Archive for the ‘JCPOA’ Category

BIS Amends EAR, Eases Restrictions on Exports to India

2018/08/30

Effective August 3, 2018 the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to formally recognize and implement India as a new member of the Wassenaar Arrangement as well as move India from Country Group A:6 to A:5. This rule follows a series of rules with the intention of furthering reforms agreed upon by the United States and India to promote global nonproliferation, expand high technology cooperation and trade, and ultimately facilitate India’s full membership in the four multilateral export control regimes (Nuclear Suppliers Group, MTCR, WA, and AG).

Specific EAR Amendments Recognizing and Implementing India’s Membership in Wassenaar and Adding India to Country Group A:5

  • PART 738 – BIS amends Supplement No. 1 to Part 738, Commerce Country Chart, by removing the license requirements for National Security Column 2 (NS2) reasons. Accordingly, this rule removes the “X” in NS Column 2 for India.
  • PART 740 – BIS amends Supplement No. 1 to Part 740 to add India to Country Groups A:1 and A:5.

CONFORMING AMENDMENTS

  • PART 738 – Consistent with India’s new multilateral export control regime status, this rule also removes the first sentence of footnote 7 to the Commerce Country Chart in Supplement No. 1 to Part 738, related to India. This amendment removes the requirement that exporters file in the Automated Export System when items controlled for Crime Control Columns 1 and 3 reasons, and Regional Stability Column 2 reasons were destined to India. As a conforming change, this rule removes the word “Also” from the second sentence of footnote 7 and capitalizes the “n” in “note” since it begins the sentence.

– Also, as a conforming change in Part 738, BIS amends paragraph (b)(3) of §738.4, related to a sample analysis using the Commerce Control List and Country Chart to determine when a license is required, to remove the name “India” and replace it with the name “Chad.” The sample analysis used India as an example of a country with NS Column 2 controls. That reason for control no longer applies to India but currently applies to Chad.

  • PART 740 – In adding India to Country Group A:5, BIS removes India from Country Group A:6 to avoid creating conflicting eligibility criteria for STA provisions.
  • PART 743 – As a member of Wassenaar, India now is subject to reporting requirements for items controlled under Wassenaar, as set forth in Part 743, Special Reporting and Notification. Specifically, India is added, in alphabetical order, to Supplement No. 1 to Part 743, Wassenaar Arrangement Participating States.
  • PART 758 – Consistent with India’s achievements and status as a Major Defense Partner, BIS removes the requirement that exporters file certain Electronic Export Information in AES as set forth in §758.1(b)(9). Specifically, this removes the requirement that exporters file in AES when items controlled for CC Columns 1 and 3 reasons and RS Column 2 reasons are destined to India. This reporting requirement had been instituted when the license requirement for such items was removed (see U.S.-India Bilateral Understanding: Additional Revisions to the U.S. Export and Reexport Controls Under the Export Administration Regulations; January 23, 2015; 80 FR 3463). BIS has determined that this reporting requirement is no longer necessary.
  • PART 772 – In this rule, BIS also adds India, in alphabetical order, to the list of countries under the term Australia Group in §772.1, Definitions of terms as used in the Export Administration Regulations (EAR). This updates the definition consistent with formal recognition of India’s membership in the AG in a BIS final rule, entitled “Implementation of the February 2017 Australia Group (AG) Intersessional Decisions and June 2017 Plenary Understandings; Addition of India to the AG” (83 FR 13849, April 2, 2018)

Richard E. Ashooh, Assistant Secretary for Export Administration.

Source (Federal Register): https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16691.pdf


President Trump Re-Imposes First Wave of Sanctions Against Iran and EU Expands Blocking Regulation to Cover US Secondary Sanctions Legislation on Iran

2018/08/30

(Source: Arent Fox LLP, 8 Aug 2018.)

By: Kay C. Georgi, Esq., kay.georgi@arentfox.com, +1 202-857-6293; Marwa M. Hassoun, Esq., marwa.hassoun@arentfox.com, +1 213-443-7645; and Regan K. Alberda, Esq., regan.alberda@arentfox.com, +1 202-775-5771.  All of Arent Fox LLP.

The President issued an Executive Order on August 6, 2018, “Reimposing Certain Sanctions With Respect to Iran” (the New Iran EO), which re-imposes relevant provisions of five Iran sanctions EOs (EOs 13574, 13590, 13622, and 13645). Additionally, the New Iran EO implements provisions in two former EOs (EOs 13716 and 13628) and revokes those EOs.

