US Spending ‘a Lot of Time’ on Sanctions Enforcement, Treasury Official Says

The Treasury Department may be prioritizing enforcement of existing Russia sanctions rather than searching for new measures to impose, said Jay Shambaugh, Treasury’s undersecretary for international affairs. Shambaugh, speaking during an April 10 event hosted by the Brookings Institution, also said industry should expect the Biden administration to continue imposing national security-related trade restrictions on China.

Shambaugh said Treasury is focused on improving its sanctions enforcement, which will help prevent “leakage” within its Russia sanctions regime, an issue “very much front and center in Treasury's minds.” He said the administration is speaking regularly with allies about ways they can curtail Russian sanctions evasion tactics and make enforcement “as good as it can be.”

“If you want to keep making the sanctions more effective, that doesn't necessarily mean adding new sanctions,” he said. “Sometimes the marginal sanction you would add is less important than tightening the way you're actually applying one of the big ones you did first.” Shambaugh said Treasury is “spending a lot of time thinking about and trying to make sure” the U.S. is “constantly evolving the way we enforce the sanctions to make sure there isn't leakage.”

Treasury in March said it planned to place a significant focus this year on targeting Russian sanctions evasion networks (see 2303030018). “It is the history of sanctions that they can become more leaky over time,” Shambaugh said. “And our goal is to defy that history.”

He also said U.S. companies shouldn’t expect the Biden administration to shift its policies anytime soon on the more sensitive trade restrictions against China, including export controls. “On the ones that are national security-related, I wouldn't anticipate that.” But he did say it’s important for the Biden administration to better communicate with China the reasons why it’s imposing the export measures and other restrictions so both sides are clear that “those aren't economic measures aimed at economic competitiveness.”

“They're not things we're doing to benefit the U.S. economically vis-a-vis China there,” Shambaugh said, adding that the U.S. isn’t looking to “limit China's growth in any way.” The U.S. at times needs “to take targeted national security-related actions, and we’ll always stand up to unfair economic practices. But there's plenty of scope for an economic relationship that benefits both of us.”

He also said the U.S. wants those trade restrictions to be “narrowly targeted” and accompanied by direct dialogue with China. “I think an essential thing there becomes trying to make sure we're able to communicate to our Chinese counterparts why we're doing what we're doing" and "that they can communicate back if they see consequences that are unintended.”