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US exempts South Korean smartphones from Russia export bans

Whitegoods and cars also allowed to cross the border

South Korea's Ministry of Trade has revealed that after discussions with the US Department of Commerce, the nation that is home to Samsung is confident that smartphones are exempt from new bans on exporting technology to Russia.

Those bans were imposed in reaction to Russia's illegal invasion of Ukraine. Technology firms have quickly and willingly complied with their new responsibilities by ceasing exports to Russia. Some – notably Oracle and SAP – even went so far as to suspend their operations in Russia. Apple has also suspended all sales in Russia.

Tech exports are an important contributor to South Korea's economy – Samsung's global revenue across all of the sprawling group's businesses equates to around 17 per cent of the nation's GPD. And according to data from analyst firm IDC, Russia's smartphone market runs to between 35 and 40 million units a year, with Samsung holding 34 per cent of that.

The Ministry's note on smartphone export exemptions states that the US Commerce Department is happy for those phones to keep reaching Russia – even if they're made at Samsung plants outside Korea – provided they're not sold to military buyers.

Whitegoods, another big Korean export, are subject to the same rules. So are cars.

Evading sanctions by acquiring kit through front companies is not an advanced manoeuvre: it is therefore entirely conceivable that Russian troops will enjoy uniforms tumbled in LG's new software-defined clothes dryer and discuss that appliance on a Samsung Galaxy S22 – while riding in a Hyundai.

While South Korean industry has reason to feel relieved about export exemptions, Indian firms are nervous that the US could hit them with secondary sanctions. India has called for an end to violence in Ukraine but abstained from a United Nations 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 US has previously used secondary sanctions to deter those who nourish its foes. Nations whose businesses defied bans on exports to Iran, for instance, have found themselves squeezed.

Indian banks are the most likely target of any secondary sanctions if New Delhi is seen to be too much of a pal to Putin. But Washington could also crimp India's access to H-1B visas – the permits that allow skilled workers in short supply stateside to take jobs in. H-1B visas are prized by Indian techies, and are also controversial as Indian services companies are accused of using them to bring lower-paid workers from home rather than paying American residents market rates.

We live in uncomfortably interesting times. ®

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