Trade Law

On December 23, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Final Rule amending the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR) to expand the scope of permissible exports/re-exports of medicine, medical devices and agricultural commodities to Iran. 

On October 7, 2016, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) published new guidance clarifying (a) circumstances under which non-U.S. financial institutions (FFIs) may engage in U.S. dollar transactions involving Iran; (b) when residual “secondary” U.S. sanctions on Iran can affect transactions involving affiliates of Iranian Specially Designated National (SDNs); and (c) U.S. government expectations for conduct of compliance screening and due diligence in Iran-related transactions otherwise permissible under U.S. sanctions relief implemented pursuant to the Joint Comprehensive Plan of Action (JCPOA or “the Agreement”) in January 2016.

On July 29, 2016, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) issued a new General License J (GL-J). GL-J authorizes the reexportation of certain civil aircraft on temporary sojourn to Iran, as well as related transactions involving the reexportation of spare parts, components and technology to Iran. GL-J therefore provides long-needed authorization for commercial passenger and cargo airline operators to fly into and out of Iran using aircraft subject to U.S. export controls. The authorizations contained in GL-J are subject to certain conditions, which are outlined below.

On March 24, 2016, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License I authorizing U.S. persons to undertake certain transactions ordinarily incident to the negotiation of, and entry into, contingent contracts for licensable activities under OFAC’s Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (SLP). OFAC also updated its FAQs on sanctions relief under the Joint Comprehensive Plan of Action (JCPOA or “Iran Nuclear Deal”) to address inquiries related to General License I and provide additional guidance on license applications pursuant to the SLP. These actions reflect ongoing OFAC efforts to implement sanctions relief under the Iran Nuclear Deal (see our January 19, 2016, and January 21, 2016, alerts for further details) and to account for business realities that companies encounter in securing sales of commercial passenger aircraft and related parts and services in the Iranian market.

On January 16, 2016, the International Atomic Energy Agency (IAEA) verified, and U.S. Secretary of State Kerry confirmed, that Iran had implemented its key nuclear-related measures described in the Joint Comprehensive Plan of Action (JCPOA or the “Agreement”). This event triggered “Implementation Day” under the Agreement, which commences the suspension and/or easing of UN, U.S. and EU nuclear-related sanctions.

On November 2, 2015, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) updated the List of Medical Supplies eligible for export or reexport to Iran under the general license set forth at Section 560.530(a)(3)(i) of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). The updated list includes more than 60 additional items that are now eligible for export under the general license. This development provides greater opportunities for businesses to engage in permissible sales of medical equipment to Iran and should reduce the number of specific license applications required of medical device exporters.

On July 14, 2015, Iran and the P5+1 countries (China, France, Germany, Russia, the United Kingdom and the United States), with the High Representative of the European Union for Foreign Affairs and Security Policy, finalized the Joint Comprehensive Plan of Action (JCPOA), a nuclear agreement that would grant Iran sanctions relief in exchange for implementing significant limitations on its nuclear program.

Under the agreement, Iran will be required to remove two-thirds of its uranium-enriching centrifuges and reduce its existing low-enriched uranium stockpiles by up to 98 percent, among other nuclear-related measures. President Obama emphasized Tuesday that the agreement, which is expected to freeze most of Iran’s nuclear efforts for a decade, is “not built on trust,” but “verification.” The International Atomic Energy Agency (IAEA) will monitor and verify Iran’s nuclear-related measures and inspect its facilities, including military sites. If any issues or disputes arise over Iran’s nuclear commitments, a joint commission, consisting of the P5+1 and Iran, will attempt to resolve the matter over a 30-day period. If unresolved after 30 days, the issue will be referred to the United Nations Security Council (UNSC), which will vote on whether to continue sanctions relief or re-impose sanctions on Iran.

In exchange, most European Union (EU) and U.N. sanctions against Iran will be lifted. The United States will generally remove sanctions that apply to non-U.S. persons. U.S. sanctions will continue to apply to non-U.S. entities owned or controlled by U.S. persons, but certain transactions by such entities may be licensed if they are consistent with the terms of the JCPOA. U.S. sanctions that apply to U.S. persons will largely remain in place, with the exception of a permissible licensing regime for the importation into the United States of Iranian carpets and foodstuff (including caviar and pistachios), and trade in civil aircraft and parts. In sum, Iran will still be subject to robust U.S. sanctions, but opportunities will exist for certain non-U.S., as well as U.S., companies in a limited number of industries.

As nuclear negotiations in Vienna reach the targeted June 30, 2015, deadline for an agreement, the P5+1, EU and Iran agreed today to extend the limited and temporary sanctions relief to Iran through July 7, 2015. The announcement comes as little surprise after this weekend, when Western and Iranian officials made numerous statements expressing intentions to continue negotiating outstanding issues past the June 30, 2015, expiration of the Joint Plan of Action (JPOA).

The extended sanctions relief will be limited to that provided in the JPOA entered into on November 24, 2013, which temporarily suspends sanctions related to, among other things, Iran’s purchase and sale of gold and other precious metals, Iran’s export of petrochemical products and crude oil, Iran’s automotive industry, safety of flight for Iranian civil aviation, and certain associated services related to these sanctioned goods and industries. In addition, the U.S. Department of Treasury, Office of Foreign Assets Control will extend through July 7, 2015, all specific licenses issued pursuant to its Second Amended Statement of Licensing Policy Related to the Safety of Iran’s civil aviation industry and expiring on June 30, 2015.