White HouseOn October, 6, the U.S. Department of State announced it will issue a report to President Donald Trump which will express the Department’s conclusion that the Government of Sudan (“GOS”) has sustained the positive actions necessary in order to repeal the majority of current U.S. economic sanctions against Sudan. The Department of State will formally publish a copy of this report in the Federal Register on Thursday, October 12, 2017, but has provided an advance copy on their website.

This report follows Executive Order 13067, issued by former President Barack Obama on January 12, 2017 (reported in Husch Blackwell’s Technology, Manufacturing & Transportation Industry Insider blog here), which acknowledged the GOS’s progress in reducing military conflict, improving humanitarian access and cooperating with the U.S. to address terrorism. Executive Order 13067 temporarily allowed financial transactions with and exports of goods and services to Sudan that would have otherwise been prohibited under the Sudanese Sanctions Regulations (the “SSR”) administered by the U.S. Department of Treasury – Office of Foreign Assets Control (“OFAC”).  Executive Order 13067 also directed the U.S. Secretary of State to issue a report within the following six months on whether the GOS had maintained these positive activities.  One day before that report was due, President Donald Trump issued Executive Order 13804 (reported in Husch Blackwell’s Technology, Manufacturing and Transportation Insider blog here) in order to amend Executive Order 13067 and extend the Secretary’s reporting deadline by an additional three months.

Because the State Department’s report did find sustained positive activity, provisions contained in Executive Order 13067 will automatically repeal portions of a previous 1997 Executive Order and the entirety of a 2006 Executive Order which served as the SSR’s enabling authority. OFAC has already issued FAQ guidance related to the report and stated its intention to remove the SSR from the Code of Federal Regulations upon the report’s official publication.

Apart from the SSR and soon-to-be-repealed Executive Orders, the Trade Sanctions Reform and Enhancement Act of 2000 (the “TSRA”) imposes separate economic sanctions on exports and reexports of agricultural commodities, medicine and medical devices to Sudan. The TSRA is federal legislation and cannot be repealed by Executive Order and its sanctions against Sudan will therefore remain in place for as long as the GOS remains designated as a State Sponsor of Terrorism. However, OFAC has issued a new General License A which will also take effect on October 12, 2017 and which will permit exports and reexports of agricultural commodities, medicine and medical devices to Sudan without the need to obtain a specific OFAC license, provided that such exports or reexports occur within 12 months after signing the relevant contract for such transactions. OFAC has provided online FAQ for General License A here.

Despite the GOS’s positive actions cited in the report, the State Department also noted that “the U.S. Government continues to have a range of concerns about the GOS’s record and activities” and reserved the right to employ targeted sanctions against Sudan if the GOS engages in future destabilizing or problematic activities. Persons doing business in Sudan should continue to screen their counterparties carefully because many persons and entities with ties to Sudan remain designated as Specially Designated Nationals (“SDNs”) and OFAC’s sanctions against those SDNs will continue to apply.  Additionally, even without the SSR in place, the Export Administration Regulations (“EAR”), administered by the U.S. Department of Commerce – Bureau of Industry and Security (“BIS”), will continue to require BIS licensing for or outright prohibit exports or re-exports of many items to Sudan.

Husch Blackwell will continue to monitor any ensuing changes in export controls and sanctions policy. For guidance on navigating any of the U.S. sanctions programs and ensuring your business is up to date and in compliance with current U.S. export regulations, contact Cortney MorganLinda Tiller, or Grant Leach.