Russia and Belarus Sanctions

• The closure of Tver and/or Uzhgorod would create a potential loss of revenue for the divestiture / liquidation, and added costs of potential relocation of staff, manufacturing lines / equipment / capital assets. In addition, Jabil would be exposed to costs associated with legal and environmental risks as well as geopolitical barriers to exit / business liquidation requirements in Russia and Ukraine.
• Fixed Costs may be eliminated at those sites; however, variable costs of labor may change according to region where operations are relocated.
• Depending on industries of business partners in Russia, US export regulations may not allow acceptance of accounts receivables. Payment of outstanding debt may also be blocked which will be a negative impact to an otherwise amicable business relationship.
• Sale of assets, if allowed, may only be allowed to go to certain entities.
• Failure to liquidate business / assets according to US and local regulations will expose Jabil to fines, penalties, and potential loss of export privileges in the US.

 

Penalties

Imports

• Penalty for gross negligence is a minimum of 2.5 times to a maximum of 4 times the total duty loss, or 25% to 40% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise.

Exports

• Criminal penalties can include up to 20 years of imprisonment and up to $1 million in fines per violation, or both.
• Administrative monetary penalties can reach up to $300,000 per violation or twice the value of the transaction, whichever is greater.
• Jabil may also be subject to the denial of their export privileges.

 

US Ban on the import of Xinjiang Origin Goods

• If Jabil imports items from the Uyghur Region and does not properly provide CBP with documentation substantiating items were not obtained / manufactured using forced labor, the shipment will be seized and destroyed. In addition, Jabil will be penalized for gross negligence and failure to exercise reasonable care.
• Penalty for gross negligence is a minimum of 2.5 times to a maximum of 4 times the total duty loss, or 25% to 40% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise.      
• In addition, Jabil will be exposed to risk of CBP audit and associated legal / financial obligations of any potential findings.

 

Impact Analysis

Russia and Belarus Sanctions

Jabil may not import or export any of the below specified items.

• Imports into the US:
  • The following are banned for import into the US.
  • Any materials originating from the Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) territories in Ukraine.
  • Any Russian origin crude oil, petroleum, petroleum fuels, oils, and products of their distillation, liquefied natural gas, coal, and coal products.
  • Any Russian origin fish, seafood, alcoholic beverages, non-industrial diamonds, and any other products of as determined by the US Secretary of the Treasury, State, and Commerce.
• US Exports, Re-Exports, and In-Country Transfers:
  • Bureau of Industry Security (BIS) placed an export license application requirement for the following items shipped from the US or foreign-made items using US technologies (Foreign Direct Product or FDR) to ship to Russia or Belarus. While the export license requirement is in place, it is important to note that BIS has also imposed a general policy of denial. This means that if Jabil applies for an export license to Russia or Belarus, it will be denied, and the shipment may not be fulfilled without violating US export legislation. The following items are forbidden to be shipped to Russia or Belarus:
    • All items on the Commerce Control List (CCL – ECCNs starting with 0, 1, 2, 3, 4, 5, 6, 7, 8, and 9).
    • Any item that is classified as EAR99 where the HTS Code / Schedule B number of the item does not appear in Supplement 4 to Part 746 of the EAR.
    • Any item manufactured outside of the US, but still using or relying on US technology (machines, software, designs, etc.).
    • Any luxury goods, and any other products of as determined by the US Secretary of the Treasury, State, and Commerce.
    • All items to Russia or Belarus “military end users” or for “military end users” except for food and medicine classified as EAR99 and where the HTS Code / Schedule B number of the item does not appear in Supplement 4 to Part 746 of the EAR.
    • Any items to the DNR or LNR territories in Ukraine.
• Jabil may not engage in any of the below-specified activities conducted from the US, directly or indirectly, or by a US person wherever located. However, the below activities may occur by a US person, if they are located within the Russian Federation:
  • Accounting Services – services related to the measurement, processing, and evaluation of financial data about economic entities. 
  • Trust and Corporate Formation Services – services related to assisting in forming or structuring trusts and corporations; acting as directors, secretaries, administrative trustees, trust fiduciaries, registered agents, or nominee shareholders of legal persons; providing a registered office, business address, correspondence address, or administrative address; and providing administrative services for trusts.
  • Management Consulting Services – services related to strategic business advice; organizational and systems planning, evaluation, and selection; development or evaluation of marketing programs or implementation; mergers, acquisitions, and organizational structure; staff augmentation and human resources policies and practices; and brand management.

 

Penalties

Imports

• Penalty for gross negligence is a minimum of 2.5 times to a maximum of 4 times the total duty loss, or 25% to 40% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise.

Exports

• Criminal penalties can include up to 20 years of imprisonment and up to $1 million in fines per violation, or both.
• Administrative monetary penalties can reach up to $300,000 per violation or twice the value of the transaction, whichever is greater.
• Jabil may also be subject to the denial of their export privileges. 

 

Section 301 Exclusion Reinstatement

• Jabil may claim Section 301 exclusion once it determines if products meet the specified criteria:
  • Product Must Originate from China
  • Product HTS Must Match Exclusion
  • Product Description, Function, Application, and Principal Use Must be Similar
• If product qualifies for the exclusion, Jabil must notify its broker partners of specified HTS / product numbers and Jabil’s commercial invoices must indicate an appropriate secondary HTS classification.
• Retroactively, Jabil may seek refunds for duties paid on entries retroactively to October 12, 2021, by filing post-summary corrections for unliquidated entries, or protests liquidated entries within 180 days of entry.

 

US Ban on the import of Xinjiang Origin Goods

If Jabil imports any materials from the region, it must provide clear and convincing evidence that the materials were not manufactured or obtained by forced labor such as:

• An affidavit from the manufacturer.
• Purchase orders, invoices, and proof of payment.
• A list of production steps and records for the imported merchandise.
• Transportation documents.
• Evidence regarding the importer’s anti-forced labor compliance program.
• If not, the materials will be seized, and Jabil will be fined. Penalty for gross negligence is a minimum of 2.5 times to a maximum of 4 times the total duty loss, or 25% to 40% of the dutiable value in non-revenue loss cases, but never to exceed the domestic value of the merchandise.
• Jabil will also be exposed to risk of CBP audit and associated legal/financial obligations of any potential findings.