International Trade Law News

Published by Jacobson Burton Kelley PLLC

Today President Bush issued an Executive Order implementing sanctions on Syria pursuant to the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 (SAA) (Public Law 108-175, 117 STAT. 2486).

The following sanctions were imposed by the United States on Syria in accordance with section five of the SAA and are effective at 12:01 eastern daylight time on May 12, 2004:

1. Prohibition on the export or reexport to Syria of most U.S. origin products. This includes a ban on the sale and donation of all U.S. origin products to Syria, except for food, medicine and medical devices. In addition, pursuant to the waiver provision of the SAA the President will permit certain other discrete categories of exports to Syria, such as those to support activities of the United States Government and United Nations agencies, to facilitate travel by United States persons, for certain humanitarian purposes, to help maintain aviation safety, and to promote the exchange of information. “Medicines on the Commerce Control List and medical devices” were among the humanitarian items that will still be permitted to be exported to Syria. However, the President did not provide a waiver to permit the export of “agricultural commodities”, a term defined by section 902(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) (Public Law 106-387) as much broader than the “food” exception set forth in today's Executive Order. In addition, a waiver was granted permitting the export of telecommunications equipment and certain software and technology to Syria.

The prohibition on exports and reexports to Syria will primarily be implemented by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). All products that will be still permitted to be exported to Syria, including food, medicine and medical devices, will require a specific license to be issued by BIS prior to export. BIS will issue a General Order (General Order No. 2) implementing the export ban and specifying the procedures for obtaining a specific license to export the permitted products to Syria. The General Order will be published in the Federal Register by the end of this week. However, until the General Order is issued U.S. companies and their overseas affiliates should refrain from entering into any transactions with Syria and should not ship any U.S. origin products to Syria from the United States or via third countries.

2. A ban on the export to Syria of any items that appear on the United States Munitions List (arms and defense weapons, ammunition, etc.) or the Commerce Control List (CCL) (dual-use items such as chemicals, nuclear technology, propulsion equipment, lasers, etc.). These prohibitions will be implemented by the State Department’s Directorate of Defense Trade Controls (for USML items) and the Commerce Department’s Bureau of Industry and Security (for items on the CCL).

3. A prohibition on commercial air services between the United States and Syria by Syria-owned and controlled aircraft. The flight ban will be implemented by the U.S. Department of Transportation.

In addition to the sanctions provided for under the SAA, the Executive Order also imposed the following additional sanctions that were not required by the SAA:

4. The Treasury Department will issue regulations pursuant to the USA PATRIOT Act requiring U.S. financial institutions to sever correspondent accounts with the Commercial Bank of Syria (CBS) based on money laundering concerns. CBS is the single, government-owned bank specializing in servicing foreign trade and commercial banking, including foreign exchange transactions. CBS maintains correspondent accounts with banks in countries all over the world, including the United States. In accordance with this requirement, today the Treasury Department has sent to the Federal Register a notice of proposed rulemaking that would prohibit any U.S. bank, broker-dealer, futures commission merchant, introducing broker or mutual fund from opening or maintaining a correspondent account for or on behalf of CBS.

5. The Treasury Department's Office of Foreign Assets Control (OFAC) will designate certain Syrian individuals and entities contributing to terrorist-related activities. OFAC will subject designees to sanctions that will block their property and property interests and prohibit U.S. persons from engaging in financial transactions with them.

The White House indicated that the President will consider additional sanctions against Syria if it does not take “serious and concrete steps to cease its support for terrorist groups, terminate its weapons of mass destruction programs, withdraw its troops from Lebanon, and cooperate fully with the international community in promoting the stabilization and reconstruction of Iraq.”

Please continue to monitor Trade Law News for further information regarding the sanctions on Syria.