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License Requirements on Certain Exports to Iran Eliminated

Wednesday, April 09, 2014
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control has issued a final rule that, effective April 7, revised the Iran Transactions Sanctions Regulations to allow exports of certain agricultural and medical goods to Iran without a license.

Agricultural Commodities. The rule expands an existing general license that authorizes the exportation or reexportation of food (including bulk agricultural commodities listed in appendix B to the ITSR) to authorize (a) the exportation or reexportation of the broader category of agricultural commodities to the government of Iran, individuals or entities in Iran, or persons in third countries purchasing specifically for resale to any of the foregoing and (b) the conduct of related transactions. All such exports or reexports must be shipped within the 12-month period beginning on the date of the signing of the contract for export or reexport.

This general license does not authorize the exportation or reexportation to Iran of castor beans, castor bean seeds, certified pathogen-free eggs (unfertilized or fertilized), dried egg albumin, live animals (excluding live cattle), embryos (excluding cattle embryos), Rosary/Jequirity peas, non-food-grade gelatin powder, peptones and their derivatives, super absorbent polymers, western red cedar, or any fertilizers. It also does not authorize (a) the exportation or reexportation of agricultural commodities to military or law enforcement purchasers or importers or (b) any transaction or dealing with a person whose property and interests in property are blocked under, or who is designated or otherwise subject to any sanction under, the terrorism, proliferation of weapons of mass destruction, or narcotics trafficking programs administered by OFAC.

                                                                                                                               

Definitions. The rule clarifies that for purposes of the general licenses for Iran the terms “agricultural commodities,” “medicine” and “medical device” include (a) in the case of items subject to the Export Administration Regulations, items that are designated as EAR99, and (b) in the case of items that are not subject to the EAR, items that would be designated as EAR99 if they were located in the United States.

Furthermore, the rule adds a definition of  “covered person,” which is (a) with respect to the exportation or reexportation of items subject to the EAR, a U.S. person or a non-U.S. person, and (b) for purposes of items not subject to the EAR, a U.S. person, wherever located, or an entity owned or controlled by a U.S. person and established or maintained outside the United States. This amendment clarifies that, for purposes of the exportation or reexportation of items that are not subject to the EAR, these general licenses apply to any U.S. person, wherever located, or any U.S.-owned or -controlled foreign entity.

Medical Device Parts. This rule adds a new 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 (a) designated as EAR99 or would be if they were located in the United States and (b) limited to a one-for-one export or reexport basis (i.e., only one replacement part can be exported or reexported to replace a broken or non-operational component). Such parts may be exported or reexported to the government of Iran, individuals or entities in Iran, or persons in third countries purchasing specifically for resale to any of the foregoing. The license authorizes the conduct of related transactions as well.

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