On October 6, the U.S. Government announced the termination of U.S. sanctions against Sudan, which had been in place since 1997.
While most of the recent developments regarding U.S. sanctions have involved increasing sanctions against countries such as North Korea and Venezuela, Sudan-related sanctions policy has been quietly moving in the opposite direction, with the Obama and Trump Administrations taking steps to significantly ease restrictions on Sudan. As we have previously written, this sanctions easing began in January 2017 when President Obama issued Executive Order (“EO”) 13761, which waived a number of statutory provisions mandating sanctions on Sudan and established a framework for the potential permanent revocation of key Sudan sanctions programs. Following the EO, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) issued a broad general license essentially suspending, on a temporary basis, the United States’ longstanding comprehensive sanctions against Sudan. The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) also amended the Export Administration Regulations to set out a favorable licensing policy for certain exports or reexports to Sudan of items intended to ensure the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft, along with certain items related to railroads. (For additional details on the specific sanctions relief authorized under these actions see our previous advisory here).
Built into President Obama’s EO was a review period, initially expiring on July 12, after which the sanctions relief would become permanent if the new administration determined that Sudan had continued a variety of “positive actions” giving rise to the order. However, the Trump Administration, determining it needed additional time to complete its review of Sudan’s behavior, delayed the deadline for that decision until October 12.
The positive actions cited in the EO have become known as the “five tracks” and include ending support for rebel factions in South Sudan; improving access for humanitarian groups in conflict zones; ending armed conflict in multiple provinces including Blue Nile, South Kordofan, and Darfur; continuing counter-terrorism cooperation with the US; and ceasing support to the Lord’s Resistance Army in neighboring countries. Senior administration officials also indicated that issues such as human rights, religious freedom, and Sudan’s support for UN Security Council resolutions on North Korea would be important considerations in the administration’s decision.
On October 6, the Department of Treasury announced that the administration had completed its review and taken steps to make the temporary sanctions relief for Sudan permanent. The Department of Treasury issued a new set of frequently asked questions explaining that, effective October 12, sections 1 and 2 of EO 13067 and all of EO 13412 will be revoked. The practical impact of those revocations is that “U.S. persons will no longer be prohibited from engaging in transactions that were previously prohibited under the Sudanese Sanctions Regulations.” In addition to those revocations, OFAC issued a general license, effective October 12, authorizing all exports and reexports of agricultural commodities, medicine, and medical devices to the Government of Sudan, entities in Sudan, and other persons purchasing such items specifically for resale to the Government of Sudan or an entity in Sudan. (Such exports and reexports would otherwise be prohibited because Sudan remains on the State Sponsors of Terrorism List). The general license also requires that items exported or reexported under its authority be shipped within 12 months of the signing of the contract for the item in question.
Despite the considerable sanctions relief provided by these actions, many regulatory risks remain for U.S. and even non-U.S. companies seeking to conduct business in or with Sudan. For example, the administration’s actions do not alter the Darfur or South Sudan sanctions programs, nor do they affect OFAC designations of Sudanese persons under sanctions authorities other than EOs 13067 and 13412. Furthermore, as a designated State Sponsor of Terrorism, Sudan remains subject to the broad “anti-terrorism” or “AT” controls set out in the EAR, which apply to all persons worldwide that export or re-export to Sudan items subject to the EAR. The Department of Treasury’s FAQs also make clear that the administration’s actions do not impact pending or future enforcement actions for violations of the Sudanese Sanctions Regulations occurring prior to the effective date of the revocations.