The rule applies to US- origin luxury goods, including malt beer, wine, certain spirits, tobacco products, certain cosmetics, apparel and footwear products valued at over $1000 per unit (U.S. wholesale price), furs, handbags, jewellery, vehicles and antique goods. The move follows targeted sanctions by the US and European allies against certain Russian entities and individuals in which Belgian diamonds and Italian luxury goods were exempted. Before today’s announcement, US controls on exports of luxury goods had only applied to North Korea.
In the days after the imposition of the initial sanctions, there was a run on products like jewellery, watches and handbags in Moscow, as consumers anticipated tight demand and sought assets that would retain value. Since then, the suspension of deliveries by shipping companies and the exclusion of Russia from the SWIFT payments system has arrested commercial activity, and luxury retailers have largely shuttered their stores in Russia. The new rule will apply to sales to certain individuals outside of Russia [and will require a level of screening at the retail level not previously seen.]
The final rule is available here.
Manufacturers, marketers, distributors and retailers of US-origin luxury products should:
- confirm which, if any, of their products are subject to the controls
- cease sales of controlled goods to Russia and Belarus
- adopt procedures to screen individual purchasers of controlled goods no matter where the goods are sold
take steps to ensure that distributors or commercial partners are not selling controlled goods in violation of the new rule.
Authored by Kelly T. Hardy, Chandri Navarro.