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On December 14, 2020, the US Government announced Sudan’s removal from the list of State Sponsors of Terrorism (the “SST List”).  This rescission of Sudan as an SST follows an agreement in October for Sudan to be removed from the list and the lapse of a 45 day congressional notification period. The federal register notice regarding the rescission is available here. As detailed in our previous blog post here, the US Government revoked Sudan sanctions in October 2017, but Sudan’s continuing inclusion on the SST List resulted in lingering stringent export and investment restrictions. The removal of Sudan from the SST List marks another fundamental change in removing trade restrictions and encouraging greater collaboration and support for transactions with Sudan.

As a result of Sudan’s removal from the SST List, several export controls and sanctions provisions will likely be revised, though we note that to date, such changes have not yet been implemented. The regulations that remain in place but are expected to be lifted and/or revised in due course are as follows:

  • Export Controls Revisions: The revocation of the sanctions are anticipated to effectuate changes in the export/reexport controls related to Sudan under the Export Administration Regulations (EAR), which are maintained by the US Commerce Department’s Bureau of Industry and Security (BIS). This would include the removal of Sudan from Country Group E:1 (terrorist supporting countries) in Supplement No. 1 to EAR Part 740, which would ultimately result in (i) a change of applicable de minimis level of US content in foreign-made items destined for Sudan from 10% to 25% and (ii) a change in certain licensing exceptions. Though according to the Reginfo.gov website such changes are under review, they have not yet been implemented.
  • OFAC General License: With the lifting of sanctions on Sudan while it remained on the SST List, the Treasury Department was obligated to continue requiring licenses for certain exports/reexports to Sudan of agricultural commodities, medicine, and medical devices pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000. Since June 2018 such items have been authorized via a general license encompassed in Section 596.506 of the Terrorism List Government Sanctions Regulations, which authorizes all exports/reexports of agricultural commodities, medicine, or medical devices to the Government of Sudan or to any entity in Sudan or to any person in a third country purchasing for resale to any of the foregoing, provided that shipment was made within 12 months of signing a contract for export/reexport. (See previous Federal Register notice.) With the removal of Sudan from the SST List, we would anticipate such licensing requirements to no longer be necessary, and thus the elimination of the general license is likely on the horizon. Though OFAC has not implemented such changes to date, Secretary Mnuchin issued a statement providing that the rescission of Sudan from the SST List opens a new chapter in US-Sudanese relations.
  • Other Restrictions: Lastly, the removal of Sudan from the SST List means that the restrictions on economic assistance, financial transactions, and other activities under federal statutes no longer apply.

The removal of Sudan from the SST List does not and is not anticipated to impact in the future the following regulations related to Sudan:

  • Darfur Sanctions: OFAC sanctions related to the conflict in Darfur remain in place, and US Persons remain prohibited from engaging in any transactions with Specially Designated Nationals (SDNs) identified under the [DARFUR] tag on OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”).
  • Dealings with Sudanese SDNs: US Persons remain prohibited from engaging in dealings with Sudanese SDNs designated pursuant to any sanctions authorities other than Executive Order 13067 and Executive Order 13412, including, e.g., SDNs designated for activities related to South Sudan (i.e., identified under the [SOUTH SUDAN] tag on the SDN List) or terrorism-related activities (i.e., identified under the [SDGT] tag on the SDN List).
Author

Nicholas Coward is a partner in Baker McKenzie´s Washington office and serves as chair the Firm’s Global Trade and Commerce Practice Group. He has also chaired the North American International Commercial Practice Group. He has over 30 years experience practicing in the areas of US export controls, trade sanctions and the Foreign Corrupt Practices Act. Mr. Coward served on the Washington Office management committee from 1990 to 2002 including two terms as managing partner and served on the Firm’s Executive Committee from 2002 to 2007.

Author

Meghan Hamilton is a member of the International Commercial Practice Group and the International Trade Compliance Sub-Practice Group in Baker McKenzie Chicago, where she has been an associate since 2015. Meg regularly assists multinational companies on sanctions, customs and export control compliance as well as other international trade matters, including commercial agreements and anti-boycott regulations. She is active in civic activities throughout Chicago, serving on the Young Professional Board of the Center for Disability and Elder Law as well as the Auxiliary Board of the Chicago Legal Clinic.

Author

Andrea Tovar regularly advises multinational companies on cross-border commercial transactions and complex international trade matters. Andrea is also a member of the firm’s Technology, Media & Telecommunications Global Industry Group and the California Diversity & Inclusion Committee.