Additionally, the New Iran EO implements provisions in two former EOs (EOs 13716 and 13628) and revokes those EOs.

August 6, 2018 marked the end of the 90-day wind-down period following the President’s decision to end the United States’ participation in the Joint Comprehensive Plan of Action (JCPOA). Effective August 7, 2018, the US government can re-impose secondary sanctions that had been suspended under the Iran nuclear deal on persons who engage in specified transactions involving any of the following sectors/activities:

  • The purchase or acquisition of US dollar banknotes by the Government of Iran;
  • Iran’s trade in gold or precious metals;
  • The direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes;
  • Significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
  • The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
  • Iran’s automotive sector.

Following the end of the 90-day wind-down period on August 6, 2018, the US government is also revoking the below JCPOA-related authorizations under US primary sanctions regarding Iran:

  • The importation into the United States of Iranian-origin carpets and foodstuffs and certain related financial transactions pursuant to general licenses under the Iranian Transactions and Sanctions Regulations;
  • Activities undertaken pursuant to specific licenses issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (JCPOA SLP); and
  • Activities undertaken pursuant to General License I relating to contingent contracts for activities eligible for authorization under the JCPOA SLP.

The remaining secondary sanctions can be re-imposed on November 5, 2018, following the end of the 180-day wind down period on November 4, 2018, on persons who engage in specified transactions involving any of the following sectors/activities:

  • Iran’s port operators, and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines, South Shipping Line Iran, or their affiliates;
  • Petroleum-related transactions with, among others, the National Iranian Oil Company, Naftiran Intertrade Company, and National Iranian Tanker Company, including the purchase of petroleum, petroleum products, or petrochemical products from Iran;
  • Transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012;
  • The provision of specialized financial messaging services to the Central Bank of Iran and Iranian financial institutions described in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010;
  • The provision of underwriting services, insurance, or reinsurance; and
  • Iran’s energy sector, including a variety of separate specific activities related to the petroleum and petrochemical industries under the Iran Sanctions Act as amended.

Additionally, on or by November 5, 2018:

  • The US government will revoke the General License H wind-down authorization that had allowed US-owned or-controlled foreign entities to wind down certain activities with the Government of Iran or persons subject to the jurisdiction of the Government of Iran that were previously authorized by General License H; and
  • The US government can re-impose, as appropriate, the sanctions that applied to persons removed from the List of Specially Designated Nationals and Blocked Persons (SDN List) and/or other lists maintained by the U.S. government on January 16, 2016.

OFAC’s FAQs about the re-imposition of Iran sanctions can be found on OFAC’s website.

One question that OFAC answers in its updated FAQs (FAQ 601) is whether the New Iran EO expands the scope of sanctions that were in effect prior to January 16, 2016 (Implementation Day of the JCPOA), and the answer is:

  • Yes. The New Iran EO broadens the scope of the sanctions that were in effect prior to January 16, 2016 and provides for greater consistency in the administration of Iran-related sanctions provisions.

OFAC provides a list of added measures, but they are largely in the nature of tweaking the authorities for providing new blocking sanctions and slightly expanding the sanctions that can be imposed for activities involving petroleum and petrochemical sectors in Iran. More specifically, according to OFAC, the new Iran EO:

  • Provides new authority for: (i) blocking sanctions on persons who provide material support for, or goods and services in support of, persons blocked for various already existing sanction activities, such as being part of the energy, shipping, or shipbuilding sectors of Iran; (ii) correspondent and payable-through account sanctions on foreign financial institutions determined to have knowingly conducted or facilitated any significant financial transaction on behalf of the persons blocked under the new authorities;
  • Expands the menu of sanctions available to impose on persons determined to have engaged in certain significant transactions relating to petroleum, petroleum products, or petrochemicals from Iran by authorizing the imposition of:
    • Visa restrictions on corporate officers, principals, or controlling shareholders of a sanctioned person;
    • Additional sanctions on principal executive officers of a sanctioned person; and
    • Prohibitions on US persons investing in or purchasing significant amounts of equity or debt instruments of a sanctioned person.
  • Expands the prohibition on US-owned or -controlled foreign entities by prohibiting transactions with persons blocked for:
    • Providing material support for, or goods and services in support of, Iranian persons on the SDN List and certain other designated persons; or
    • Being part of the energy, shipping, or shipbuilding sectors of Iran or a port operator in Iran or knowingly providing significant support to certain other persons blocked or on the SDN List.

