanied by bans on services and financing. Auditing, architectural and engineering services, IT consultancy and legal advice as well as advertising, market research and public opinion polling services, and product testing and technical inspection services (Article 1jc of Regulation (EC) No 765/2006) have been prohibited in principle since 1 July 2024.
However, the scope of application of the ban on services is smaller than for the sanctions against Russia. Compared to the prohibition for Russia on providing services to all legal persons, organisations or entities established in Russia, the scope of Article 1jc of Regulation (EC) No 765/2006 is more limited . Accordingly, services may only not be provided to natural or legal persons, organisations or entities acting on behalf of or on instructions from the Republic of Belarus, its government and its public bodies, undertakings, and agencies.
IV. Special exemptions to facilitate exits from the Belarusian market
Exits from Belarus are to be facilitated by temporary exemptions from the sanctions in Article 8da of Regulation (EC) No 765/2006. Imports and exports of certain goods located in Belarus can be authorised until 31 December 2024 if absolutely necessary for exiting the country or winding down business activities. The same applies to the provision of services in accordance with Article 1jc Regulation (EC) No 765/2006.
C. New provisions for the energy sector
In addition, importing crude oil from Belarus has been banned. The EU clarifies that the transit of crude oil through Belarus via a pipeline from Russia to the EU is not covered. However, the ban does not include other petroleum products.
Exporting goods and technology that can be used to refine oil and liquefy natural gas is prohibited under Article 1gc of Regulation (EC) No 765/2006.
The EU has also introduced a ban on investments in the energy sector in Belarus.
D. Transport
The transport ban for Belarusian road hauliers has been extended to EU companies which are at least 25% Belarusian-owned (Article 1zc(1c) of Regulation (EC) No 765/2006). Unlike the sanctions on Russia, however, this only affects EU road haulage companies that set up an establishment in the EU after 8 April 2022.
E. Compensation regulations
An independent claim for damages was now created by Article 8h of Regulation (EC) No 765/2006. Previously, EU companies were prohibited under Article 8d of Regulation (EC) No 765/2006 from settling claims by Belarusian individuals and organisations arising from compliance with the sanctions. Its effectiveness had been impaired by the fact that EU companies were sued in courts in third countries. Article 8h of Regulation (EC) No 765/2006 authorises EU companies to assert the damages resulting from such claims before the courts of the EU Member States if they do not have access to effective legal protection in the third country.
Outlook
The primary aim of extending the Belarus sanctions is to make the sanctions against Russia more effective. EU companies need to take action, particularly to include a ‘no Belarus’ clause and to meet stricter requirements for due diligence obligations towards their subsidiaries, as provided for in the most recent extension of the sanctions imposed on Russia. It remains to be seen whether the EU will strive for even greater harmonisation of sanctions regimes in the future.
[1] Currently the US, Japan, UK, Norway, South Korea, Australia, Canada, New Zealand, Switzerland, Liechtenstein and Iceland.
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