Imagine you sit in an office overlooking the Port of Amsterdam in the Netherlands, one of Europe’s main entry point for cocoa imports. As you enjoy your morning cup of coffee, you glance out the window and notice the usual hustle and bustle of ships, cargo containers, and port workers is oddly calm at the docks where the cocoa is normally handled. This is the current scene in many European ports and harbors dedicated to cocoa imports from Africa. But why?

Oligarch Defies Election Process and Lawfully Elected Successor

Three thousand miles away from the Netherlands, Côte d’Ivoire is the world’s number one producer and exporter of cocoa (beans, powder, liquor, butter). It is also one of the top ten producers and exporters of coffee.

Although the people of Côte d’Ivoire elected a new President (Alassane Ouattara) in November of 2010, his predecessor, Laurent Gbagbo, has refused since that time to relinquish his post, leading to an increasingly unstable political and security situation in the country. In an effort to ostracize and isolate Mr. Gbagbo and his followers, the United Nations (UN), United States and European Union (E.U.) have implemented targeted economic sanctions. For his part, Mr. Ouattara himself, though not yet in office, has declared a ban on exports of coffee and cocoa, asserting that proceeds of exports flow to Mr. Gbagbo and his supporters, and promised to punish any companies who violate the ban.

Trade in Coffee and Cocoa Impacted

The cumulative current restrictions on trade in coffee and cocoa from Côte d’Ivoire can be summarized as follows:

  • Effective local law export ban on coffee and cocoa exports from Côte d’Ivoire
  • E.U. sanctions prohibiting payment of export duties to the Coffee and Cocoa Trade Management Committee
  • E.U. sanctions prohibiting any involvement directly or indirectly in transactions involving other blocked persons or entities
  • U.S. sanctions prohibiting any involvement directly or indirectly in transactions involving certain blocked persons or entities (Laurent Gbagbo, his wife, Simone Gbagbo, and three of Mr. Gbagbo’s senior advisors, Désiré Tagro, Pascal Affi N’Guessan, and Alcide Ilahiri Djédjé)

 U.S. and E.U. Firms Responsible for Compliance

While the current U.S. and E.U. sanctions are targeted and are not directed against the country of Côte d’Ivoire generally or the entire Government of Côte d’Ivoire, as a practical matter, it may be quite difficult for U.S. and E.U. businesses to lawfully procure coffee or cocoa products from Côte d’Ivoire. Furthermore, U.S. and E.U. firms bear a heightened burden to adequately research their sources of coffee and cocoa to ensure they are not dealing in product that was unlawfully exported from Côte d’Ivoire in contravention of U.S. or E.U. sanctions (as well as local restrictions).

Under both U.S. and E.U. sanctions regimes, individuals and companies subject to U.S. or E.U. law will be liable for even inadvertent involvement in transactions indirectly related to any violation of the sanctions restrictions. Will the authorities come after you for your morning cup of coffee? No. Might they scrutinize the conduct of the companies who bring you your morning cup of coffee? Quite possibly.

Apart from the obvious impact on coffee and chocolate manufacturers, both coffee and cocoa products (powder, liquor, butter) are used in consumer products as diverse as food and cosmetics. Companies in industries as wideranging as agriculture, shipping, freight forwarding, food and beverage, and cosmetics should implement adequate compliance procedures to minimize the risk of violations of current measures impacting Côte d’Ivoire.