Among the Obama administration’s final actions was issuance of Executive Order 13761 (Jan. 13, 2017) suspending most United States trade sanctions against Sudan. The EO asserted that the reasons for imposing the sanctions in 1997 had changed. In particular, the government of Sudan had reduced its in-country military activity and showed cooperation in resolving conflict issues.
In recognition of these changes, EO 13761 revoked sections of previous Executive Orders that had established the sanctions in the first place. The catch, however, was that the effective date of revocation would be July 12, 2017, six months after EO 13761 was issued. Also on that date, the State Department was required to issue “a report on whether the Government of Sudan has sustained the positive actions that gave rise to” the revocation, and issue annual update reports thereafter.
General License Authorizes Most Transactions with Sudan
Complementing EO 13761, the Office of Foreign Assets Control issued a general license to the Sudanese Sanctions Regulations authorizing “all prohibited transactions, including transactions involving property in which the Government of Sudan has an interest.” Newly-permissible activities “include the processing of transactions involving persons in Sudan; the importation of goods and services from Sudan; the exportation of goods, technology, and services to Sudan . . .” Before the general license was issued, of course, OFAC’s regulations prohibited United States persons from conducting virtually all import, export, reexport, trade and financial transactions with Sudan.
Even with these changes, Sudan is not yet treated as a completely “normal” country for trade purposes. OFAC continues to require licenses for “the export of agricultural commodities, medicine, and medical devices to Sudan”, plus the Darfur Sanctions Regulations, 31 C.F.R. Part 546, and South Sudan Sanctions Regulations, 31 C.F.R. Part 558, continue in place and Sudan remains designated as an “AT” terrorist-supporting country under the Export Administration Regulations, effectively limiting exports to EAR99 items. Nevertheless, the general license permits U.S. persons, wherever located, to take part in most transactions with the country.
Innocuous Delay or Spanner in the Works?
Everything seemed to be moving along swimmingly until the recent issuance of EO 13804 (July 11, 2017), delaying the “progress report” by three months, until October 12, 2017. The stated reasons for this action are “to take additional steps to address the emergency . . . with respect to the policies and actions of the Government of Sudan, including additional factfinding and a more comprehensive analysis of the Government of Sudan’s actions.”
The White House notification message to Congress gave a little more explanation for the delay: “While the Government of Sudan has made some progress in areas identified in Executive Order 13761, I have decided that more time is needed for this review to establish that the Government of Sudan has demonstrated sufficient positive action across all of those areas.” The “some progress” language strikes me as a hopeful sign that termination of the sanctions remains on track, and the current Administration wants to build a more complete record before finalizing the revocation. Press reports, however, emphasize disarray and disagreement within the Administration as the reasons for the postponement.
Perhaps the three-month extension simply is intended to buy more time to make a final decision. If the Administration already had decided to reverse the revocation process, it could have issued a negative report on July 12. What puzzles me, though, is removal of the annual report requirement. It was included in EO 13761 to ensure that the government of Sudan does not revert to its previous behavior after the sanctions are finally revoked. Was this requirement deleted because no one wants to read yet another government report, or does it portend that the sanctions ultimately will remain in place?
Whatever the Administration’s rationale for the postponement, there now is an element of uncertainty over the ultimate fate of the Sudanese Sanctions Regulations. U.S. persons, both companies and individuals, who are now doing business with Sudan under OFAC’s general license should be aware that the termination process still has a ways to go before it’s final.