Russian Sanctions

Why we have imposed sanctions

• The Russia Sanctions Act 2022, passed unanimously by Parliament on 9 March 2022, is Aotearoa New Zealand’s response to Russia’s illegal and unprovoked invasion of Ukraine.
• In the absence of an effective response from the United Nations Security Council (as a result of Russia, one of the five permanent United Nations Security Council members, using its veto) and in light of Russia’s continued actions in Ukraine, the Act provides Aotearoa New Zealand with the legislative tools to join the international community and respond.
• Aotearoa New Zealand, through our sanctions measures, will contribute to international efforts to limit Russia’s ability to finance and equip the war in Ukraine, and to influence Russia away from war. Sanctions under the Act targets individuals and companies economically or strategically important to Russia.

Who sanctions apply to

Sanctions apply to individuals, entities, assets and services designated under the Act. These designations can be found in Schedule 2 of the Russia Sanctions Regulations 2022. The sanctions that apply to each individual or entity are listed in this Schedule. MFAT maintains a sanctions register. Some of the sanctions measures that apply to designated persons also extend to their associates and relatives – see Schedule 2 of the Russia Sanctions Regulations 2022.

All New Zealanders, both inside and outside of New Zealand, are required to comply with the sanctions set out in the Regulations. Individuals in New Zealand (and those ordinarily resident in New Zealand) and entities operating in New Zealand are also required to comply. New Zealanders in Russia may continue using services (of a sanctioned company) where necessary for personal or household purposes e.g. utility services.

The Act imposes civil and criminal liability.

Types of sanctions imposed under the Russia Sanctions Act

Travel bans:

• Designated individuals are prohibited from traveling to, or transiting New Zealand. The sanction may also affect an individual’s visa status if they already have a visa.

Transport bans:

• All Russian and Belarussian military and government owned or controlled ships and aircraft are banned from New Zealand airspace and waters.
• Aircraft and ships owned, operated, or chartered by specified designated individuals cannot enter New Zealand.

Prohibition on dealing with assets (asset freeze):

• Asset freezes stop New Zealanders and New Zealand-based businesses, individuals and entities dealing with the assets of designated individuals and entities. The Act defines what ‘dealings’ means. This prohibition does not apply to securities (as defined in the Regulations).
• One effect of asset freezes is that designated individuals and entities and their associates are prevented from accessing any assets they hold in New Zealand. This includes bank accounts and personal property.
• Asset freezes also prohibit New Zealanders and New Zealand-based businesses, individuals and entities from entering into financial transactions with, by, or on behalf of specified individuals and entities.
• Note: asset freezes are not the same as asset seizures. There is no ability to seize assets in the Russia Sanctions Act.
• Where a duty-holder is in possession or control of assets and suspects on reasonable grounds that these assets may be subject to the sanctions measures, they have a duty to report it to the Police.

Prohibition on dealing with securities of sanctioned persons

• New Zealanders and New Zealand-based businesses are prohibited from dealing with a security of a sanctioned person if doing so would result in: that person acquiring the security, a sanctioned person owning or controlling the security, or would otherwise be for the benefit of a sanctioned person.
• A ‘security’ is defined in the Regulations.
• The prohibition does not prevent a New Zealand person from holding or disposing of such a security (as long as it is not to a sanctioned person).

Services prohibition:

• This is a measure that prohibits, amongst other things, services being extended to, offered to, or received from sanctioned individuals or entities.
• Where a duty-holder is dealing with services and suspects on reasonable grounds that the services may be subject to the sanctions measures, they have a duty to report it to the Police.

Trade measures

• There is a 35% tariff on all imports of Russian origin. This does not include low value goods of less than NZ $1,000. In 2019 and 2020 goods of less than NZ $1,000 made up less 0.02% and 0.03% of total imports (by value) from Russia.
• New Zealand has also prohibited the export of certain goods to Russia and Belarus, including products that are closely connected to strategic Russian industries (products are listed in the sanctions register

Exceptions

There are a limited number of exceptions to the prohibitions detailed above and these are set out at Regulation 12 of the Russia Sanctions Regulations 2022.

