Certain Iran Sanctions Reimposed after 90-Day “Wind-Down” Period Ends

President Trump issued an Executive Order today re-imposing and, in some cases, expanding sanctions on Iran that had been lifted under the 2016 nuclear deal (the “JCPOA”), as today marked the end of the first “wind-down” period of 90 days following the President’s May 8 announcement that the US would no longer honor its sanctions commitments under the JCPOA.  Some of the re-imposed sanctions will be effective tomorrow, August 7; others will come back into effect following the second (180-day) wind-down period ending November 4.  In addition, OFAC issued additional answers to frequently asked questions on Iran sanctions, including guidance on the circumstances in which payments from Iranian parties can be received after the end of the wind-down periods.  These actions are largely consistent with the President’s May 8 announcement and the earlier guidance that had been issued by OFAC on the re-imposition of Iran sanctions.

Effective August 7, the following sanctions that were lifted pursuant to the JCPOA, have been reimposed, including sanctions on certain support for and services related to the activities below: Continue Reading

Congress Agrees on Final Text of CFIUS Reform Bill

Earlier this week, negotiators from the House and Senate reached agreement on what will very likely be the final text of the Foreign Investment Risk Review Modernization Act (FIRRMA), which will be part of the National Defense Authorization Act for Fiscal Year 2019 (NDAA). FIRRMA seeks to overhaul the Committee on Foreign Investment in the United States (CFIUS) by expanding the scope of the committee’s jurisdiction and closing certain “loopholes,” among other revisions.  A text of the final version of the NDAA, including FIRRMA (at Title XVII), is available here. The negotiated text must still be passed by both chambers of Congress.  The House is expected to vote on the updated version in the coming days and the Senate shortly thereafter.

As expected, FIRRMA will expand the jurisdiction of CFIUS to cover additional investments in critical technology and critical infrastructure companies, real estate transactions and concessions at airports and port facilities, and other perceived gaps in the existing CFIUS process. The bill will also result in new US export controls oversight over exports of “emerging and foundational technologies” that are not currently subject to regulation.  Steptoe is preparing a detailed advisory on FIRRMA to be published in the coming days.  Previous Steptoe advisories on FIRRMA are available here and here.

U.S. Rejects European Requests for Exemptions to Iran Sanctions

Since President Trump’s announcement, on May 8, that the United States would withdrawal from the Joint Comprehensive Plan of Action (“JCPOA”) and re-impose previously lifted sanctions against Iran, the remaining JCPOA signatories have been scrambling to save the agreement. On June 4, officials from the UK, Germany, France, and the EU sent a letter to Secretary of State Mike Pompeo and Secretary of the Treasury Steven Mnuchin seeking a number of exemptions to US secondary sanctions scheduled to come back into effect later this year in order to facilitate the continued economic engagement between the EU and Iran that is a key part of the JCPOA. (See our previous advisory on the United States withdrawal from the JCPOA here). The letter from EU officials outlined a number of specific requests:

  • grant exemptions from US sanctions for EU companies that initiated or concluded their contracts after JCPoA Implementation Day (16 January 2016).
  • give public confirmation of areas of business that are exempt from US secondary sanctions, such as pharmaceuticals, healthcare; and grant exemptions to allow for economic relationships in key sectors, in particular in the fields of energy, automotive, civil aviation and infrastructure.
  • grant exemptions to maintain banking channels and financing channels with Iran. This notably includes maintaining links with the Central Bank of Iran as well as with the other Iranian banks that are not sanctioned by the European Union and the preservation of financial messaging services (SWIFT) to these banks.
  • grant extended and adapted winding-down periods according to the necessary time to properly wind down affected projects for companies that may eventually choose to withdraw from Iran.
  • prolong General License H (foreign subsidiaries of US companies to be able to continue business).
  • reaffirm the exemption for Embassy bank accounts.

Continue Reading

ZTE Denial Order Lifted

The US Commerce Department’s Bureau of Industry and Security (BIS) terminated the ZTE Denial Order, effective today.  As a result, ZTE is no longer subject to any specific US export control restrictions (except for ZTE Parsian, an Iranian affiliate that remains on the BIS Entity List).  ZTE still faces a series of stringent requirements that will last 10 years, pursuant to its settlement with BIS, and any failure to comply could lead to a reactivation of the Denial Order.  The Commerce Department issued a press release describing these developments in more detail.  A bipartisan legislative effort continues to try to impose similar restrictions on ZTE, but the fate of that effort remains unclear.

Supreme Court Upholds Travel Ban Version Three

On June 26, 2018, the US Supreme Court upheld the Trump Administration’s third travel ban and, more significantly, affirmed the president’s broad authority to restrict immigration by Executive Order (EO). In Trump v. Hawaii, the Court found that the EO was within the president’s authority under an Immigration and Nationality Act (INA) provision that gives the president the ability to restrict the entry of foreign nationals into the US whenever the president finds that such entry “would be detrimental to the interests of the United States.”

