I. Trade with Iran Under the JCPOA Since 2015
The Joint Comprehensive Plan of Action - JCPOA, an agreement signed in 2015 by seven parties including the US, was designed to alleviate economic sanctions against Iran in return for a reduction in Iran's nuclear capabilities. The facilitation of sanctions included access to humanitarian goods such as agricultural commodities, food, medical care and pharmaceutical products. The provisions of such product, under certain conditions, has not been sanctioned since the JCPOA entered into force.
In practice, however, the sale and delivery of such goods to Iran proved to be virtually impossible, as international networks of banks and financial services refused in principle to finance deliveries to Iran, even such transactions were legal and not subject to sanctions.
II. Effects of the Withdrawal of the JCPOA by the USA
These de facto barriers to trade were further reinforced in May 2018 when the US withdrew from the JCPOA and reintroduced certain secondary sanctions, applicable to non-US entities engaging in transactions with US goods, dollars or other US touch points. Although humanitarian goods continue to be excluded from the newly introduced sanctions, banks have since withdrawn completely from any business with Iran.
III. Switzerland Opens a Limited Trade Lane
On January 20, 2020, the Swiss Federal Council approved the Swiss Humanitarian Trade Agreement (SHTA), which entered into force on February 27, 2020. The Agreement provides a limited number of Swiss banks and companies with a secure legal framework, in particular from the US Department of Treasury, for financing transactions with vetted Iranian buyers of humanitarian products. Parties involved will receive increased assurances of compliance with applicable sanctions provisions. This assurance will take the form of a "letter of comfort" from the US Treasury, which is intended to strengthen the parties' confidence that the planned activities will not be subject to sanctions by the US.
In order to benefit from the SHTA, participating exporters or traders domiciled in Switzerland and banks will be expected to conduct enhanced due diligence on potential business partners and report such information to the Swiss State Secretariat for Economic Affairs (SECO), who will then verify and transmit the information to the US Treasury Department on the basis of confidentiality agreements.
On January 27, 2020, a pilot transaction under the SHTA took place involving the export of cancer drugs and drugs required for organ transplants by medical manufacturer Novartis, valued at 2.4 million Swiss Francs, financed by Genevan-based Bank de Commerce et de Placements (BCP).