OFAC and BIS Issue Amended Iraqi Sanctions Regulations
The issuance of Executive Order 13350 by the President (see below) has paved the way for the long-awaited revisions to the Iraq sanctions regimes administered by BIS and OFAC. In order to implement the changes required by Executive Order 13350, BIS and OFAC today published in the Federal Register regulations making significant changes to the Export Administration regulations (EAR) and the Iraqi Sanctions Regulations (ISR).
While the new regulations are complex, and should be reviewed carefully, the most significant change made by these regulations is to transfer the primary export licensing jurisdiction on exports to Iraq from OFAC to BIS.
Under the regulation issued by BIS, items subject to the EAR but not listed on the Commerce Control List (CCL) (i.e., EAR99 items) will generally not be subject to a license requirement except pursuant to the end-user and end-use controls set forth in the EAR. In addition, items controlled only for anti-terrorism (AT) reasons on the CCL, except for items controlled under six Export Control Classification Numbers (ECCNs), will also not be subject to a licensing requirement, except for the end-use and end-user requirements (see the regulation for the six ECCNs. As a result, in most instances, this new licensing policy will allow the export or reexport to Iraq, or the transfer within Iraq, without a license, of items classified as EAR99 or controlled only for AT reasons.
The BIS regulation also amends the de minimis rules applicable to Iraq to provide that reexports of items to Iraq from abroad are subject to the EAR only when U.S.-origin controlled content in such items exceeds 25% (as opposed to the existing 10%).
Export licenses must be obtained from BIS prior to exporting or reexporting to Iraq any items on the multilateral export control regime lists, the Wassenaar Arrangement, the Nuclear Suppliers' Group, the Australia Group and the Missile Technology Control Regime, and items controlled for crime control (CC) or regional stability (RS) reasons.
The regulation issued by OFAC today modifies the ISRs to recognize the transfer to BIS of licensing jurisdiction over exports from the United States to Iraq. Among other things, OFAC's regulation states that, effective today, July 30, 2004, all license applications for the exportation or reexportation of items subject to the EAR to Iraq should be submitted to BIS. In addition, the regulation specifies that all OFAC licenses for the exportation or reexportation of goods, software or technology to Iraq shall remain valid until the expiration date stated in the license, or if no expiration date is provided in the license, until July 30, 2005. OFAC's regulation also makes clear that U.S. persons may engage in economic transactions with certain entities and, thereby, contribute to the orderly and expeditious reconstruction of Iraq.
In addition, OFAC issued a general license (General License No. 1 Pursuant to Executive Order 13315 of August 28, 2003) that authorizes most transactions with state bodies, corporations, or agencies of the former Iraqi regime that were prohibited by Executive Order 13315. The general license notes that transactions with certain persons on the list of Specially Designated Nationals (SDN List) are still prohibited and that certain assets of those individuals remains blocked.
The BIS Iraq regulation can be viewed at the following link:
OFAC's Iraq regulation can be viewed at the following link: http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-17615.pdf