For more information, please see our advisory.

CFIUS Reform: What’s Next?

The ambitious CFIUS reform bill introduced in November 2017, the Foreign Investment Risk Review Modernization Act (FIRRMA), has recently received significant congressional attention and appears likely to become law this year, with some revisions from the version introduced last year. On June 18, 2018, the Senate passed its version of FIRRMA as Title XVII of the National Defense Authorization Act of 2019 (H.R. 5515). On June 26, 2018, the House passed its version of FIRRMA (H.R. 5841) as a stand-alone bill. Both versions of FIRRMA passed with strong majorities, and both versions have been updated in substantial part to alleviate US business concerns about some of the more extensive aspects of the original version of the bill. On June 27, President Trump urged Congress to move quickly to pass FIRRMA. The president’s statement came as he rejected the idea he had previously floated in the context of the ongoing Section 301 investigations about introducing additional investment restrictions against China under other legal authorities.

For more information on the key provisions of FIRRMA, its prospects for passage, and next steps in CFIUS reform, please see our advisory.

OFAC Revokes General License H and Takes Other Steps to Continue to Implement the US Withdrawal from the JCPOA

Effective yesterday, as part of the President’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA), the Office of Foreign Assets Control (OFAC) revoked several general authorizations that had been issued as part of the JCPOA, and amended the Iranian Transactions and Sanctions Regulations (ITSR) to implement “wind down” periods for persons who had previously relied on these authorizations.   In addition, OFAC updated its Frequently Asked Questions (FAQs) providing guidance on the JCPOA withdrawal, although these minor updates do not add much insight.

Yesterday’s action primarily impacts certain US companies, as well as non-US companies owned or controlled by US persons. The most significant change is the revocation of OFAC’s General License H, which had provided sanctions relief pursuant to the JCPOA for foreign subsidiaries of US companies conducting business with Iran.  In its place, OFAC has issued a new general license authorizing the wind down of business with Iran by foreign subsidiaries until November 5, 2018.  Yesterday’s action also revokes OFAC’s general licenses authorizing imports into the United States of Iranian-origin carpets and foodstuffs and the entry into contingent contracts related to sales of commercial passenger aircraft and related goods and services, which have been replaced with similar wind down provisions requiring that all such activity cease by August 7, 2018.   Continue Reading

US Section 301 Investigation: Update on US Tariffs and China’s Response

The Office of the US Trade Representative (USTR) issued an update on its Section 301 investigation into Chinese technology and intellectual property practices on June 15, 2018. This update contains a list of products that will be subject to additional 25% tariffs on July 6, 2018 as well as a second proposed list of products targeted for future 25% tariffs.  

The announcement that the United States would impose Section 301 tariffs marked a change of course in US-China trade relations. As the deadline for public comments on USTR’s April tariff list approached, US Treasury Secretary Steven Mnuchin stated that the United States would postpone tariffs while finalizing a bilateral agreement to reduce the US-China trade deficit and promote bilateral commerce and intellectual property protection. A week later, however, the White House stated that Section 301 tariffs would be announced by June 15 and would go into effect soon after. Following this announcement, US-China trade talks have deteriorated, China has retaliated for the Section 301 tariff plan, and both countries have made significant additional retaliation threats against one another.

For more information, please see our advisory.

EU Extends the Scope of EU Blocking Statute to Protect Against Extra Territorial Application of US Re-Imposed Sanctions on Iran

On June 6, and in furtherance of its May 16 announcement, the European Commission adopted a delegated act to amend the annex to the EU Blocking Statute by adding within its scope US Iran-related secondary sanctions that have extra-territorial application.  The delegated act will enter into force once it is published in the EU Official Journal – probably well before the August 16 deadline set out for the re-imposition of the US secondary sanctions – unless the European Parliament or the Council (the Member States) object within a two-month scrutiny period.

List of US Secondary Sanctions Newly Targeted

The revised annex sets out the third-country measures to which the statute applies should it enter into force. The revised annex includes the same references to US sanctions laws that have previously been included in the annex, namely those that target US sanctions on Cuba.  But it also lists the following new US sanctions laws and regulations specifically to address the reimposition of US sanctions pursuant to the US withdrawal of the JCPOA: Continue Reading

President Trump Issues Venezuela-Related Executive Order

On May 21, 2018, President Trump issued a new executive order prohibiting certain transactions benefitting the government of Venezuela.  The order prohibits all transactions related to, provision of financing for, and other dealings in:

(i) the purchase of any debt owed to the Government of Venezuela, including accounts receivable,

(ii) any debt owed to the Government of Venezuela that is pledged as collateral after the effective date of this order, including accounts receivable; and

(iii) the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.

As is typically the case with such executive orders, the new order also prohibits “any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order” and “any conspiracy formed to violate any of the prohibitions set forth in this order.” Continue Reading