The European Union is set to approve banning the sale to Russia of luxury goods worth more than €300, as well as the purchase of many Russian steel and iron products as part of a fourth round of sanctions over the invasion of Ukraine, according to a draft obtained by Bloomberg.
EU diplomats on Monday teed up the stricter measures, which also include a ban on new investments in Russian energy projects, after several days of closed-door debate. They could be formally adopted as early as Tuesday morning.
The bloc is banning the sale of luxury cars, boats and planes valued at more than €50,000, which would apply to models from several European car brands, including Audi, BMW, Mercedes, Ferrari and Porsche. It also covers motorcycles worth more than €5,000, as well as parts and accessories. Many European carmakers have already voluntarily suspended sales to Russia.
The new sanctions package does include some exemptions, particularly related to energy. For example, it won’t ban transactions needed for purchasing or transporting Russian fossil fuels. It also exempts titanium, aluminium, copper, nickel, palladium and iron ore from the restrictions.
While most finished Russian steel products are included in the sanctions, precursors such as slabs and billets aren’t. Many EU mills rely on Russia’s exports for those materials, and would struggle to replace them if the country’s supplies were restricted.
Steel imports
Still, the measures will serve to further tighten the EU steel market, which is already suffering from the loss of Ukrainian shipments. Russia provides about a fifth of the bloc’s steel imports.
When it comes to luxury goods, the ban applies to the sale of certain products with a value of more than €300 per item to anyone in Russia or for use in Russia. The list of restricted items includes caviar, truffles, beer, champagne, cigars, perfumes, handbags, leather and fur apparel, overcoats, suits, shoes, shirts and other assorted clothing items, pearls, diamonds, gold and precious stones.
The level at which to set the threshold was the subject of much debate among member states, with lobby groups pushing several governments to agree on high values, separate documents seen by Bloomberg show. The catch-all €300 threshold means that some of the categories will be mostly unscathed by the ban.
As with earlier trade penalties imposed on Russia, existing contracts are shielded from some of the measures included in this package, with the implementation dates delayed by several months.
Some of the moves carry more symbolic weight than economic bite. For example, Russia represents about 2 per cent of global sales for Europe’s major luxury vehicle brands, and robust global demand could compensate for lower exports to Russia, according to Bloomberg Intelligence.
Mercedes, BMW, Porsche and Audi parent Volkswagen AG already announced stops on exports to Russia earlier this month.
– Bloomberg
