On Wednesday, March 12, 2014, US President Barack Obama reiterated his support for Ukraine and its stand-off with Moscow by proclaiming that Russia has “violated international law.”

Leaders within the EU and US have continued to threaten to issue a wave of economic sanctions against Russia should Russian President Vladimir Putin continue his military interference into Ukraine’s Crimean peninsula. The threats follow the withdrawal of seven members of the Group of Eight from the annual summit which was to be hosted by Russia.

As of Monday, March 17, 2014, the US issued some sanctions against Russian leaders. According to Politico, sanctions include halting trade talks, banning travel visas and freezing the country’s government and business leaders’ assets in overseas financial institutions. It is believed that these sanctions are only the beginning of what President Obama has in store for Russia should they continue their interference in Crimea.

The US currently has billions of dollars in trade transactions with Russia, its 20th largest goods trading partner, and a looming trade sanction could spell trouble for US businesses with investments in the nation.

While it is still too early to make guesses on the details of further sanctions, it’s never too soon to take precautions.

  • Stay up-to-date on sanctions: Every organization is responsible for knowing, not only who they’re shipping to, but who is involved in their exporting process. Careful attention to current events can play a major role in your knowledge on impending sanctions, but denied party screening is the most accurate way to ensure compliance within your business.  Automated screening offers the highest level of accuracy with the lowest rate of false positives while creating and storing an audit trail of past screening results for future reference and demonstrating “Reasonable Care”.
  • Properly classify your goods: It is vital for companies to begin streamlining their entire product classification process.  When goods are accurately classified, any effects of a potential sanctions can be quickly recognized and communicated with trade partners.
  • Assess country threat levels:  Regardless if your suppliers are in Russia or neighboring countries, any type of disruption along the route can cause problems.  Knowing what country threat levels exist as soon as possible and how it could affect your supply chain will allow you make plans to re-route goods, thus decreasing the chance of disruptions, should those disruptions occur.
  • Analyze tariffs from multiple countries to find the best source: If sanctions are put against a country, then you could find yourself without a supplier.  Using an online tariff analyzer tool will allow you to look at various Country of Origins for one HS number to determine where the next best source would be based on duties, FTA qualifications, etc.

“We are committed to preventing international trade in minerals from intensifying or perpetuating conflict," said High Representative of the EU for Foreign Affairs and Security Policy Catherine Ashton and EU Trade Commissioner Karel De Gucht. (via the European Commission)

In a joint statement made on 5 March 2014, the High Representative of the EU for Foreign Affairs and Security Policy Council and the EU Trade Commissioner set forth a proposed trade rule to encourage legitimate trading channels and the responsible importing of conflict minerals into European Union (EU) member states.  The proposed ruling asks for the voluntary participation by the business community in the “monitoring and administering their purchases and sales of conflict minerals.” . Conflict minerals (tantalum, tin, tungsten and gold) are those that are mined under hostile and harsh conditions, where the miners are typically working by force under difficult conditions and with tools lacking efficiency.  According to Financial Times, the EU imports about 25 percent of the global trade in tin, tungsten and tantalum and about 15 percent of gold.

This proposed Regulation and an accompanying “Communication” comes on the heels of the US’s mandatory inclusion of conflict minerals reporting for all US imports, which led to an unintended backlash of US companies pulling business away from Africa.

The European Commission has also announced that, in their continued effort to increase public accountability and cooperation, the plan to recognize ‘responsible smelters and refiners’ – those manufacturers that participate in responsible trade –  in an annual list.

The efforts to track the sale and use of conflict minerals are an ongoing effort for many countries. For more information on how the US is handling Conflict Minerals, view our past posts here.

Plans to build a bridge connecting Detroit, Michigan and Windsor, Ontario continue despite the recent exclusion of a part of the project’s funding from the US federal budget.  Even with funding still not secured, construction on the bridge could begin as early as 2016 with a completion date of 2020.

In President Barack Obama’s proposed budget for 2015, the allotted amount for Customs and Border Protection (CBP) construction and facilities management did not include the Detroit plaza, which The Times Herald estimates will cost approximately $250 million.  Canada has agreed to cover $2.3 billion of the construction costs, including a $550 million infrastructure cost on the US side.

“This infrastructure project is of utmost economic significance to both Michigan and the entire U.S. and our largest trading partner, Canada,” said Sara Wurfel, spokeswoman for Detroit Gov. Rick Snyder, who supports the project.

An existing connection, the 84-year old Ambassador Bridge, plays a major role in the $70 billion annual trade relationship between Michigan and Canada and garners an approximate $60 million in annual gross revenue. The owner of the Ambassador Bridge, Manuel “Matty” Moroun opposes the New International Trade Crossing project and plans to build a twin span to the existing Ambassador Bridge with private funding.