On October 12, 2017, the United States lifted its general commercial embargo on Sudan. Because Sudan has played a role in international terrorism, the U.S. has maintained a comprehensive embargo against Sudan since 1997. These sanctions were contained in executive orders and the Sudanese Sanctions Regulations (SSR).

Following a 16-month diplomatic effort, the United States removed sanctions that had prohibited U.S. persons from engaging in or facilitating most transactions that involved Sudan or its government. U.S. persons may now engage in most transactions without the need for a general or specific license from the Office of Foreign Assets Control (OFAC).

On January 17, 2017, the U.S. temporarily lifted sanctions with respect to Sudan and its government. OFAC issued a general license that temporarily authorized transactions prohibited by the SSR, which was contingent on the U.S. government’s determination regarding Sudan’s developments in key areas. Earlier this month, the Secretary of State provided a determination to President Trump that the government of Sudan has made positive development in the cessation of hostilities in conflict areas, improving humanitarian access throughout Sudan, and addressing regional conflicts and threats of terrorism.

Effective October 12, 2017, the temporary general license is no longer operable and OFAC authorization is not required for proposed transactions that were previously prohibited by the SSR, unless the proposed transaction implicates the Darfur Sanctions Regulations or other OFAC-administered sanctions regulations.

While most sanctions were lifted, significant restrictions remain in place for those seeking to trade with Sudan, primarily with respect to export controls and individuals and entities listed on the Specially Designated Nationals List (SDN List). OFAC sanctions related to the conflict in Darfur still remain in place, and the revocation does not affect OFAC’s designations of any Sudanese persons pursuant to other sanctions authorities.

Additionally, this does not impact Sudan’s status as a state sponsor of terrorism. Pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), an OFAC license is still required for certain exports and reexports to Sudan of agricultural commodities, medicine, and medical devices as a result of Sudan’s inclusion on the State Sponsors of Terrorism List (SST List).

General License A, which went into effect on October 12, 2017, authorizes exports and reexports of certain TSRA items to Sudan. General License A is available for review here. General License A replaces the need for any existing general or specific licenses currently issued to authorize conduct that was otherwise prohibited under the Sudan sanctions program.

U.S. persons are still required to comply with the export and reexport controls of the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce, Bureau of Industry and Security (BIS). These requirements include restrictions that are maintained as a consequence of Sudan’s inclusion on the SST List and apply to certain exports and reexports of items on the Commerce Control List. BIS also maintains end-use and end-user controls on the export and reexport to Sudan of EAR99 items by U.S. persons and non-U.S. persons.

Despite lifting the general commercial embargo on Sudan, the sanctions revocation does not affect past, present or future OFAC enforcement actions related to violations of the SSR that occurred prior to January 17, 2017. Additionally, the revocation does not mean that sanctions cannot be quickly reimposed by the U.S.

 

On Wednesday, the U.S. Department of Commerce began its preliminary phase antidumping and countervailing duty investigations pursuant to the Tariff Act of 1930. The Department of Commerce is looking into whether the imports of stainless steel flanges from China and India, which are alleged to be sold in the U.S. at less than fair value and alleged to be subsidized by the Chinese and Indian governments, are materially injuring the U.S. industry.

The U.S. antidumping law imposes special tariffs to counteract imports that are sold in the U.S. at less than fair value. The U.S. countervailing duty law imposes special tariffs to counteract imports that are sold in the U.S. with the benefit of foreign government subsidies. For these duties to be imposed, the U.S. government must determine that there is material injury, or a threat of material injury, by reason of the dumped and/or subsidized imports.

The probe by the Department of Commerce comes after two privately held companies filed petitions. The two petitioners are the individual members of the Coalition of American Flange Producers: Core Pipe Products, Inc. and Maass Flange Corporation. The petitioners alleged dumping margins in China ranging from 99.23% to 257.11%, and for India margins ranging from 78.49% to 145.25%.

The products covered by these investigations are certain forged stainless steel flanges, whether unfinished, semi-finished or finished. The term “stainless steel” refers to an alloy steel containing, by actual weight, 1.2% or less of carbon and 10.5% or more of chromium, with or without other elements.

It is the job of the Department of Commerce to determine whether the alleged dumping or subsidizing is occurring, and if so, the margin of dumping or the amount of the subsidy. The United States International Trade Commission (“USITC”) will determine whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation. If both the Department of Commerce and the USITC reach affirmative final determinations, then the Department of Commerce will issue an antidumping or a countervailing duty order to offset the subsidy.

