On January 13, 2017, the Obama administration announced that it was easing many of the restrictions on trade with Sudan “in response to positive developments in the country over the past six months related to bilateral cooperation, the ending of internal hostilities, regional cooperation, and improvements to humanitarian access.” These changes announced by the administration:
- generally authorize U.S. persons to engage in transactions with Sudanese individuals and entities,
- establish the conditional revocation of certain restrictions on trade with Sudan, and
- create favorable licensing policies for the export to Sudan of items related to civilian aircraft safety and railroad improvements.
Pursuant to this new policy, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) amended the Sudanese Sanctions Regulations (“SSR”) (31 C.F.R. Part 538) on January 17 to include a general license at SSR § 538.540 authorizing all transactions prohibited by the SSR and Executive Orders (“EOs”) 13067 (“Blocking Sudanese Government Property and Prohibiting Transactions with Sudan”) and 13412 (“Blocking Property and Prohibiting Transactions With the Government of Sudan”). As a result, U.S. persons are authorized to transact with individuals and entities in Sudan (other than those that remain on the Specially Designated Nationals List), and the property of the Government of Sudan subject to U.S. jurisdiction is unblocked. In effect, the general license results in the following:
- All property and interests in property blocked pursuant to the SSR are unblocked.
- All trade between the United States and Sudan that was previously prohibited by the SSR is authorized.
- All transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan, including oilfield services and oil and gas pipelines, that were previously prohibited by the SSR are authorized.
- U.S. persons are no longer prohibited from facilitating transactions between Sudan and third countries, to the extent previously prohibited by the SSR.
In conjunction with OFAC’s action, President Obama signed an Executive Order “Recognizing Positive Actions by the Government of Sudan and Providing for the Revocation of Certain Sudan-Related Sanctions” (the “Order”), which provides for the conditional revocation on July 12, 2017 of the sanctions provisions in Executive Orders 13067 and 13412. Specifically, the Order states that, before revocation of Executive Orders 13067 and 13412, the Secretary of State, in consultation with the Secretary of the Treasury, the Director of National Intelligence, and the Administrator of the U.S. Agency for International Development, must provide the President on or before July 12, 2017 a public report on whether the Government of Sudan has sustained carrying out its pledge to maintain a cessation of hostilities in conflict areas in Sudan; continued improvement of humanitarian access throughout Sudan; and maintained its cooperation with the U.S. on addressing regional conflicts and the threat of terrorism. If such a report is provided, the revocation will become effective on July 12, 2017. If the report concludes that Sudan has not maintained positive actions in these areas, the sanctions will not be revoked. The outcome of the report will not directly affect the OFAC-issued general license described above.
Additionally, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced on January 17 that it will no longer maintain a general policy of denial for applications for licenses to export or reexport to Sudan certain parts, components, materials, equipment, and technology related to commercial aircraft safety and items to construct and refurbish railroads in Sudan. Instead, BIS will now generally approve applications for license to export or reexport such items to Sudan if these items are controlled on the Commerce Control List only for anti-terrorism reasons.
These general policies of approval for aircraft- and railroad-related items are subject to some limitations. For example, applications for licenses to export complete aircraft that are controlled for both anti-terrorism and any other reason are not also subject to the general policy of approval. Additionally, the policies of approval only apply to exports and reexports to Sudan for civil use by non-sensitive end-users within Sudan. License applications that would substantially benefit sensitive end users, such as Sudan’s military, police, and intelligence services, will generally be denied. Finally, BIS encourages persons interested in exporting or reexporting to Sudan pursuant to the OFAC general license described above to consult BIS regarding any licensing obligations they may have under the Export Administration Regulations.
On January 20, the Trump administration issued a memorandum asking federal agencies to freeze the publication or implementation of pending regulations. This memorandum does not affect the general license issued by OFAC or the change in BIS licensing policy described herein, as both were published and came into effect on January 17, prior to the issuance of the memorandum requiring the regulatory freeze.