USA imposes sanctions on the Chinese entity Equipment Development Department

The United States of America (USA) has imposed sanctions on the Chinese entity Equipment Development Department (EDD) and its Director, Li Shangfu, for engaging in significant transactions with Russian companies and persons who are on the List of Specified Persons (LSP) under Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA).

As per the details shared by U.S Department of State, these transactions involved Russia's transfer to China of Su-35 combat aircraft and S-400 surface-to-air missile system-related equipment.

Giving details on the action initiated against EDD, the US State Department said: "The Secretary of State, in consultation with the Secretary of the Treasury, determined that EDD, formerly known as the General Armaments Department (GAD), knowingly engaged in significant transactions with a person that is a part of, or operates for or on behalf of, the defence sector of the Government of the Russian Federation. China took delivery from Russia of ten Su-35 combat aircraft in December 2017 and an initial batch of S-400 (a.k.a. SA-21) surface-to-air missile system-related equipment in 2018. Both transactions resulted from pre-August 2, 2017, deals negotiated between EDD and Rosoboronexport (ROE), Russia's main arms export entity."

As part of these sanctions there will be a denial of export licenses, a prohibition on foreign exchange transactions under United States jurisdiction, a prohibition on transactions with the United States financial system, blocking of all property and interests in property within United States jurisdiction and the imposition of sanctions on an EDD principal executive officer, its Director Li Shangfu, which include a prohibition on foreign exchange transactions under US jurisdiction, a prohibition on transactions with the US financial system, blocking of all property and interests in property within US jurisdiction, and a visa ban.

The step, as per US Department of State, has been taken to further impose costs on the Russian Government for its malign activities.

The Secretary of State has also added 33 additional persons to the CAATSA Section 231 List of Specified Persons (LSP) informing about which the press release states, "A person is either an entity or an individual and is added to the list for being a part of, or operating for or on behalf of, the defense or intelligence sectors of the Government of the Russian Federation. This action increases the number of persons identified on the LSP to 72. Any person who knowingly engages in a significant transaction with any of these persons is subject to mandatory sanctions under CAATSA section 231."

The move follows the President of America Donald Trump's new Executive Order "Authorizing the Implementation of Certain Sanctions Set Forth in the Countering Americas Adversaries Through Sanctions Act" to further the implementation of certain sanctions in the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA) with respect to the Russian Federation.

Elaborating further on these decisions, the US Department of State has also clarified that these actions are not intended to undermine the military capabilities or combat readiness of any country.

It said: "Section 231 of CAATSA and today's actions are not intended to undermine the military capabilities or combat readiness of any country, but rather to impose costs on Russia in response to its interference in the United States election process, its unacceptable behaviour in eastern Ukraine, and other malign activities. Today's actions further demonstrate the Department of State's continuing commitment to fully implement CAATSA section 231, which has already deterred billions of dollars worth of potential arms exports from Russia. The state encourages all persons to avoid engaging in transactions with entities on the LSP that may risk sanctions, including high-value, major transactions for sophisticated weapons systems."

CAATSA Section 231 requires that at least five of the twelve sanctions described in CAATSA section 235 be imposed on a person who knowingly engaged in a significant transaction with a person that is a part of, or operates for or on behalf of, the defence or intelligence sectors of the Russian Government.