For the first time, the Group of Seven (G7), in collaboration with the Global Export Control Coalition (GECC), has presented joint guidance to industries to limit Russia's access to critical foreign technologies. Notably, the document includes instructions previously proposed by the Economic Security Council of Ukraine (ESCU) in May 2024.
The recommendations describe an export control list (CHPL), risk indicators, and best legal practices for businesses engaged in international trade. These guidelines will help companies detect export control evasion, protect their technologies, prevent reputational damage, and reduce legal risks.
The CHPL includes 50 critical items that Russia seeks to acquire for its military needs. Among them are Computer Numerically Controlled (CNC) machines. The ESCU has emphasized the importance of strengthening control over this technology since 2022, as it is critical for the production of Russian weapons.
Red Flag Indicators of Export Control Evasion
The G7 countries have identified several indicators that may suggest attempts to evade sanctions and export controls, including:
- New importers or exporters of CHPL items, particularly those at the same address as sanctioned entities.
- Significant increases in import volume or value by existing importers.
- Exporters that previously supplied Russia but started working with new countries after February 24, 2022.
- False declarations of export licenses, incorrect classification of goods, or circumvention of restrictions through third countries.
Best Practices for Due Diligence
Companies facing signs of risk should conduct additional customer and transaction checks:
- Analyze risks of export control and sanction circumvention.
- Verify transaction parties against sanction lists.
- Request additional information about end users and product destinations.
- Update distributor agreements to ensure best practices for due diligence.
The joint guidance from G7 and GECC is an important step in countering export control evasion. However, to ensure its real effectiveness, effective mechanisms for punishing companies that violate established rules must be implemented. The inclusion of clear accountability for negligence, which leads to goods ending up in sanctioned countries, will ensure the effectiveness of these measures and prevent Russia's access to critical technologies.