On December 11, 2023, the UK’s Department for Business & Trade (“DBT”) published a General Trade Licence of indefinite duration concerning measures related to third-country processed iron and steel, pursuant to The Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Regulations”) (the “GL”).  The GL has been introduced to provide additional clarity in key areas for traders navigating these sanctions.

Background

In April 2023, the UK government legislated for a prohibition on certain activities involving Russian iron and steel products processed in a third country in The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023 (the “2023 Regulations”), which came into effect on September 30, 2023.  The legislation established a ban on the import into the UK of (and provision of ancillary services relating to) specific Russian iron and steel products processed in one or more third countries, with the intent of addressing the potential use of third-country processing as a method to obscure the Russian origin of iron and steel products, thereby foiling attempts to circumvent sanctions imposed on Russian iron and steel.

GL Requirements

In pertinent part, the GL permits the import into the UK of, and provision of ancillary services in relation to, goods that otherwise would be prohibited by the sanctions on Russian iron and steel products processed in a third country.  According to accompanying guidance issued by DBT, the GL may be used in cases where a trader is unaware of a good’s origin, such that their goods are potentially prohibited.  To rely upon the GL, the goods must be:

  1. Reusable Packaging

The GL covers reusable packaging (e.g., pallets and similar platforms used for handling goods) of Russian origin, or that makes use of Russian iron and steel products processed in a third country.  In order to satisfy eligibility requirements, the packaging must fall within Commodity Code 7326 90 40 00, must only be used for the purpose of facilitating the international trade of other goods (whether or not filled with those other goods when imported into the UK), and should not be consigned from Russia.  Crucially, if the in-scope iron and steel products are themselves the object of the import (e.g., they are intended for domestic use or sale in the United Kingdom), the GL would not permit their import into the United Kingdom.

  1. Iron and Steel Products Processed in a Third Country and Manufactured/Produced Before April 21, 2023

The GL covers in-scope iron and steel products processed in a third country that were manufactured/produced before April 21, 2023, and that at no time on or after April 21, 2023 were located in Russia.  Traders are required to maintain verifiable evidence, such as invoices, bills of lading, or sales contracts, in order to demonstrate that the particular goods existed and were located outside Russia prior to April 21, 2023.  It is not necessary to demonstrate the exact date of manufacture.

  1. Goods Previously in the United Kingdom

The GL also covers in-scope iron and steel products processed in a third country that previously had been in free circulation in the United Kingdom, fall within the same commodity code as they did when exported from the United Kingdom, and that have not at any time on or after April 21, 2023 been located in Russia.  Traders are expected to have documentation evidencing the satisfaction of these conditions.

Record Keeping Requirements

According to Regulation 76 of the Russia Regulations, traders must maintain a register or record for each act carried out under the GL.  This register or record should contain essential details, including:

  • a description of the act;
  • a description of goods, technology, services, or funds involved;
  • the date of the act;
  • the quantity of goods or funds;
  • the trader’s name and address;
  • the consignee’s name and address;
  • end-user information (if known);
  • the supplier’s name and address (if different from the trader); and
  • any additional information required by the license.

The register or record must be retained until the end of the calendar year in which it is created and for an additional 4 years from the end of that calendar year.

Notification

In order to use the GL, traders must notify DBT by providing their name, EORI number, and the address where the records required to be kept under the GL can be inspected within 30 days of first use of the GL.  While there is not a requirement to notify each use of the GL, traders are required to keep the information provided up to date.  The initial notification (and any subsequent updates) can be provided by emailing records.importlicences@businessandtrade.gov.uk.

Making a Customs Declaration Using the GL

Traders importing goods into the United Kingdom under the GL are not required to have documentation available to demonstrate the goods’ supply chain.  However, use of the GL requires a customs declaration, using code 9063 and licence number GBSAN0001.  Traders cannot use a Declaration by Conduct or an oral declaration to import sanctioned goods.

HMRC Inspection

Traders may be asked to present evidence of a good’s supply chain at the UK border and, in some cases, customs may require the production of further information relating to the goods such as invoices, bills of lading or other books or documents relating to the goods.

In its guidance, DBT advises all parts of the supply chain for third country processed iron and steel imports into the United Kingdom to:

  • undertake appropriate due diligence to ensure that sanctions are not being circumvented directly or indirectly; and
  • (in the case of importers) include assurances that imports are not of Russian origin in contractual agreements.

For further details and comprehensive guidance, you can refer to the official government guidance publication here.  For more information on these developments, contact the authors of this post, Alexandra Melia or Elliot Letts, in Steptoe’s Economic Sanctions team in London.