Either in response to questions posed by U.S. companies, or in anticipation of the potential snap-back of secondary, nuclear-related sanctions on Iran by President Trump after the inauguration or by virtue of Iran’s recent announcement that the United States has violated the Joint Comprehensive Plan of Action (JCPOA), the Treasury Department’s Office of Foreign Assets Control (OFAC) posted guidance on its Frequently Asked Questions webpage as to what the reimposition of sanctions on Iran would likely entail.
Specifically, OFAC stated that, if sanctions against Iran were reimposed—
- Companies would not be sanctioned retroactively for any legitimate business activities with Iran undertaken before the snapback occurs
- Companies would be sanctioned for any activities with Iran after sanctions prohibiting such undertakings are reimposed in the future, and the JCPOA does not contain any grandfathering provisions for contracts signed with Iran prior to the snapback of sanctions.
- OFAC anticipates, as in previous similar situations, that a wind-down period will be granted after the snapback of sanctions takes effect in which companies will be allowed to disengage from their activities with Iran.
President-Elect Trump has made numerous statements that he intends to withdraw from the JCPOA when he takes office in January, and to reimpose or “snap-back” the nuclear-related sanctions against Iran—he would be authorized to take such action through the issuance of Executive Orders. Just last week, the Iran Sanctions Extension Act (H.R. 6297) went into effect (without the signature of President Obama) which effectively extends the Iran Sanctions Action through 2026. In response to the passage of the Iran Sanctions Extension Act, Iran announced that the United States had violated the JCPOA and, as a result, Iran has instructed its scientists to create a nuclear propeller for marine transportation—it is not clear whether such a program would be used for nuclear-powered submarines or whether Iran intends to enrich uranium beyond the levels set forth in the Joint Comprehensive Plan of Action (JCPOA).
U.S. companies and their foreign affiliates who are already trading with Iran should keep a wary eye on any new developments and pronouncements by OFAC, President-Elect Trump, the JCPOA partner countries and Iran itself in the coming weeks. Designing and implementing a Middle East trade marketing strategy that includes Iran is a tenuous proposition at best in the current politically-charged climate. Companies should keep up-to-date and consider temporarily tabling any long-term contractual obligations involving Iran until the situation becomes clearer.
To access OFAC’s FAQs, click here.