As a new round of nuclear talks involving American, European, and Iranian leaders commence this week in Vienna it appears that the first-step deal agreed upon in January has already led to significant changes in OFAC’ s Iranian sanctions regime. In the months since the initial deal, OFAC has taken incremental yet steady action geared towards ultimately allowing certain U.S. industries to begin trading with Iranian entities. While initial actions by the President and OFAC did not significantly change anything for U.S. industries in particular (they were primarily geared towards allowing transactions with Iran involving non-U.S. entities to go forward), the following actions may signal the start of a reopening of trade relations between the U.S. and Iran, especially if the current round of talks prove to be as successful as the last:
- OFAC has granted Boeing a license to export spare commercial parts to Iran for use in repairing IranAir’s commercial fleet. The transaction will be the company’s first dealing with Tehran since 1979 and represents the first substantial application of OFAC’s new “favorable licensing policy” towards Iran, which was first announced on January 20th. A Boeing statement maintained that the license had been granted to promote flight safety. Additionally, General Electric said it received permission to repair 18 commercial plane engines it had sold to Iran decades ago. The repairs will be carried out in GE facilities or at a German partner firm. Maybe it is time to consider “out of the box” opportunities? You have to play to win. This is big market opportunity for companies that want to get special licenses.
- OFAC has published a final rule that implements the following changes to its sanctions program:
- Amends the existing general license that authorizes the exportation or re-exportation of food to individuals and entities in Iran to include the category of agricultural commodities (this is a much broader category, but keep in mind that the rule does exclude some notable commodities such as castor beans, eggs, and live animals, and furthermore, still prohibits the sale of these goods to military or law enforcement purchasers or importers)
- Adds a general license that authorizes the exportation or reexportation of replacement parts for certain medical devices to individuals and entities in Iran provided that the parts are classified as EAR99 and limited to a one-for-one export or reexport basis (one replacement part per one medical device)
As has been the case for decades, any potential transaction with an Iranian entity must be carefully and thoroughly vetted to ensure that it does not amount to a violation of OFAC’s ever-changing sanctions regime. Yet now more than ever, it may prove lucrative to entertain these possibilities and perform the necessary due diligence to determine whether they are indeed viable opportunities. If relations between Iran and the U.S. continue to improve, companies in a position to swiftly reenter the Iranian market stand to reap the benefits of high consumer demand coupled with minimal competition.