By Melissa Miller Proctor
Today, most of the comprehensive U.S. economic sanctions imposed on Sudan have been lifted, and virtually all trade between the U.S. and Sudan that was previously prohibited under the Sudanese Sanctions Regulations (SSR) in 31 C.F.R. Part 538 are now authorized. The lifting of these sanctions was made by Presidential Executive Order on January 13th, as well as the implementation of a new General License today by the Treasury Department’s Office of Foreign Assets Control (OFAC) in Section 538.540 of the SSR. Specifically, the following activities by U.S. persons are now authorized:
- The processing of transactions involving persons in Sudan, including those relating to the petroleum or petrochemical industries in Sudan;
- Exports and reexports of goods, services and technology to Sudan;
- Imports of goods, services and technology into the United States from Sudan;
- Facilitation of transactions between Sudan and third countries; and,
- Transactions involving property in which Sudan has an interest—such property has been unblocked.
The Obama Administration announced that it was taking such actions as a result of progress made by the Government of Sudan in reducing offensive military activity, pledging to maintain a cessation of hostilities in conflict areas in Sudan, improving humanitarian access throughout Sudan, and cooperating with the United States on counter terrorism. Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence stated that, “The Executive Order issued by President Obama and the amendment to the Sudanese Sanctions Regulations … aim to further incentivize the Government of Sudan to continue to improve its conduct.”
The General License issued by OFAC today supersedes all existing General Licenses under the SSR, Specific Licenses issued by OFAC that are still in effect, and pending applications for Specific Licenses from OFAC relating to Sudan. However, U.S. companies desiring to transact business with Sudan are urged to keep the following key points in mind:
- The Trade Sanctions Reform Act of 2000 (22 U.S.C. 7201 et seq) (“TSRA”) still requires that exports of certain agricultural commodities, medicines and medical devices to Sudan be made pursuant to one-year authorizations from OFAC; thus, exports of such items under the new General License in Section 538.540 will continue to be subject to this one-year restriction (i.e., all exports of these items to Sudan must be made within 12 months following the date on which the contract with Sudan was signed by the parties).
- U.S. persons are still prohibited from dealing with individuals and entities on the Specially Designated Nationals (SDN) List that were added as a result of their activities in the Darfur Region (per Executive Order 13400 and 31 C.F.R. Part 546) and South Sudan (per Executive Order 13664 and 31 C.F.R. Part 558).
- Sudan is still designated as a State Sponsor of Terror.
- The U.S. arms embargo against Sudan remains in effect, and Sudan is still designated as a proscribed country under 22 C.F.R. 126.1 of the International Traffic in Arms Regulations (ITAR); therefore, U.S. persons are still prohibited from exporting, reexporting or transferring defense articles (or providing defense services) to Sudan.
- The Commerce Department’s Bureau of Industry and Security (BIS) may still require licenses to export and reexport certain commodities, software and technology that is subject to the Export Administration Regulations to Sudan based on their Commerce Control List classifications, the parties to the proposed transactions, and/or their proposed end-uses in Sudan.
- Today, the BIS announced it’s a new general policy of approval for license applications relating to exports and reexports of: (a) certain items intended to ensure safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft; and, (b) certain items used to inspect, design, construct, operate, improve, maintain, repair, overhaul or refurbish railroads in Sudan. Such exports and reexports will be authorized only for civil uses by “non-sensitive” end-users in Sudan. So-called “sensitive” end-users include Sudan’s military, policy or intelligence services, as well as persons that are part of or owned/operated/controlled by those services. Applications for exports and reexports of such items to sensitive end-users in Sudan will continue to be subject to BIS’ general policy of denial.
- Most importantly, the lifting of sanctions on Sudan by the Obama Administration was made through Executive Order which may be revoked by President-Elect Trump once he takes office at the end of this week. U.S. companies are urged to exercise caution with respect to jumping into transactions and new contractual agreements with Sudan until it becomes clear as to what the Trump Administration will do when it takes over.