The USITC is scheduled to make its preliminary determination regarding the injury on or before October 2, 2017. If the USITC determines that there is injury, the investigations will continue, and the Department of Commerce will makes its preliminary countervailing duty determination in November 2017, and its antidumping determination in January 2018, though these dates may be extended.

The results of the investigation could impact both importers and purchasers. Importers will be liable for any potential duties that are imposed by the U.S. government. Purchases could be impacted because the determination could result in increased prices and/or decreased supply of stainless steel flanges.

Co-Author, Santos Ramos

On June 16, 2017, President Trump announced changes to United States’ Cuban sanctions regime which will stem the tide of liberalization that Obama Administration set in motion 2014. While the regulatory changes have not yet taken effect, the Department of Treasury’s Office of Foreign Assets Control (OFAC) released updated its online resources to reflect the Trump Administration’s forthcoming changes.  Most notably, under the announced changes, individual “people-to-people” travel will no longer be permitted and any trade or business ventures involving Cuba’s military, intelligence and security services is strictly prohibited.

Travel

Trump Administration’s new Cuban travel policies crack down on the potential for individual ‘vacation’ travel to Cuba. Under the Obama Administration’s reforms to the Cuban sanctions, individuals could travel to Cuba as long as they affirmed that they were engaged in permitted activities, such as educational and artistic study, news reporting, or other endeavors designed to promote and aid the Cuban people.  Under the newly announced changes, individuals will no longer be able to travel to Cuba on their own for “people-to-people travel” (i.e., educational travel that does not involve any academic study towards the pursuit of a degree and is not under the auspices of an organization). Group people-to-people travel will still be permitted as long as the group is led by a U.S.-based organization and maintains a full-time schedule of educational or other permitted activities. Unfortunately for those who may have already booked their tickets to Havana, the new regulation will not be prospective, meaning that any travel that does not conform with the new regulations (even if previously planned) will be prohibited.

Trade and Business

Companies seeking to do business in Cuba will also have to navigate stricter regulations. While trade and business ventures with the Cuban government remained restricted under the Obama Administration’s revised sanctions, the new rules will more clearly delineate entities which are associated with Cuban military conglomerate Grupo de Administración Empresarial SA (GAESA). GAESA, which is comprised of Cuban military, intelligence, and security services, has an extensive web of subsidiaries and ownership interests which some estimate touch as much as 60 percent of the Cuban economy. OFAC and Department of Commerce, Bureau of Industry and Security (BIS) will publish an extensive list of prohibited entities when the new regulations are completed. The new trade policy will be prospective, however, meaning that any contracts and licenses executed and issued prior to effective date of the new regulations will not be terminated.

What Should U.S. Companies Do?

U.S. companies which have already entered into contracts with a GAESA-related companies will be able to continue operating without any change. Any U.S. company seeking to begin or expand business in Cuba after the new policy takes effect, however, must heed the warning that any transaction with GAESA-related entities is prohibited. Moreover, while OFAC and BIS will strive to produce a comprehensive list of GAESA-related entities, it may prove to be a difficult and ever-evolving challenge.  Accordingly, despite any published list of entities, it will almost certainly remain the responsibility – and potential liability – of U.S. companies to know with whom they are conducting business. In addition, U.S. companies must be vigilant about any renewals of contracts or licenses with GAESA-related entities, as there has been little guidance as to whether renewing an existing contract will be considered continued operation or a new, prohibited engagement.

Last week the Trump administration announced new Iran-related sanctions imposed against 18 Iranian entities and individuals. The sanctions are the administration’s response to Iran’s ballistic missile program and destabilizing actions in the region.

The actions of the administration were taken pursuant to Executive Order (E.O.) 13382, which targets proliferators of weapons of mass destruction and their means of delivery by freezing the assets of those proliferators, as well as E.O. 13581, which blocks the property of transnational criminal organizations.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed sanctions on individuals and entities for their support of the Iranian military and the Islamic Revolutionary Guard Corps, and for engaging in international hacking efforts. The U.S. Department of State placed sanctions on entities for their involvement in ballistic missile research and development for the Iranian government.

These sanctions were announced only a day after the Trump administration recertified Iran’s compliance with the Joint Comprehensive Plan of Action (JCPOA). The JCPOA is a 2015 nuclear deal that was agreed to by the P5+1 (China, France, Germany, Russia, the United Kingdom, and the U.S.), the European Union (EU), and Iran, to ensure a peaceful nuclear program in Iran. The JCPOA offers Iran sanctions relief if it continues to curb its nuclear program and follow the timeline of requirements set forth in the JCPOA.