Humanitarian organisations

The sanctions do not apply in relation to a humanitarian organisation carrying out humanitarian activities.

Export controls

While not part of the Russia Sanctions Act, export bans are also among New Zealand’s response measures:

• Goods intended for the Russian and Belarus military, security, and police sectors are banned from export: Export Controls (Export Prohibition to Specified Places) Notice 2022 (No 2) - 2022-go899 - New Zealand Gazette.
• New Zealand also maintains a comprehensive export control scheme for the export of other controlled goods to Russia and Belarus, details of which can be found here: Which goods are controlled? | New Zealand Ministry of Foreign Affairs and Trade (mfat.govt.nz)

What are sanctions?

Sanctions are a way to express serious concern for a violation of international law, and a tool for seeking to influence foreign governments and individuals to change their behaviour. There are different types of sanctions and sanctions can be applied on individuals, entities, assets, goods and services.

My business is not able to make/receive payments to Russia, because my bank is complying with sanctions.

• It is required that all people and companies in New Zealand comply with sanctions, as per the Russia Sanctions Act.
• Due to the nature of financial transactions, institutions such as banks are also required to comply with sanctions imposed by other countries, including the United States, the United Kingdom, and Australia. This means that if an individual or entity (or in some cases, entire jurisdictions) is sanctioned by another country, it is possible that banks in New Zealand will refuse to engage in transactions related to them.
• We encourage you to seek legal advice on your specific situation.

How will I know when new sanctions/designations are announced?

• The sanctions register will be updated when new sanctions are put in place.
• You can find the text of the Act and Regulations on legislation.govt.nz
• All changes to the Regulations, including new designations, will be notified in the Gazette: gazette.govt.nz

What can still be sold into Russia or brought in from Russia (or other sanctioned countries)?

• You should check the sanctions register (which includes the list of prohibited exports) and export control list to ensure that you are not violating sanctions or export control laws.
• Goods of Russian origin may still be imported to New Zealand, but if they are over NZ $1,000 they will be subject to the 35% tariff.
• If you are unsure we recommend you seek legal advice.
• You may face practical challenges trading with Russia, related to shipping and making/receiving payments.

I have a legitimate need to engage with sanctioned individuals/entities, what can I do?

• Regulation 12 of the Russia Sanctions Regulations 2022 details situations in which dealing with sanctioned persons, assets or services is allowed. The sanctions do not apply in relation to humanitarian organisations carrying out their humanitarian activities (Regulation 18).
• Additionally, the Act provides that any person may apply to the Minister of Foreign Affairs, on the basis of humanitarian need or for any other reason, to request an exemption, in relation to particular events or dealings in relation to persons, assets or services.
• A request for an exemption must be set out in the application form and sent to Sanctions-Exemptions@mfat.govt.nz. The Minister is not required to consider an application if another application in relation to the same matter has been already made within six months.

Can a listing be revoked or amended?

• The Act provides that any person may apply to the Minister of Foreign Affairs, on the basis of humanitarian need or for any other reason, to request an amendment or revocation of a regulation or a designation notice. A request for a revocation or amendment must be set out in the application form and sent to Sanctions-Exemptions@mfat.govt.nz.
• The Minister is not required to consider an application if another application in relation to the same matter has already been made within six months.

What impact will the trade measures have on Russia?

• Placing punitive tariffs on goods of Russian origin denies foreign exchange to the Russian Federation to help finance their aggression. It also closes off New Zealand from the possibility of Russian products being unloaded on New Zealand and undermining other similar efforts by our partners.
• While our trade with Russia is relatively thin, only 0.13% of total goods imports, these measures are designed to send a strong signal of our condemnation of the Russian Government’s actions in Ukraine.

What impact will the trade measures have on New Zealand?

• Given Russian products make up just 0.13% of total goods imports to New Zealand, the impact of these measures is expected to be localised.
• New Zealand imports of Russian products mainly consist of fertilisers, building materials and copper wire. Within these sectors, trade with Russia makes up less than 10% of total imports.

