Enforcement of Recent Amendments to Public Notice on Trade of Strategic Items – 34th and 35th Amended Public Notices

On June 21, 2024, partial amendments to the Public Notice on Trade of Strategic Items (the “Public Notice”), pre-announced on May 3, 2024, came into force (the “First Partial Amendments”). Subsequently, on September 9, 2024, partial amendments newly adding 243 items subject to the “catch-all” license requirement for export to Russia and Belarus, which had been pre-announced on June 28, 2024, came into force (the “Second Partial Amendments”).

The following are highlights of the recent amendments:

Highlights of the First Partial Amendments

Appendix 24 of the First Partial Amendments added publications, motion picture films, music CDs, and tapes, among others, to a category of “consumer communications products” exempted from the catch-all license requirement ((2(B)(11)). Additionally, through the mutatis mutandis application of Article 26,^[1] the grounds for license exemptions were expanded to include: (i) the re-import and repair of exported items due to failure or breakdown and their re-export to the end-user after repair, and (ii) the re-export of shipping containers within one year of import for the purpose of transportation of other goods or for disposal in a country overseas. Companies that seek to export items to Russia or Belarus may find it worthwhile to examine whether their items qualify for the new license exemptions.

Appendix 24 – Guidelines on License for Export to Russia or Belarus for Cooperation with International Export Controls

(Omitted)
Notwithstanding the foregoing, the (catch-all, brokerage or transit/transshipment) license requirement shall be exempted in the event of Subparagraphs A and B below. Among the individual export license exemption clauses, Article 26 (1), Subparagraphs 2, 3, 6, 7, 9, 15, 16 and 17, and Article 26 (2) 5 shall apply mutatis mutandis to the exemption of (catch-all, brokerage or transit/transshipment) license requirement (Omitted).

A. Support for the Government or international organizations

B. Trade of consumer communications products

(1) - (10) (Omitted)
(11) Publications, films, posters, music records and photographs, as well as microfilms, tapes and compact discs (CDs) containing these materials, which do not incorporate any software or technology listed in Appendix 2 or Appendix 2-2

In addition, the First Partial Amendments reflect changes to the list of strategic items subject to export controls as agreed to by international export control regimes, such as the Wassenaar Arrangement (the “WA”), Nuclear Suppliers Group (the “NSG”), Missile Technology Control Regime (the “MTCR”) and Australia Group (the “AG”). As a result, three new dual use items have been added. Amendments to Appendixes 1 through 4 resulting from these additions came into force three months after the enforcement of the First Partial Amendments on June 21, 2024 (i.e., September 21, 2024).

Compound: 1C011.e Iodine pentafluoride (CAS 7783-66-6)
Chemical substance: 1C350.90 Dipropylamine (CAS 142-84-7)
Pathogens and toxins harmful to humans and animals: 1C351.d.24 Neosaxitoxin

For reference, the amended Foreign Trade Act took effect on August 21, 2024, in response to the increased need to strengthen export controls on advanced technologies due to changes in the international trade and security environment and the accelerated development of military-civilian fusion technologies in the wake of the recent Russia-Ukraine war. In addition to the items already designated as strategic items under existing international export control regimes, the amended Foreign Trade Act allows further designation of goods and technologies as strategic items requiring export licenses or subject to other restrictions in support of multilateral export control agreements. Therefore, in addition to the three items described above, other items may be designated as strategic items pursuant to Korea’s export control cooperation policy with allied countries, and companies are advised to keep abreast of changes and developments in this regulatory area.

Highlights of Second Partial Amendments

Certain items that were subject to the US’s catch-all controls but were not previously covered in the Public Notice have been added to the list of items that require a license for export to Russia or Belarus. Specifically, a total of 243 items have been added across materials and chemicals categories based on HS codes (No. 1,160-1,402).

The following table lists some of the items that have been added, along with specific examples based on HS codes. In particular, a number of chemicals, materials and their products have been added to the list. Companies exporting the types of items listed below are advised to carefully review whether their exports include items subject to the catch-all license requirement.

Control No.	HS Code Description	Examples
1211-1228	Chapter 38 – Miscellaneous chemical products	Rosin, wood tar, agents/dye carriers for textiles, plasticisers, preparations for fire-extinguishers, anti-freezing fluids, biodiesel, reaction initiators, reaction accelerators and catalytic preparations
1229-1258	Chapter 39 – Plastics and articles thereof	Polypropylene (“PP”), polystyrene (“PS”), polyvinyl acetate (“PVA”), Poly(methyl methacrylate) (“PMMA”), polylactic acid (“PLA”), polyamide (“PA”) and other plastic materials; Pipes, hoses, plates, sheets, bidets, doors, window frames and other plastic products
1259-1293	Chapter 40 – Rubber and articles thereof	Butadiene, isobutene, latex and other rubber materials; Plates, sheets, strip, belts, tubes, hoses, pneumatic tyres (retreaded or used) and other rubber products
1299-1303	Category 69 – Ceramic products	Bricks, tiles, roofing tiles and chimney liners
1304-1319	Category 70 – Glass and glassware	Glass rods, glass balls, glass tubes, glass sheets and laminated safety glass
1321	Chapter 72 – Iron and steel	Ferrovanadium
1322-1327	Chapter 74 – Copper and articles thereof	Copper bars and rods, copper wire and copper plates, sheets, strips, etc.
1336-1381	Chapter 84 – Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	Boilers, pumps, machine-tools, welding machinery and apparatus, and fluid projectors for semiconductor manufacturing

In addition, although the Second Partial Amendments provide that applications for catch-all licenses will be denied in principle, transaction agreements that have been executed prior to the enforcement date (i.e., September 8, 2024 for newly added items subject to the catch-all requirement) will be reviewed on a case-by-case basis for license approval. Therefore, companies seeking to export items subject to the catch-all license requirement are advised to consider whether they qualify for the exception.

In summary, (i) the First Partial Amendments provide additional grounds for exemption from a license requirement, while (ii) the Second Partial Amendments significantly expand the list of items subject to the catch-all license for exports to Russia and Belarus. In addition, the Korean Government’s policy of cooperation with the international community has resulted in the amended Foreign Trade Act providing the legislative basis for the further designation of additional strategic items in line with multilateral export control objectives.

The increasing demands of the international community for export control cooperation and the geopolitical dynamics surrounding Korea are causing the regulatory landscape in this sphere to evolve rapidly. Companies are advised to thoroughly review the HS code of their export items and regularly check for updates to the Public Notice. Additionally, special care should be taken to determine whether export items fall under strategic items and/or items subject to the catch-all license. Companies should also review the risk of items entering Russia, Belarus or other countries that require further attention through a third country.

^[1] Exemption from Individual Export License, Article 26 (1) 7 and 15.

[Korean Version]

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