BIS Issues New Guidance on Medical-Related Items Destined for Russia, Belarus, or Occupied/Covered Regions of Ukraine

Washington, D.C. (August 2, 2023) – On July 19, 2023, the United States Department of Commerce’s Bureau of Industry and Society (BIS) released new best practices guidance for exporters dealing with medical-related items destined for Russia, Belarus, or the Occupied/Covered Regions of Ukraine. This guidance follows the May 19 tranche of export control regulations and reinforces the U.S. Government’s approach of facilitating the flows of humanitarian and medical goods while preventing their diversion to military ends. The new guidelines aim to strike that balance by providing businesses with a set of recommendations to follow to streamline and expedite the export process for medical-related items. The BIS has put forth five specific recommendations.

Submitting End-User Due Diligence Statements            

Medical-related items destined for Russia, Belarus, and the Occupied/Covered Regions of Ukraine are permitted so long as the BIS grants an export license per the Export Administration Regulations (EAR). Here, the key inquiry is whether the ultimate consignee is a civilian facility providing direct patient care to civilians. Medical-related items must not end up used by hospitals owned or operated by the Russian or Belarusian Ministry of Defense. To ensure this, the BIS recommends that all applicants provide a statement certifying that they conducted due diligence to ensure their exports will serve people’s humanitarian needs.

Narrowing the Scope of the Transaction/License

The BIS suggests that more narrowly tailored applications for exporting medical-related items are the likeliest to see success and an expeditious resolution. The broader the scope of the application, the higher the risk for diversion of those items. As such, the BIS counsels applicants to narrow their applications to a single consignee/distributor, for fewer than 100 end users, and for only a one-year supply of item quantities. Applicants will be more successful if they connect the item quantities in their application to some demonstrable demand for that item.

Grouping Export Items

Applicants should group similar items on their application in broad categories to help the BIS reach a speedier decision. This approach helps interagency reviewers more quickly understand which items are being exported. Grouping items in categories, however, does not obviate a need for specifics. For instance, while an applicant should group consumable items together, simply calling them “consumables,” without more detail, is likely to result in follow-up documentation requests. Applicants are also likely to see quicker results if they include specific Harmonized System (HS) codes for the items in their requests.

Applications for Direct Patient Care Exports

The CDC defines “direct patient care” as “hands-on, face-to-face contact with patients for the purpose of diagnosis, treatment and monitoring.” Applications are likely to move more quickly through the review process if they clearly demonstrate that the items will be used for direct patient care, for civilian patients, in civilian treatment facilities.

Proper use of HS Codes

HS Codes are a global standard for classifying goods, with six-digit numbers often used by customs authorities. The U.S. uses them as well, in part to serve as a foundation for its own classification system. Specifically, the U.S. Government uses Schedule B numbers – 10-digit codes where the first six numbers correspond to the item’s HS Code.

However, the BIS is unable to classify goods by HS code for a license application. Applicants should use the same HS code for an item that they use for other purposes such as determining tariff rates. For an authoritative determination of an item’s HS code, the BIS directs exporters to request a ruling letter on the issue from U.S. Customs and Border Protection. Applicants who misclassify their item run the risk of being denied authorization for that transaction.

Best Practices Checklist

In addition to the five broader recommendations above, the BIS has also released a best practices checklist for exporters to consult before submitting their license application:

• Have you provided a statement certifying that the medical facilities on the application are civilian facilities providing direct patient care only to civilian patients?
• Are the item quantities scoped to what would be used over the period of one year?
• Do the items for export have an identifying description in the Technical Description Block?
• Did you scope the license to minimize the risk of diversion to unauthorized end users/end uses?
• For items controlled by HS code, have you included the HS code that covers your items and the section of the EAR where that HS code is referenced?
• Did you provide a description of how the items would be used for direct patient care?
• Have you explained the role of any parties that do not provide direct patient care?

While this BIS guidance does not impose any new substantive requirements on license applications, exporters whose applications meet these recommendations are likelier to see success. Lewis Brisbois’ attorneys leverage their deep experience on issues of sanctions compliance and export controls to advise clients in a difficult legal and political risk environment. For more information, contact the author or editors of this alert, and visit our Ukraine Conflict Response Practice page for additional alerts in this area.

Author:

Nikita Buchko, Summer Associate

Editors:

Jane C. Luxton, Managing Partner - Washington, D.C.

Andrew Pidgirsky, Partner