What is the purpose of the tariff increases?

• These trade measures send an important message, alongside the international community, that New Zealand consumers will not finance Russian aggression against Ukraine.
• It is part of a series of economic actions we have taken against Russia under the Russia Sanctions Act.

Why raise the tariff and not impose an outright ban?

• 35% represents a high tariff barrier, particularly for the kind of products that New Zealand has imported from Russia in the past, most of which attract zero tariff.
• Russian products are unlikely to be competitive in the New Zealand market any longer. The effect is therefore likely to be practically the same as a ban.
• This is consistent with the approach a number of our partners have taken.

Will product that left Russia but had not arrived in New Zealand by 25 April attract a 35% tariff on entry?

• Product of Russian origin that was en route to New Zealand from Russia prior to 25 April will be exempt from the 35% tariff increase, otherwise the 35% tariff will apply.

What does “en route to New Zealand” in the context of the 35% tariff mean?

“en route to New Zealand” means:

• The decision to transport the goods to an importer in New Zealand was made prior to 25 April 2022 AND
• The goods commenced the journey to the importer in New Zealand prior to 25 April 2022.

The goods may still be physically still in the country of export however must have departed the point of supply.

Importers with goods “en route to New Zealand” prior to 25 April 2022 can apply to Customs for an exemption from the 35% import tariff.

How do the trade measures fit within WTO rules? 

• WTO rules include a national security exception which enables WTO Members to take ‘any action’ they consider necessary to protect their essential security interests ‘in time of war or other emergency in international relations’.
• As with other members of the international community who have taken such action, we consider these trade measures are warranted in response to Russia’s war of aggression in Ukraine.

What impact do sanctions have on supply chains and shipping routes?

• Many of the major shipping lines have suspended deliveries of non-essential goods to Russia itself. Essential goods, such as humanitarian goods like food, are still being shipped.
• While freight connections for essential goods may still be functioning, there are blockages elsewhere in the system. Measures imposed by others like sanctions, restrictions on financial transfers, and restrictions at ports may impede flows of freight.
• There may also be disruptions where shipping routes go via Russia. Businesses are encouraged to find alternative routes in this case, for example, through Asia or Eastern Europe.
  

What if you are still owed payment for exported goods?

• Getting paid for exported goods will be more difficult. Continue to talk to your Russian partners in market, many Russian businesses will be experiencing similar issues with completing transactions and may have some practical advice.
• Additionally, contact your bank to discuss if it is possible to send or receive payments within the constraints imposed by the New Zealand and international sanction regimes. You should seek qualified legal advice if necessary.

Are personal effects able to be imported into New Zealand from Russia without attracting the 35% import tariff?

If certain criteria are met, people coming to live in New Zealand are permitted to import their used domestic and personal goods free of duty. This is outlined in reference 80 in Part II (Concessions) of the Working Tariff Document of New Zealand, which can be found on the New Zealand Customs Service website. This webpage also includes information on how to make an application for a concession.  

What sanctions apply to Belarus?

• A number of Belarusian individuals and entities are sanctioned (check the sanctions register for more info)
• Export prohibitions apply to Belarus as well as Russia. The HS codes for prohibited items can be found in the sanctions register.
• The 35% import tariff only applies to goods imported from Russia.

What current sanctions has Aotearoa New Zealand imposed?

In addition to sanctions imposed under the Russia Sanctions Act, New Zealand implements all sanctions imposed by the United Nations Security Council in regulations under the United Nations Act 1946. This currently includes sanctions on:

• The Democratic People’s Republic of Korea (North Korea)
• Iran
• Libya
• Syria
• Central African Republic
• Democratic Republic of the Congo
• Guinea-Bissau
• Iraq
• Lebanon
• Mali
• Somalia
• South Sudan
• Sudan
• Yemen
• The Taliban
• ISIL (Da’esh) and Al-Qaida
• Counter-Terrorism sanctions