The JCPOA states that its participants anticipate that the “full implementation of this JCPOA will positively contribute to regional and international peace and security.” However, the U.S. believes that the other actions taken by Iran undermine the positive contributions and goals of the JCPOA to bring about peace and security in the Middle East.

These new sanctions mean that Americans are prevented from doing business with these newly sanctioned entities and individuals. It also means that any assets these entities and individuals have in the U.S. will be frozen.

In a press release issued in connection with the announcement of the sanctions, the State Department also called upon Iran to release Baquer Namazi, Siamak Namazi, and Xiyue Wang, all of whom are U.S. citizens detained by Iran.

Despite the announcement of the new sanctions, the U.S. is still committed to complying with its commitments under the JCPOA, and Iran will continue to receive the same sanctions relief it received under former President Obama.

On Thursday, the Senate passed legislation to impose additional sanctions on Russia. The bill passed by an overwhelming majority, 98-2, with only Senator Rand Paul and Senator Bernie Sanders voting against it.

In addition to the Russian sanctions, Iran sanctions, and the requirement that Congress review any effort by the Trump administration to loosen sanctions against Russia, the bill also includes a reassertion of the United States’ commitment to the North Atlantic Treaty Organization’s Article 5 charter provision that states that an attack on one member of NATO is considered an attack on all members.

The bill will now go to the House of Representatives, where the fate of the bill is less certain. Although the White House has signaled that it wants to improve relations with Russia, it has not yet said whether President Trump would sign the bill into law.

 

Copyright: alexkich / 123RF Stock Photo

On Monday, U.S. senators reached an agreement regarding imposing new sanctions against Russia. The agreement will be filed as an amendment to a larger Iran sanctions bill that is nearing passage in the Senate.

The sanctions are meant to punish Russia for several Russian actions. The sanctions will punish Russia for the alleged meddling in the U.S. 2016 presidential election, its annexation of Ukraine’s Crimea region, and its support of, and supplying weapons to, the government of Syria.

The new measure will also codify existing sanctions and place new economic restrictions on Russia. It will allow new sanctions on Russian mining, metals, shipping and railway industries.

The proposed legislation is backed by both Republicans and Democrats, and it is expected to pass the Senate. It could come to a vote as early as later this week. To pass into law, the legislation will also need to be approved by the House of Representatives and be signed into law by President Donald Trump.

In a statement released late Monday, top Republican and Democratic senators on the Foreign Relations Committee and the Committee on Banking, Housing and Urban Affairs said the agreement would “provide for a mandated congressional review” if the White House sought to ease penalties against Russia unilaterally.

Last week, the D.C. Circuit affirmed the U.S. Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) wide latitude to impose Iran sanctions, but it set aside a $4.07 million penalty against car accessory seller Epsilon Electronics (“Epsilon”). The D.C. Circuit found that the agency cut too many corners in its investigation of Epsilon.

In July 2014, OFAC imposed the $4.07 million penalty on Epsilon, alleging that a series of shipments in 2012 by the company to Asra International Corporation, LLC in Dubai, United Arab Emirates (“Dubai Asra”) were destined for end-use in Iran. Sending products to Iran would violate the Iranian Transactions and Regulations. OFAC is authorized to impose civil penalties against individuals or entities who export to a third party who it has reason to know intends to send those goods to Iran.

The case dealt with the initial question of whether OFAC must prove that the goods ended up in Iran in order to hold the company liable for the breach of U.S. sanctions. The court determined that OFAC had enough evidence to support a finding that the first 34 shipments from Epsilon to Dubai Asra violated the sanctions. However, for the final five shipments, the court found that OFAC failed to explain why it discounted certain evidence and why the conclusion about the first 34 shipments applied to the last five, in light of the countervailing evidence presented. The evidence included several email exchanges between Epsilon’s sales team and Dubai Asra’s manager that indicated that the last five shipment were intended for a Dubai retail store and not Iran.

The U.S. Court of Appeals for the D.C. Circuit remanded the case to the district court, with instructions to remand the matter to OFAC for further consideration of the alleged 2012 violations relating to the final five shipments, and calculation of the total monetary penalty imposed for all liability findings. While the court found that the government does not need to show that the goods actually ended up in Iran, the court did conclude that OFAC did not adequately explain its determination that Epsilon had reason to know that the goods would end up in Iran. Because OFAC failed to justify its conclusion that Epsilon should be held liable for the last five shipments as well as the first 34, the final liability determinations were deemed capricious and arbitrary.

