OFAC Sanctions
Because of Sudan’s role in international terrorism and support for Osama bin Laden, since 1997, the United States has maintained a comprehensive embargo against Sudan which prohibited virtually all trade between the United States and Sudan. These sanctions are contained in the Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (the SSR), and executive orders (E.O.) 13067 and 13412.
On January 13, 2017, just prior to leaving office, President Obama issued E.O. 13761 and a general license that temporarily suspended a number of sanctions against Sudan including prohibitions on transactions with certain designated persons and entities (the 2017 Sudan Rule). The temporary revocation of these sanctions was to become permanent on July 12, 2017 if Sudan had carried out certain actions to cease hostilities within Sudan, improve access to humanitarian aid, and cooperate with the United States to address regional conflicts and the threat of terrorism. On July 11, 2017, President Trump extended the review period to October 12, 2017 to allow his administration time to assess the actions taken by the Sudanese government.
The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) has stated that it expects to remove the SSR to end the comprehensive trade embargo against Sudan. As a result, U.S. persons will be able to engage in most trade with Sudan, including the government of Sudan and persons and entities previously blocked under E.O. 13067 and 13412. Sanctions against South Sudan will remain in place as will sanctions in response to the situation in Darfur. Persons designated under executive orders other than E.O. 13067 and 13412 will also remain designated. Although the SSR will be revoked, OFAC will still have authority to seek enforcement actions for violations of the SSR prior to the revocation.2
New General License A
OFAC has issued a new general license, General License A,3 to account for the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), which remains in place. Under TSRA, an OFAC license is required for exports and reexports to Sudan of agricultural commodities, medicine, and medical devices since Sudan will continue to remain on the State Sponsors of Terrorism List. These exports will now be authorized, however, under the new General License A.
BIS Export Controls
U.S. and non-U.S. persons will still be required to comply with export and reexport controls administered by the U.S. Department of Commerce, Bureau of Industry and Security (BIS). BIS administers controls on the export and reexport to Sudan of certain goods, software, and technology listed on the Commerce Control List (CCL). Therefore, despite the lifting of sanctions, companies should ensure they are in compliance with all export requirements and have any necessary BIS licenses for exports and reexports to Sudan. All items on the CCL will continue to be restricted for export/reexport and require an export license unless they qualify for a license exception, as Sudan remains listed as an E:1 “terrorist supporting” country under the BIS-administered Export Administration Regulations (EAR). Where EAR99 items are destined for prohibited end-users or end-uses, such as for the Sudanese military, a license is required and applications generally will be denied. For items destined for non-military end-users or telecommunications purposes, BIS provides “case-by-case” review. License applications for items only controlled for anti-terrorism reasons and for the safety of civil aircraft or railway in Sudan are subject to a general policy of approval.
EU Sanctions
The EU position regarding Sudan and South Sudan remains the same4 as it has been since 2014 and 2015 respectively. That is, the EU currently maintains:
- an embargo on arms and related materiel;
- a ban on the provision of certain services;
- restrictions on admission in respect of certain persons; and
- a freezing of funds and economic resources in respect of a limited list of persons.
Although the U.S. position has significantly changed (as described above) to remove the vast majority of its sanctions against Sudan, it cannot be said that the U.S. and EU positions are the same. As a result, it remains necessary to keep in mind the differences between the regimes when assessing the propriety of transactions involving both Sudan and South Sudan.
- See reedsmith.com.
- See OFAC FAQ, treasury.gov (last visited Oct. 6, 2017).
- See treasury.gov (last visited Oct. 6, 2017).
- In the case of both, there were amendments to deal with certain details relating to designated persons.
Client Alert 2017-238