Since these last activities were already prohibited under Section 218 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and OFAC’s implementing regulations, it is unclear whether in fact this last is a true expansion or an adjustment of authority.

EU Reaction – Amendment of Blocking Regulation

As anticipated, the EU reacted by publishing, and thereby bringing into effect, an amendment to the Annex to Council Regulation No 2271/96 protecting against the effects of extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom.

The revised Annex increases the number of laws subject to the blocking regulations, including, notably:

  • The energy sanctions contained in the Iran Sanctions Act of 1996 as amended;
  • The Iran Freedom and Counter-Proliferation Act of 2012;
  • The National Defense Authorization Act for Fiscal Year 2012;
  • The Iran Threat Reduction and Syria Human Rights Act of 2012; and
  • The Iranian Transactions and Sanctions Regulations.

According to the guidance published by the EU, the Blocking Statute:

  • Prohibits EU operators from complying with the listed extra-territorial legislation, or any decision, ruling or award based thereon, given that the EU does not recognize its applicability to/effects towards EU operators (Article 5, paragraph 1);
  • Requires EU operators to inform the European Commission within 30 days of any events arising from listed extra-territorial legislation or actions based thereon or resulting thereof, that affect, directly or indirectly, their economic or financial interests;
  • Nullifies the effect in the EU of any foreign decision, including court rulings or arbitration awards, based on the listed extra-territorial legislation or the acts and provisions adopted pursuant to them (Article 4);
  • Allows EU operators to recover damages arising from the application of the listed extra-territorial legislation from the natural or legal persons or entities causing them (Article 6). Damages are defined as ‘any damages, including legal costs, caused by the application of the laws specified in its Annex or by actions based thereon or resulting therefrom’; and
  • Allows EU operators to request an authorization to comply with the listed extra-territorial legislation, if not doing so would cause serious harm to their interests or the interests of the EU (Article 5, paragraph 2).

The Blocking Regulation applies to the EU subsidiaries of US companies, thereby placing them in a potentially difficult position. Moreover, the EU Guidance specifically states that EU operators cannot, consistent with the EU Blocking Regulations, request licenses from the United States unless they request the European Commission to authorize them to apply for such a license. At the same time, the EU Guidance specifically notes that EU companies remain free to do or not to do business with Cuba and Iran, provided such business decisions are not forced on the EU companies by the listed US legislation.


Germany Launches Iran Advice Office Over U.S. Sanctions

2018/07/30

(Source: European Sanctions Blog, 19 June 2018.)

By:  Maya Lester, Esq., Brick Court Chambers, maya.lester@brickcourt.co.uk, +44 20 7379 3550.

In June the German government announced that it has created an “Iran contact point” to guide companies in their business transactions with Iran, given President Trump’s recent decision to reimpose US sanctions on Iran. The German government also stated that EU sanctions relief for Iran, one of the terms under the JCPOA, remained in place, and that government-backed export credit guarantees were still available.

Details: https://europeansanctions.com/2018/06/19/germany-launches-iran-advice-office-over-us-sanctions/


OFAC Revokes JCPOA-Related General Licenses, Amends Iranian Transactions and Sanctions Regulations, and Publishes Updated FAQ

2018/07/30

(Source: Treasury/OFAC, 27 Jun 2018.)

Several actions are being taken in furtherance of President Trump’s May 8, 2018 decision to withdraw from the JCPOA and begin re-imposing the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief, following a wind-down period. These actions include:

  • The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has revoked Iran-related General Licenses H and I, which were issued in connection with the Joint Comprehensive Plan of Action (JCPOA). Archival versions of General Licenses H and Iwill still be available on OFAC’s website to assist persons in determining which activities were not sanctionable or prohibited while those authorizations were in effect and how best to wind down such activity.
  • OFAC also amended the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR), in order to narrow the scope of the general licenses authorizing the importation into the United States of, and dealings in, Iranian-origin carpets and foodstuffs, as well as related letters of credit and brokering services, to the wind down of such activities through August 6, 2018 and to issue two new general licenses authorizing the wind down, through August 6, 2018, of transactions previously authorized under General License I, and the wind down, through November 4, 2018, of transactions previously authorized under General License H.  The amendment of the ITSR is now effective and published in the Federal Register.
  • OFAC has also updated Frequently Asked Questions (FAQs) 4.3, 4.4, and 4.5from its FAQs Regarding the Re-Imposition of Sanctions Pursuant to the May 8, 2018 NSPM Relating to the JCPOA.

Details: https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180627.aspx