Baker Donelson’s Trade and Compliance attorneys capped off their 2017 trade watch series with a year-end analysis of lessons learned during the first year of the Trump Administration, along with thoughtful projections of what we may expect in the coming months. With 2017 now behind us, we look ahead at what may be in store for trade after the withdrawal from the Trans-Pacific Partnership Agreement (TPP), sanctions involving Iran and Cuba, and NAFTA negotiations in 2018. Read our analysis here.
On December 12, a key deadline passed for Congress to reimpose nuclear-related sanctions against Tehran, shifting the pressure back to the executive branch and setting new deadlines that will be critical to the fate of the 2015 Iran nuclear deal. In October, President Trump refused to certify Iran’s compliance with the 2015 Joint Comprehensive Plan of Action (JCPOA), calling on Congress to set “trigger points” related to Iran’s nuclear and ballistic missile programs, and setting off a 60-day window for lawmakers to reimpose secondary sanctions that have been suspended under the terms of the JCPOA. That window closed on December 12 without any Congressional action. (more…)
President Trump’s October 13 speech denounced Iran’s “fanatical regime” as a “menace,” and threatened to terminate the 2015 Iran nuclear deal negotiated by Barack Obama and formally known as the Joint Comprehensive Plan of Action (JCPOA). He accused the “rogue” Iranian government of financing terror organizations, imprisoning Americans and fomenting vicious civil wars. (more…)
A D.C. Circuit Court of Appeal’s panel recently issued a key opinion affirming the U.S. Treasury Department’s broad ability to enforce sanctions regulations through its Office of Foreign Assets Control (“OFAC”). While the court ultimately set aside a $4.07 million penalty, the decision established critical precedent for export compliance and future OFAC enforcement actions. Significantly, the court ruled that OFAC does not have to prove that a company’s exports actually reached a sanctioned destination in order to impose penalties for sanctions violations. Rather, OFAC simply has to show that a company knew or had reason to know that through its third-party distributor, the company’s exported goods would ultimately end up in a sanctioned country. (more…)
You may not have heard of the Office of Export Enforcement (OEE), but if you or your subsidiary are doing business abroad, you should take note. Last month, the OEE, which is part of the Department of Commerce’s Bureau for Industry and Security (BIS), raided the U.S. headquarters of a company whose European subsidiary is suspected of violating U.S. export control and sanctions laws. (more…)
On March 7, we learned that Zhongxing Telecommunications Equipment Corporation (ZTE) concluded 3 settlement agreements that could result in penalties as high as $1.2 billion for its violations of U.S. sanctions and export controls laws. Although the amount of the fines results from particularly egregious conduct on the part of ZTE to conceal its violations even during the period of investigation, the case highlights three valuable lessons for all exporters. This is especially true given Secretary of Commerce Wilbur Ross’s pronouncement that the case signals the new Administration will be “aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers.” (more…)
If you are a foreign company that wants access to the U.S. financial markets, make sure you understand the U.S. Iran Transactions and Sanctions Regulations (ITSR). Administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), the ITSR, unlike other sanctions programs, contain secondary sanctions that apply to non-U.S. persons for wholly non-U.S. conduct that may occur entirely outside U.S. jurisdiction. Even if you are not doing business with Iran, several companies and individuals, many of whom are not Iranian, have been listed under the sanctions program, including 25 more added earlier this month. (more…)
In the final weeks of December, President Obama amended sanctions to both the Iran and Russia programs. These changes further relaxed sanctions on Iran while they tightened sanctions on Russia (see our client advisory). Yet, just three days from the inauguration of President-elect Donald Trump, exporters are no doubt wondering what the new president will do with regard to these changes and other sanctions relief that has come to pass under the Obama administration. (more…)
Further weakening secondary sanctions, the Department of Treasury’s Office of Foreign Assets Control has issued a new license to allow non-U.S. persons to fly some U.S. aircraft to Iran for temporary sojourn. While General License J only applies to fixed-wing airplanes and imposes a number of conditions that must be met in order for non U.S.-persons to fly to Iran, the new license may mark the start of new opportunities for the civil aviation industry in Iran. (more…)
What are secondary sanctions?
Secondary sanctions apply to non-U.S. persons for wholly non-U.S. conduct that occurs entirely outside U.S. jurisdiction. Compare this to primary sanctions, which prohibit U.S. persons from engaging in specified activities with certain countries, entities, and persons. (more…)