In issuing the recent Executive Order, the United States announced that it will enforce the United Nations arms embargo beyond October 18, 2020, the date the embargo is scheduled to expire. Last month, the United Nations Security Council declined to extend the arms embargo beyond that date. The European participants of the JCPOA have since vowed not to cooperate with the United States in its efforts to reimpose the United Nations sanctions.
In conjunction with signing the Executive Order, the Trump Administration designated a number of individuals and entities. Some of these were targeted under Executive Order 13382, an existing authority, which authorizes the imposition of sanctions on proliferators of weapons of mass destruction, while others were targeted under the new Executive Order. Among the designations were an Iranian nuclear agency, the Ministry of Defense and Armed Logistics, entities engaged in ballistic missile activity, and a number of officials and subsidiaries of the Atomic Energy Organization of Iran, which was previously sanctioned in January of 2020. Venezuela’s president, Nicolas Maduro, who was already designated under the Venezuela sanctions program, was also sanctioned under the new Executive Order. Finally, five Iranian nuclear scientists were added to the Entity List, meaning a specific license from the U.S. Department of Commerce is required before any person sells or transfers goods subject to the Export Administration Regulations (which includes almost all U.S.-origin items) to them.
The Executive Order
Under the terms of the new Executive Order, those engaged in the following activities can be designated:
- Any person that “materially contributes” to the sale, supply, or transfer of arms to or from Iran, whether directly or indirectly. This includes transfers to military end-users in Iran as well as any transfers “for the … benefit of Iran."
- Any person that provides Iran with technical training, financial resources or services, advice, other services, or assistance related to the sale, manufacturing, or use of conventional arms.
- Any person that “materially contributes” to or is likely to materially contribute to, the proliferation of arms or arms-related material or items intended for military end-uses or military end-users.
Additionally, and as with nearly all of President Trump’s sanctions-related executive orders, non-U.S. persons may be designated if the U.S. government determines that they “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order.”
Comment
The U.S. decision to unilaterally enforce the arms embargo will make it more difficult for the Iranian military to find suppliers. The immediate impact on civilian global trade, however, is likely to be minimal. An important caveat is that suppliers of dual use goods, those that can be used for both military and civilian purposes, should consider taking additional steps to ensure that their goods are not transferred to military end-users or for military end-uses in Iran, in violation of the new Executive Order.
International disagreement over whether the United States has the authority to reimpose sanctions suspended under the terms of the JCPOA will play out at the International Court of Justice. The United States has described its most recent actions as enforcing the multilateral snapback provisions of the JCPOA; however, the United States withdrew from the JCPOA in May, 2018 and the remaining parties to the agreement (China, France, Germany, Russia and the United Kingdom) have taken the position that the United States cannot trigger snapback. Hearings are taking place this week and a ruling is expected before the year’s end.
Client Alert 2020-535