The decision establishes key precedents related to trade compliance. The case shows that OFAC does not need to prove that the goods actually reached the sanctioned country in order to impose penalties. Additionally, the case shows that agency enforcement actions from OFAC can be subject to judicial review. This could lead to enhanced transparency between violators and the government imposing sanctions. For more information about the case, read the opinion here.

On Monday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) leveled one of the largest sanctions actions in OFAC’s history. OFAC sanctioned 271 employees of Syria’s Scientific Studies and Research Center (“SSRC”).

According to OFAC, the SSRC is responsible for developing chemical weapons that were used against civilians by Syrian government forces earlier this month in Khan Sheikhoun, Syria. OFAC has stated that these 271 designated individuals are scientists who have expertise in chemistry and related scientific disciplines and have supported the SSRC program since at least 2012. OFAC has stated that these individuals are working on developing chemical weapons for Syrian President Bashar Assad.

Because of the sanctions, U.S. persons are now generally prohibited from conducting business with these designated individuals. Any property or interest in property of the 271 individuals in the possession or control of U.S. persons or within the United States must be blocked. Additionally, U.S. banks have been ordered to freeze the assets of any employees that have been named.

The sanctions more than double the number of individuals and entities sanctioned by the United States pursuant to Syria-related Executive Orders.  These sanctions are intended to hold the Assad regime and those who support it accountable for the regime’s violations of the Chemical Weapons Convention and UN Security Council Resolution 2118.

 

On April 20, 2017 the Department of Treasury’s Office of Foreign Assets Control (OFAC) offered new guidance for individuals and entities (and their counsel) who seek to have their names removed from OFAC’s list of Specially Designated Nationals (SDN).

The guidance comes in the form of updates to OFAC’s Frequently Asked Questions and sets forth the procedures for petitioning for removal from the SDN list.  The petition itself appears quite simple.  In fact, the only requirements are that it include: (1) the name and contact information of the SDN; (2) the date of the relevant OFAC listing action; and (3) a “detailed description” of the reasons that individual or entity should be removed from the SDN list. Parties may also submit additional evidence or argument as to why the SDN designation is not appropriate.

While OFAC notes that all petitions are unique, OFAC announces a goal to send its first questionnaire within 90 days of receiving a petition.  The time a party takes to respond to the questionnaire (and any subsequent questionnaires) can, of course, significantly draw out the overall petition process.

Although individuals may submit their own petitions, hiring proper counsel is likely a wise decision.  Not only can knowledgeable counsel navigate the grounds on which OFAC is likely to remove a person from the SDN list (i.e., positive change in behavior, change in the basis for the designation, mistaken identity, or death), counsel can help ensure that information disclosures will comport with OFAC’s expectations (ideally limiting the number of follow-up questionnaires).

Counsel should be cautioned not to run afoul of OFAC’s sanctions regimes while representing an SDN.  Although there are general licenses under most of OFAC’s sanctions regimes permitting legal services to aid a person in contesting SDN status, restrictions on the origin of payments may complicate matters.

New clarity on the path off of the sanctions black list is encouraging evidence of OFAC’s commitment to ensuring that the SDN list encourages good behavior and is not a heavy-handed punishment.  While the reality of the petition process may not be as simple as the FAQ suggests, clear guidelines are a great aid to targeted individuals and their counsel.

Today the Office of Foreign Assets Control (“OFAC”) updated its Specially Designated Nationals List (“SDN List”). OFAC frequently updates the SDN List to add or remove names as necessary and appropriate.

The SDN List is a list published by OFAC that includes the names of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.

OFAC implements and imposes sanctions against those companies and individuals on the SDN List. Any US citizen, permanent resident alien, entity organized under the laws of the United States (including foreign branches), or any person (i.e., individual or entity) in the United States (collectively, “U.S. persons”) are generally prohibited from dealing with these companies and individuals, including transactions involving commerce, business, trade or finance. U.S. persons must block any property in their possession or under their control in which a company or individual on the SDN List has an interest.

When doing business with a foreign company or individual, it is important to access the SDN List to ensure that transactions with that foreign party are permissible. U.S. persons are expected to exercise due diligence in determining whether any such persons are involved in a proposed transaction. A failure to review the most up-to-date SDN List and review current sanctions can lead to serious consequences.

For more information on OFAC’s update and to review those added to the SDN List, please visit this page.  To review the current SDN List, click here.