Treasury Notes

 The Iran Deal and Sanctions

By: Betsy Bourassa

We are currently in an important preparatory phase of the Joint Comprehensive Plan of Action (JCPOA), as Iran, the EU, and the P5+1 move to implement key commitments.  The JCPOA’s next milestone will be Implementation Day, the date when international inspectors from the International Atomic Energy Agency (IAEA) verify that Iran has completed its nuclear commitments.  Immediately upon that verification, the U.S. nuclear-related sanctions specified in the JCPOA will be lifted.  Iran, through its own implementation schedule, controls when that date will be.
In the meantime, we have received many questions about the scope of permissible activity.  Before Implementation Day, non-U.S. companies and individuals will not be subject to U.S sanctions if they engage in initial discussions about potential business opportunities or travel to Iran to examine the possibilities of business relationships after sanctions are lifted.  However, entering into contracts involving Iran prior to Implementation Day may be sanctionable.  For this reason, we recommend the companies seek expert guidance before executing any contract or beginning a formal business relationship involving Iran prior to Implementation Day.
Looking ahead, the Office of Foreign Assets Control (OFAC) will be providing clear and detailed guidance to ensure that companies, financial institutions, and foreign governments fully understand the sanctions that are due to be lifted on Implementation Day – and those that will remain in place.
The broad outlines are already clear.  First, the U.S. government will not stand in the way of permitted business activities – either today or after Implementation Day, when sanctions specified in the JCPOA will be lifted.  Second, the U.S. embargo will generally remain in place, even after Implementation Day, because of concerns outside of Iran’s nuclear program.  However, the U.S. government has committed under the JCPOA to license certain activities involving U.S. persons or U.S. origin goods that are consistent with the JCPOA and U.S. law.  These include the sale of U.S. origin aircraft, parts and services exclusively for commercial passenger aviation end uses to Iran; the import of Iranian-origin carpets and foodstuffs; and certain activities conducted by foreign subsidiaries of U.S. companies.  Further, as has always been the case, there are exceptions for certain humanitarian exports of food, medicine, and medical devices.  Finally, foreign companies should be cautious about dealings with Iranian companies and individuals that will remain on OFAC’s list of Specially Designated Nationals and Blocked Persons, such as those that have been designated for non-nuclear reasons, including Iran’s support for terrorism, human rights abuses, and other areas.
The JCPOA is designed to expand the scope of permitted business activity with Iran through sanctions lifting in exchange for Iran’s full compliance with its commitments.  We look forward to seeing all of these steps taken in the interests of the region and the world.
Posted in:  Iran
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