On January 13, 2017, President Obama made sweeping changes to the Sudan sanctions program, removing the majority of the sanctions in place against this war-torn nation. The final decision will be in the hands of President-elect Donald Trump and the Secretary of State, but it seems the suspension of the Sudan embargo was made in consultation with the future administration. The relaxation of the Sudan sanctions now means that, once effective, U.S. persons will be authorized to engage in most commercial transactions in Sudan, except those impacting the Darfur region, through a newly issued general license. Certain conditions will remain in place under the general license, because of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), such that agricultural commodities, medicine, and medical devices "subject to the EAR" or classified as EAR99 must be shipped within 12 months of the date that the relevant contract is signed.
The Issuance of Executive Order (EO) 13761
EO 13761 recognizes the positive actions taken by Sudan's government to resolve political and military conflicts in the country, including its cessation of military offensives in Darfur and the Two Areas - South Kordofan and Blue Nile. EO 130761 has the effect of terminating substantial portions of EOs 13067 (Nov. 3, 1997) and 13412 (Oct. 13, 2006), which authorized the comprehensive Sudan sanctions. The Sudan embargo will only be revoked July 12, 2017, after the Secretary of State consults with the administration and determines that the Government of Sudan "has sustained the positive actions" giving rise to the executive order.
The New General License
The 2017 Sudan Rule adds a new general license to authorize transactions that were previously prohibited by the Sudan Sanctions Regulations ("SSR") and EOs 13067 and 13412, effective upon the date of publication in the Federal Register (Jan. 17, 2017). The addition of the general license will have an immediate effect and will authorize certain transactions, while the complete revocation of certain Sudan sanctions will take place July 12, 2017, after the administration's determination that the Government of Sudan has fulfilled the necessary conditions. OFAC has also stated that the new general license "is broader than and supersedes" any other existing general licenses in the SSR. Specifically, the general license will amend the SSR to enable U.S. persons to engage in the following types of transactions:
- Imports of goods and services from Sudan
- Transactions in which the Government of Sudan has an interest
- Exports of goods, technology, and services to Sudan (subject to Department of Commerce license requirements)
- All transactions relating to the petroleum or petrochemical industries in Sudan that were previously prohibited by the SSR, including oilfield services and oil and gas pipelines
- Transactions between Sudan and third countries, to the extent previously prohibited by the SSR
Sanctions Remaining in Place
The following sanctions will continue to remain in place for Sudan:
- Because the general license does not remove existing statutory requirements, exports and re-exports of agricultural commodities, medicine, or medical devices that are eligible to be exported or re-exported under the Trade Sanctions Reform and Export Enhancement Act (TSRA) are subject to a one-year licensing requirement. As long as the exports occur within 12 months from the date of signing a contract for export or re export, however, exporters need not obtain a specific license from OFAC. A BIS license is not required for the export or re-export of EAR99 items to Sudan, unless the transaction involves a prohibited end-use or end-user.
- Prohibited Transactions with SDNs. U.S. persons continue to be prohibited from transacting with individuals on the SDN list. Companies should screen transactions to ensure SDNs are not involved in their transactions.
- Prohibited Transactions Under the Darfur Sanctions Regulations. The list-based Darfur sanctions pursuant to EO 13400 and South Sudan sanctions under 13664 will remain in place. U.S. persons may not deal with parties blocked pursuant to these sanctions regimes.
The Department of Commerce, Bureau of Industry and Security ("BIS") has issued a new license-review policy relating to Sudan in light of these changes. All items "subject to the EAR" and listed on the Commerce Control List ("CCL") will continue to be restricted for export and will require an export license unless subject to a license exception. BIS will continue to maintain a licensing policy of denial for items exported to Sudan, except it shall maintain a licensing policy of approval for items used for (1) civil aircraft and (2) railroads. Specifically, civil aircraft items will be controlled only for anti-terrorism ("AT") reasons and "intended to ensure the safety of civil aviation or the safe operation of fixed-wing commercial passenger aircraft." Similarly, railroad items will also be controlled only for AT reasons and "used to inspect, design, construct, operate, improve, maintain, repair, overhaul, or refurbish railroads in Sudan."
The policy of approval only applies to exports to "non-sensitive end-users" within Sudan. "Sensitive end-users" include Sudan's military, police, and/or intelligence services, and persons owned or operated by those services. Companies that seek to export items pursuant to OFAC's general license should continue to consult BIS regarding any licensing obligations they may have under the EAR.
Export license applications involving aircraft controlled for AT and additional reasons (such as Missile Technology) will continue to be subject to a licensing policy of denial.
Ultimately, the revocation of Sudan sanctions will depend on the incoming administration and whether it determines the Government of Sudan has "sustained the positive actions" giving rise to EO 13761. These actions will include the cessation of hostilities in conflict areas in Sudan, continued improvement of humanitarian access throughout Sudan, and maintaining its cooperation with the United States in addressing regional conflicts and the threat of terrorism.