New package of EU sanctions on Russia

A range of additional EU sanctions measures were recently adopted by the Council of the European Union and one measure in particular is likely to impact a significant number of UK exporters and EU importers.

From 30 September 2023, EU importers of iron and steel products that were processed in a third country must provide evidence that the inputs used did not originate in Russia. This will affect UK manufacturers as well as retailers and distributors selling finished products to EU customers.

The Regulations require that the evidence must be provided at the point of import into the EU and failure to do so may result in delays or the goods being seized at the border. Acceptable evidence to prove that the products do not include Russian inputs must be in the form of a Mill-Test Certificate (MTC), identifying the facility in which the processing is carried out and the types of processing operations that occur.

This poses a significant challenge for UK businesses who export goods in scope to the EU, and an important first step for traders is to therefore conduct an impact assessment and identify which goods fall within the scope of the sanctions. Reviewing Management Support System (MSS) export data will help shed light on this and we can support the business in reviewing commodity codes accordingly.

Affected traders will then have to ensure that the relevant information is provided to the importer in the EU or ensure to present the certificate on its own account where appropriate. Businesses will need to engage with suppliers to understand if the goods being exported to the EU incorporate materials of Russian origin, requesting the appropriate documents which corroborate composition of the products.

It will be important to implement the necessary processes to comply with the new Regulations and this is likely to see cross-collaboration and input from a number of divisions across the business. Customers in the EU will be keen to gain assurance that their suppliers in the UK are able to provide the required MTCs.

It should be noted that the UK will also implement a similar measure for imports on the same date, with some differences on the goods impacted, and details of the evidence requirements remain unclear at this stage.

CBAM crossover

Notably, the transitional measures for the EU Carbon Border Adjustment Mechanism (CBAM) also come into effect from 1 October 2023 (please find our full article on CBAM below) and many products fall under both the Sanctions and CBAM measures.

The CBAM will require EU importers to submit quarterly reports to the EU Commission detailing the imported goods and declaring direct and indirect emissions. UK businesses who export carbon intensive goods which fall within the scope of CBAM will be tasked with supplying the EU importer with the required information, presenting further compliance burdens.

With the effective date fast approaching, it is important that businesses prioritise discussions around the measures and we can assist in analysing customs data to identify products in scope and advise on the key measures that should be implemented to ensure adherence to Regulations.

For more guidance on the impact of the Sanctions and/or CBAM on UK exports to the EU, please contact Ian Worth or your usual Crowe contact.