Effective October 12, 2017, U.S. persons will no longer be prohibited from engaging in transactions that were previously prohibited under the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (SSR). Consistent with the revocation of these sanctions provisions, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) expects to remove the SSR from the Code of Federal Regulations. This revocation of sanctions against Sudan is the culmination of a 10-month review process and lengthy diplomatic negotiations with Sudan, which has been a target of U.S. trade and economic sanctions for nearly two decades.
Recent Background on Removal
On January 13, 2017, former President Obama issued Executive Order (EO) 13761, providing for the eventual revocation of sanctions toward Sudan, so long as the government of Sudan continued taking positive actions to reduce offensive military activity, maintaining a cessation of hostilities in conflict areas within Sudan, and improving humanitarian access throughout the country. On January 17, 2017, OFAC issued a final rule temporarily revoking sanctions against Sudan by providing a general license granting U.S. persons the general authorization to transact business with individuals and entities in Sudan. At that time, OFAC’s amendments to the SSR included unblocking property and interests previously blocked; authorizing trade that was prohibited; allowing transactions relating to petroleum or petrochemical industries, such as oilfield services and oil and gas pipelines; and allowing the facilitation of transactions between Sudan and third countries. See our previous publication, “United States Begins to Lift 20-Year-Old Trade Sanctions Toward Sudan,” for additional background.
Under President Trump, in July 2017, the terms of EO 13761 were extended in order to allow the new administration to review the matter and prepare a report. The State Department has now issued a report with respect to, and in support of, the revocation of Sudanese sanctions. The report describes actions taken by the government of Sudan between January 13, 2017 and October 12, 2017 in the following five areas: 1) maintaining a cessation of hostilities in Darfur and the Two Areas of South Kordofan and Blue Nile states; 2) improving humanitarian access throughout Sudan; maintaining its cooperation with the United States on 3) the conflict in South Sudan and 4) countering the Lord’s Resistance Army; and 5) addressing the threat of terrorism.
While the State Department has concluded that Sudan has sustained the positive actions that gave rise to EO 13761, and determined along with the Department of the Treasury that the removal of sanctions at this time is warranted, the State Department has made clear that any further normalization of ties will require continued progress by the government of Sudan. Furthermore, the United States is prepared to use additional tools to apply pressure if the government of Sudan regresses in the five areas noted above where progress has been made to date or takes negative actions in other areas of concern.
Impact of the Removal of Sanctions Against Sudan
As of October 12, 2017, OFAC sanctions against Sudan are largely removed; U.S. persons will no longer be prohibited from engaging in transactions that were previously prohibited under the SSR. However, Sudan will remain on the U.S. State Sponsors of Terrorism List (SST List), resulting in a continued ban on sales and exports of weapons and defense articles to Sudan. Further, while restrictions remain on certain exports and reexports to Sudan of agricultural commodities, medicine and medical devices as a result of Sudan’s inclusion on the SST List, such items will be allowed and licensed by OFAC under Sudan General License A.
It is important to note that certain Sudanese officials remain subject to separate sanctions stemming from human rights abuses during the Darfur conflict, and such officials remain on the Specially Designated Nationals List. U.S. persons are prohibited from engaging in any transactions with such individuals.
In addition, U.S. persons will still need to obtain any licenses that may be required by the Department of Commerce’s Bureau of Industry and Security to export or reexport to Sudan certain items (commodities, software and technology) that are on the Commerce Control List, Supp. No. 1 to part 774 of the Export Administration Regulations, 15 C.F.R. parts 730-774.