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Focus: Russia imposes sanctions against Australia

11 August 2014

In brief: Russia has imposed sanctions against Australia and certain other countries (including EU member states and the US) prohibiting certain food imports, and may impose further sanctions restricting access to its airspace. Partner Rachel Nicolson (view CV) and Associates Andrew Wilcock and Freya Dinshaw report.

How does it affect you?

  • Australian, EU and US companies that export food products to the Russian market will be hardest hit by the sanctions.
  • Companies with activities or operations in Russia should review their operations and supply arrangements to ensure that they are in compliance with Russian sanctions and any sanctions that may be imposed against Russia in response.
  • Companies with operations in or near Russia should monitor Russian Government announcements relating to access to Russian airspace.

Background

In February and March 2014, in response to Russia's annexation of the Crimean Peninsula, the EU and US imposed targeted financial sanctions against several individuals and corporate entities. In June 2014, Australia imposed similar targeted financial sanctions.

In July and August 2014, in response to the downing of Malaysian Airlines flight MH17, the EU and US imposed further sanctions targeting the Russian defence, finance and oil and gas sectors. On 30 July 2014, the Australian Government announced that it had no intention to follow suit.

In response to foreign sanctions targeting Russia, on 6 August 2014, Russian President Vladimir Putin signed an 'Executive Order On Applying Certain Special Economic Measures to Ensure the Security of the Russian Federation'. The measure prohibits the importation of certain food products from Australia, the EU, the USA, Canada and Norway into Russia.

The Australian Government has expressed disappointment at Russia's imposition of sanctions against Australia, and is considering whether to impose expanded sanctions against Russia, including a potential uranium export ban.

Food ban

The recently announced Russian sanctions ban the importation of the following products from Australia, Canada, EU member states, Norway and the USA into Russia:

  • beef, pork, fish and poultry;
  • fruits and vegetables; and
  • cheese, milk and dairy products.

The Russian Agriculture Minister Nikolai Fyodorov has stated that Russian officials are in talks with Belarus and Kazakhstan to prevent the shipment of sanctioned goods through those countries.

The sanctions came into effect on 7 August 2014, and will remain in force for 12 months. However, Russian Prime Minister Dmitry Medvedev has noted the possibility of revising the period of sanctions if the countries affected 'display a constructive approach towards cooperation issues'.1

Potential airspace restrictions

Prime Minister Medvedev also foreshadowed that Russia may implement further measures in response to EU sanctions against Dobrolet Airlines, a Russian low-cost airline and subsidiary of Aeroflot.

Such measures would have the primary aim of increasing transportation times and costs for Western carriers, but would also likely increase costs for business with operations in and around Russia.

Conclusion

Russia's recently announced sanctions against Australia will predominantly affect the agricultural and food sectors. They may also affect Australian business with activities or operations in Russia.

Proposed airspace restrictions, if adopted, will affect Australian businesses that operate in or near Russia, which may face logistical difficulties.

Businesses should take steps to ensure that they are in compliance, not only with Russian sanctions against Australia and other countries, but also to ensure that they are in compliance with Australian and other sanctions against Russia.

Footnotes
  1. Russian Government, On measures to implement the presidential executive order On Adopting Special Economic Measures to Provide for Security of the Russian Federation, 7 August 2014.

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