From bridges to sockets: what goods the EU has banned from delivering to Russia

In a new package of sanctions against RUSSIA, the EU banned the supply of a variety of goods, including metal structures, forklifts, internal combustion engines and conveyors.Now they will have to be replaced by their own or Chinese goods

As part of the tenth package of anti-Russian sanctions, the European Union banned the EXPORT to Russia of many industrial goods - more than 200 customs codes in total. The European Commission said that the new restrictions affect products, the supply of which to Russia in 2021 amounted to €11.4 billion. During previous sanctions rounds, the EU limited the export of goods by €32.5 billion (according to data for 2021).

Products sanctioned this time include gears and cogwheels, various metal structures (including bridge sections and steel doors), liquid filters, machine tools and presses for metal working, forklift trucks, reciprocating internal combustion engines, elevators and continuous conveyors, certain trailers and semi-trailers, certain AC motors and pumps, lead accumulators, parts of hydraulic turbines, instruments for physical and chemical analysis, etc. These goods are embargoed as being able to "contribute to the improvement of the industrial potential" of Russia.

Under another heading - "advanced technologies" - the EU banned the supply to Russia of digital cameras, permanent metal magnets, antennas and antenna reflectors, electrical switches, "other" lamp holders, plugs and sockets, machines for additive manufacturing.

Volumes of purchases by Russia of goods from the list of new sanctions

In 2022, European exports of all these goods to Russia were significantly reduced even before the latest sanctions were introduced - this behavior of suppliers is usually associated with several factors: the expectation that formal sanctions will soon be applied to sensitive products, difficulties in selling goods due to other sanctions (against banks servicing trade; against Russian sea vessels and road cargo transportation, etc.), image risks.

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Nevertheless, until the last moment, Russiacontinued to purchase these European products, now subject to sanctions. Under the terms of the restrictions, these deliveries are entitled to continue until March 27 under contracts concluded before February 26, 2023. In 2022, the EU countries exported these goods to Russia in the amount of at least €4.4 billion, RBC calculated based on Eurostat data (the Russian Federal Customs Service suspended the disclosure of foreign trade statistics). Some of these products were actually delivered only until March 2022, and after the start of the Russian special operation in Ukraine, their exports decreased to symbolic values ​​(for example, “other” trailers and semi-trailers for the transport of goods, “other” motor vehicles with a gross weight of more than 20 tons ), but most goods were exported to Russia in relatively large volumes until the end of the year.

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For example, the import of European turbojet engines with a thrust of more than 25 kilonewtons to Russia in 2021 amounted to almost €400 million, and in 2022 it decreased to €7.6 million, and since March, the supply of these engines has been reset. Such turbojet engines were added to the sanctions list against Russia on February 25 this year.

Deliveries of now sanctioned sockets, cartridges, plugs, switches and electrical switching devices from Europe to Russia in 2022 decreased to €138 million, compared with €381 million in 2021.

However, the actual flow of EU goods, which were subject to restrictions under the last sanctions round, to Russia could be even more, since European statistics include only direct exports from the EU to Russia. In 2022, there was a trend towards the re-export of European goods to Russia through countries such as Turkey, Armenia, Kazakhstan, Uzbekistan, etc., as reported by the Euromonitor expert, the European Bank for Reconstruction and Development and the EU Special Envoy for sanctions.

Prospects for import substitution

Now Russia will have to replace these European goods with domestic products or Asian goods (mostly Chinese) or expand parallel imports. Most Russian companies have already replaced imported spare parts and equipment from unfriendly countries with Chinese ones, a recent Gaidar Institute survey among enterprises showed. At the same time, 15% of Russian enterprises reported that they continue to receive sanctioned machine tools and machines.

Based on an analysis of data from Chinese customs and the European statistical agency Eurostat, rating agency Moody's estimated that China has replaced Russia with about 20% of imports from EU countries that fell under the union's export restrictions (the analysis did not take into account the February tenth round of sanctions). “There is evidence that Russia has managed to replace some sanctioned goods, including by developing domestic alternatives. However, most likely, this is achieved at the cost of increasing costs and reducing quality, ”Moody's believes.

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Last year showed that the inclusion of a product in the sanctions list does not mean an automatic cessation of its import to Russia, said Vladimir Salnikov, deputy DIRECTOR general of the Center for Macroeconomic Analysis and Short-Term Forecasting. In fact, alternative deliveries are very often established - analogues from other countries or the same products, but in more complex, "roundabout" ways. Therefore, it is possible to speak more about the rise in the cost of imports, and not about its complete cessation, the expert believes.

In the case of imports through third countries, problems can mainly arise with complex engineering equipment, such as numerically controlled machine tools that have a connection with the manufacturer. And if this is typical equipment that does not require the participation of the manufacturer during operation, then it will be difficult to track deliveries to Russia, Salnikov notes. Although adaptation is now mainly through alternative supply routes, some positions are likely to be replaced domestically, he says: “For example, metal structures, something that is not high-tech, does not require unique materials in production.”

According to Chinese customs data, Russia’s dependence on European goods that fell under export restrictions on February 25 was commensurate with dependence on similar goods from China back in 2022. Among the 15 commodity items, the largest in terms of exports from the EU to Russia last year, Chinese exports to Russia exceeded European deliveries in seven - transmission shafts and bearing housings, parts for mechanisms and machines (cranes, bulldozers, tunneling machines), parts of equipment for purification of liquids and gases, electrical equipment for ignition or starting of internal combustion engines, forklift trucks, other gas filtering equipment, reciprocating internal combustion engines. At the same time, compared to 2021, China even reduced the supply of these goods to Russia - by about 10%, to $ 2,