Smartphone and Car Exports to Russia Opened... But US Says "Control Level Must Be Raised for FDPR Exception"

Ministry of Industry Discloses US Commerce Department's Position... General Consumer Goods Exempt from FDPR
Export of Russian Subsidiaries May Be Allowed... 'Refusal Principle' Not Applied
Government Begins Persuasion Including Exempt Countries... High-Level Meetings with Commerce Department Directors

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] The United States has reiterated its position that raising the level of export controls is necessary to grant the South Korean government's request for exceptions in the export control sanctions against Russia. However, it has been confirmed that exports of consumer goods such as smartphones, finished cars, and washing machines to Russia are possible even for non-exempt countries under the Foreign Direct Product Rule (FDPR).

The Ministry of Trade, Industry and Energy announced on the 3rd that it received this response during consultations with the U.S. Department of Commerce's Bureau of Industry and Security (BIS) regarding coordinated export controls against Russia. The FDPR is a measure that prohibits exports of products made in third countries using U.S. technology or software (SW), even if the products are not made in the United States. It was previously used by former U.S. President Donald Trump to pressure China's Huawei.

The U.S. Department of Commerce stated that smartphones, finished cars, and washing machines are subject to FDPR, but in principle, they are exceptions as consumer goods intended for general consumers. However, this is limited to cases that are not exports to "Military End Users."

Accordingly, exports by South Korean companies' local subsidiaries in Russia are not subject to the U.S. policy of denial. The U.S. Department of Commerce indicated that exports to Russian subsidiaries may be permitted after case-by-case review. The same applies to exports from South Korean subsidiaries located in third countries such as Vietnam to subsidiaries located in Russia.

Trade Negotiations Chief Visits Russia Desk
(Seoul=Yonhap News) Reporter Son Hyung-joo = On the 24th, Yeo Han-gu, Chief of the Trade Negotiations Headquarters, is inspecting the Russia Desk at the Strategic Materials Management Institute in Gangnam-gu, Seoul. As Russia's invasion of Ukraine intensifies, the government launched the operation of the 'Russia Desk,' a dedicated consultation window for export control, starting today. The Russia Desk is a dedicated consultation window that advises domestic companies on whether their products fall under export control items when the United States strengthens export control measures against Russia. 2022.2.24
2022331@yna.co.kr
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However, it appears difficult to be included among the FDPR exempt countries as requested by the South Korean government. The U.S. Department of Commerce stated, "The condition for inclusion as an FDPR exempt country for Russia is to independently implement export controls against Russia at a level similar to that of the United States and the international community." This implies that the South Korean government's level of export control does not meet the level desired by the United States. Currently, 32 countries including the 27 European Union (EU) member states, Australia, Canada, Japan, New Zealand, and the United Kingdom, which have independently imposed sanctions on Russia in line with the U.S.'s high-intensity sanctions, have become FDPR exempt countries, but South Korea is excluded.

The government has belatedly taken steps to address the situation. According to the Ministry of Trade, Industry and Energy, Yeoh Hangoo, the head of the Trade Negotiations Office, urgently headed to the United States during a business trip to Mexico on the same day. Yeoh plans to hold a meeting with senior officials, including directors of the U.S. Department of Commerce, in the early morning the next day. He intends to discuss South Korea's inclusion among the FDPR exempt countries.

This content was produced with the assistance of AI translation services.