On June 27, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) officially revoked General Licenses H and I. General License H previously allowed foreign owned or controlled subsidiaries of U.S. companies to engage in limited transactions with Iran that would have otherwise been prohibited under the Iranian Transactions and Sanctions Regulations (the “ITSR”). General License I previously allowed U.S. persons to negotiate and enter into contingent contracts for exports and reexports to Iran of commercial passenger aircraft and related parts and services that were eligible to potentially receive specific licenses under the Iran Nuclear Deal, otherwise known as the Joint Comprehensive Plan of Action (the “JCPOA”). OFAC previously advised that these revocations would be forthcoming in May, when President Trump formally announced his decision to withdraw from the JCPOA.
OFAC replaced the revoked General Licenses with amendments to the ITSR, which create temporary General Licenses allowing: (i) U.S. parent companies and their foreign subsidiaries to wind down transactions that were previously authorized under General License H until November 4, 2018, and (ii) U.S. persons to wind down transactions ordinarily incident to the contingent contract negotiations that were previously permitted under General License I, continuing until August 6, 2018. OFAC also amended the ITSR to revoke JCPOA authorizations which had previously allowed U.S. persons to import Iranian carpets and food products and engage in limited related letter of credit transactions and brokering services, subject to a newly created General License authorizing the winding down of previously permitted carpet and foodstuff transactions until August 6, 2018. In addition to revoking these General Licenses and updating the ITSR, OFAC also updated its online Iran JCPOA FAQ guidance.
By following through with these revocations, the Trump Administration ignored a formal joint request submitted by France, Germany, the United Kingdom and the European Union (the “E3 and the EU”) on June 4, 2018 which asked the U.S. to prolong General License H. In addition, that request from the E3 and the EU also asked the U.S. to grant several other exemptions from imposition of secondary sanctions in order to allow EU companies to continue various forms of trade with Iran. At a separate special briefing on June 26, 2018, the U.S. State Department indicated that the Trump Administration is unlikely to grant such waivers and also communicated its expectation that countries outside the U.S. should reduce their imports of Iranian oil to zero before OFAC’s secondary sanctions against Iran’s energy sector are fully reinstated on November 4, 2018.
These recent actions seem to suggest that the U.S. government intends to aggressively enforce its reimposed secondary Iran sanctions against non-U.S. persons after they “snap back” to full strength on either August 6, 2018 or November 4, 2018, as applicable. Husch Blackwell’s Export Controls and Economic Sanctions team continues to monitor this situation closely as it develops and will provide updates and analysis as new information becomes available. Should you have any questions, please contact Cortney Morgan or Grant Leach.