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US exempts South Korean smartphones from Russia export bans

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The South Korean Ministry of Commerce has revealed that after discussions with the US Department of Commerce, the nation that houses Samsung is confident that smartphones are exempt from new bans on exporting technology to Russia.

These bans were imposed in response to Russia’s illegal invasion of Ukraine. Tech companies quickly and voluntarily complied with their new responsibilities by ceasing to export to Russia. Some – notably Oracle and SAP – have even gone so far as to suspend their operations in Russia. Apple has also suspended all sales in Russia.

Technology exports are a significant contributor to South Korea’s economy – Samsung’s global revenue across all of the sprawling group’s businesses is equivalent to around 17% of the country’s GPD. And according to data from analyst firm IDCthe Russian smartphone market has between 35 and 40 million units per year, with Samsung holding 34%.

The ministry’s memo on smartphone export exemptions says the U.S. Commerce Department is happy for these phones to continue to reach Russia — even if they’re made in Samsung factories outside Korea — provided that they are not sold to military buyers.

White goods, another big Korean export, are subject to the same rules. Cars too.

Avoiding sanctions by acquiring kits through front companies isn’t an advanced maneuver: so it’s entirely conceivable that Russian troops will take advantage of dropped uniforms in LG’s new software-defined clothes dryer and discuss of this device on a Samsung Galaxy S22 – while driving in a Hyundai.

While South Korean industry has reason to feel relief from the export exemptions, Indian companies fear the United States will hit them with secondary sanctions. India called for an end to violence in Ukraine but abstained in the UN vote on a resolution “deploring Russia’s aggression”. India also has strong defense ties with Russia, having pledged to acquire missile systems from its northern neighbor in 2021.

The United States has already used secondary sanctions to deter those who feed their enemies. Nations whose companies have defied export bans on Iran, for example, have found themselves stuck.

Indian banks are the most likely target for secondary sanctions if New Delhi is seen as too close to Putin. But Washington could also restrict India’s access to H-1B visas – the permits that allow skilled workers in short supply in the United States to take jobs. H-1B visas are popular with Indian technicians and are also controversial as Indian service companies are accused of using to bring in the lowest paid workers from home rather than paying market rates to US residents.

We live in uncomfortably interesting times. ®