On January 13, 2017, President Obama issued Executive Order, “Recognizing Positive Actions by the Government of Sudan and Providing for the Revocation of Certain Sudan-Related Sanctions” (“Sudan Executive Order”) to revoke in six months’ time the sanctions provisions of Executive Orders 13067 and 13412, which form the basis for US sanctions targeting Sudan, which are implemented through the Sudanese Sanctions Regulations (“SSR”). The provisions of the Sudan Executive Order that will terminate these US sanctions against Sudan will go into effect on July 12, 2017, provided the Government of Sudan continues the positive progress it has made in the past six months.
In conjunction with the Sudan Executive Order, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued a general license to authorize all transactions previously prohibited under the SSR and Executive Orders 13067 and 13412. Concurrently with this announcement, OFAC published a Fact Sheet and issued FAQs 490-494 and the Treasury Department issued a press release to explain these SSR changes. In addition, the US Commerce Department’s Bureau of Industry and Security (“BIS”) issued a Final Rule revising its Sudan policy of review for certain license applications. As indicated above, the actions by OFAC and BIS are contingent on continued cooperation from the Government of Sudan.
OFAC’s Changes
On January 13, 2017, OFAC announced an SSR amendment to add a new general license authorizing all transactions prohibited by the SSR and Executive Orders 13067 and 13412 (“the 2017 Sudan Rule”). This new general license supersedes other general licenses found in the SSR. Newly authorized transactions under the 2017 Sudan Rule include the processing of transactions involving persons in Sudan; the importation into the United States of goods and services from Sudan; the export of goods, technology, and services to Sudan; and transactions involving property in which the Government of Sudan has an interest. With respect to exports or reexports to Sudan of agricultural commodities, medicine, and medical devices, the 2017 Sudan Rule still requires that such exports/reexports be shipped within the 12-month period beginning on the date of the signing of the relevant contract, to comply with the Trade Sanctions Reform and Export Enhancement Act of 2000 (aka “TSRA”).
In addition, the 2017 Sudan Rule authorizes dealings with, and unblocks the property of, the Government of Sudan and parties that have been designated under the SSR (i.e., “Specially Designated Nationals” (“SDNs”) with the [SUDAN] tag on the Specially Designated Nationals and Blocked Persons List (“SDN List”)). SDNs with the [SUDAN] tag were not delisted by OFAC on January 13, 2017, and they will likely remain on the SDN List until all provisions of the Sudan Executive Order take effect on July 12, 2017. In the region, there will remain risks related to dealings with SDNs designated under other sanctions programs, such as those designated under US sanctions related to Darfur and South Sudan (i.e., [DARFUR] and [SOUTH SUDAN] tags on the SDN List), neither of which are affected by these changes.
BIS’s Changes
In coordination with these efforts, BIS published a Final Rule to amend Section 742.10 of the Export Administration Regulations (“EAR”). These EAR changes revise the policy of review for applications for licenses to export or reexport to Sudan certain items intended to inspect, construct, repair, overhaul, or refurbish railroads in Sudan, as well as certain items intended to ensure the safety of civil aviation or the safe operation of commercial passenger aircraft. Such license applications will now be reviewed by BIS under a general policy of approval, rather than a general policy of denial. The BIS general policy of approval applies only to exports and reexports for civil use by non-sensitive end-users within Sudan.
The BIS Final Rule does not change other parts of EAR Section 742.10 that impose a specific licensing requirement for most exports or reexports to Sudan of items (i.e., goods, software, technology) subject to the EAR and described on the EAR’s Commerce Control List. For Sudan purposes, items subject to the EAR include (i) US-origin items, (ii) items exported from the United States, (iii) non-US items that incorporate more than 10% controlled (i.e., non-“EAR99”) US content by value, and (iv) certain foreign direct products of US technology or software.
As a result of the changes described above, US persons are now generally authorized to engage in transactions with Sudan, including the Government of Sudan. Further, US and non-US parties are now permitted to export or reexport EAR99 items subject to the EAR to Sudan, but specific licenses will still generally be required to export or reexport non-EAR99 items to Sudan unless a license exception applies. Existing EAR license exceptions applicable to Sudan, such as License Exception “Consumer Communication Devices” at EAR Section 740.19, remain in effect and are not changed by the Final Rule.
