On January 13, 2017, former President Obama issued Executive Order 13761 providing for the eventual revocation of sanctions toward Sudan, so long as the government of Sudan continues 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. As a result of recent positive steps taken by Sudan, certain trade with Sudan will again be allowed, and other transactions which may require a license will be reviewed by the relevant U.S. agencies in a more favorable light.
I. OFAC General License Allows Trade Previously Prohibited
Effective January 17, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a final rule revoking sanctions against Sudan by providing a general license which grants U.S. persons the general ability to transact business with individuals and entities in Sudan. OFAC’s amendments to the Sudanese Sanctions Regulations (SSR) include 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.
Specifically, 31 CFR Part 538.540 authorizes:
- the processing of transactions involving persons in Sudan;
- the importation of goods and services from Sudan;
- the exportation of goods, technology and services to Sudan; and
- transactions involving property in which the Sudanese government has an interest.
Additionally, non-governmental organizations (NGOs) that are involved in humanitarian or religious activities in Sudan are no longer required to obtain an NGO registration number in order to operate in or transact with Sudan.
II. BIS Revises Sudan Licensing Policy
Also on January 17, 2017, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule revising the policy of review for license applications for export or re-export to Sudan of certain items that are (1) intended to ensure the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft, or (2) for use to inspect, design, construct, operate, improve, maintain, repair, overhaul or refurbish railroads in Sudan. Such applications will now be reviewed under a general policy of approval rather than a general policy of denial.
This change in review policy does not create any new license requirements or remove any existing license requirements for exports or re-exports to Sudan; it is simply a change in the review and approval of licenses due to ongoing U.S.-Sudan bilateral engagement.
III. Some Restrictions for Trade with Sudan Remain
The OFAC general license and revisions to BIS’ license review policy do not authorize transactions prohibited under the Darfur Sanctions Regulations, 31 CFR Part 546 or the South Sudan Sanctions Regulations, 31 CFR Part 558, or Executive Orders 13400 or 13664, all of which remain in place. Nor does the general license authorize transactions prohibited under any other OFAC sanctions program, including provisions from 31 CFR Chapter V, including restrictions relating to terrorism, the proliferation of weapons of mass destruction, narcotics trafficking or other provisions of law. U.S. persons must also continue to comply with the Export Administration Regulations, 15 CFR 730-774 (EAR) as administered by the Bureau of Industry and Security. Lastly, any past, present or future enforcement actions or investigations with respect to any violations that occurred prior to January 17, 2017 remain unaffected by this license.
Under the Trade Sanctions Reform and Export Enhancement Act of 2000 Program, no prior authorization is needed to export agricultural commodities, medicine or medical devices; however, such items must be shipped within 12 months of the date of the signing of any contract for export or re-export.
U.S. persons must maintain records of authorized transactions for a minimum of five years, which OFAC may obtain in order to continue to monitor Sudan-related activities.
The U.S. State Department continues to list Sudan as a state sponsor of terrorism, therefore restrictions are still in place regarding U.S. foreign assistance and any defense-related activity, in addition to the EAR and International Traffic in Arms Regulations (ITAR).
IV. Sudan’s History & Recent Positive Actions
The U.S. has historically sustained comprehensive sanctions against Sudan for its continued support of international terrorism, ongoing efforts to destabilize neighboring governments and the prevalence of human rights violations, including slavery and the denial of religious freedom. Sudan has been viewed as a threat to the national security and foreign policy of the United States due to the pervasive role of the Sudanese government in the petroleum and petrochemical industries in Sudan.
Importantly, President Obama’s executive order allowing for the issuance of the OFAC general license and the shift in BIS’ licensing review policy also states that if Sudan sustains its positive actions, Executive Orders 13067 and 13412 will be revoked in their entirety on July 12, 2017 in order to further incentivize progress by the government of Sudan. Because the sanctions are being lifted in response to an executive order, President Trump could revoke the license or issue new executive orders of his own regarding Sudan, particularly if he does not agree that Sudan’s ongoing efforts are positive.
V. Due Diligence Still Required
Although the general license revokes many of the economic prohibitions on trade with Sudan, due to the complexity of international transactions, certain OFAC sanctions that still remain, and the various regulatory requirements in place through other administrative agencies, any transaction involving persons, entities or property in Sudan must continue to be thoroughly vetted.