Date: 25 Nov 1999
Time: 19:28:49
Remote Name: 24.30.154.205
Has the US turned a new chapter in its Iranian sanctions policy? Have US policy makers paved the road for the end of an ineffectual policy of isolation and economic hostility towards the Islamic Republic of Iran? President Clinton's decision in April to exempt certain commercial sales of food, medicines, and medical equipment from the US sanctions regimes may indicate as much. In late July, the US Treasury Department's Office of Foreign Assets Control (OFAC) amended the Iranian Transaction Regulations (31 CFR 560) to reflect President Clinton's April decision. These amendments provided a procedure for case-by-case licenses for the commercial sale of food, medicine, and medical equipment to "approved buyers" in Iran. Most recently, further amendments with respect to these eligible sales became effective on October 27.th Notably, they allowed for specific licenses to authorize trade financing by approved eligible procurement bodies of the Iranian government. Additional amendments were also made with respect to alternate payment terms, eligible purchasers, debits and credits to Iranian accounts in US depository institutions, licensing requirements of federal agencies other than OFAC, "informational materials," and temporary worker visas. What follows is a brief summary of the essential amendments to the Iranian Transactions Regulations that became effective on October 27, 1999. Readers are advised to seek the legal advice of counsel and the licensing bureau of the Office of Assets Control (see below for contact information) for legal advice and instruction.
Eligible Procurement Bodies
Appendix C to Part 560 identifies the Government Trading Corporation and the State Livestock and Logistics Company as eligible procurement bodies of the Iranian government that are not affiliated with the "coercive organs of the state." As such, OFAC may issue specific licenses authorizing them to provide financing for eligible sales contracts. This designation provides an Iranian source for financing that was not otherwise available. A lengthy list of ineligible financial institutions that OFAC determined to be owned or controlled, presumably by the coercive organs of the government of Iran, is found in Appendix A to Part 560. (See also §560.532(e))
Alternate Payment Terms
A new provision in section 560.530(b) provides flexibility through case-by-case approval of specific licenses for payment terms and trade financing not authorized by the general license in section 560.530(a). Once again, the amendments provide another avenue to facilitate the commercial sale of food, medicine, and medical equipment to Iran that was not otherwise available. Eligible Purchasers & Other Federal Agency Licensing Requirements
Section 560.530(a) authorizes entry into executory contracts with eligible purchasers, namely "individuals in Iran acting for their own account, nongovernmental entities or procurement bodies in Iran identified by the Office of Foreign Assets Control…or with persons in third countries." Persons in third countries must purchase for persons in Iran acting for themselves or OFAC identified nongovernmental entities or procurement bodies. Performance in these executory contracts must be made dependent upon OFAC authorization. Moreover, performance of contracts with respect to exports or re-exports of any goods, technology, or services that require licensing by federal agencies other than OFAC must also be made contingent to such additional licensing (See §560.530(b)(4), §560.531(b)(4), and §560.533(b)(3))).
No Debits or Credits to Iranian Accounts on the Books of US Depository Institutions
Section 560.532(c) emphasizes the continuing prohibition of debits or credits to the US accounts of the government of Iran or those of persons located in Iran. This amendment is apparently a technical reminder that Iranian government assets remain frozen. The prohibition is explicitly applied to brokerage fees earned in approved commercial sales of food, medicine, and medical equipment to Iran in Section 560.533(c). Such fees must also not involve a debit or credit to the accounts of the government of Iran or a person located in Iran on the books of a US depository institution.
Information and Informational Materials
With the exception of prepaid subscriptions for widely circulated magazines, periodical publications, and certain other detailed exceptions in section 560.315, "information and informational materials" include publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs artworks, and news wire feeds. Amendments to section 560.210(2) prohibit services to market, produce, co-produce, create, or assist in the creation of information and informational materials. Moreover, the section further prohibits advances for such information and informational materials not yet created and completed.
Temporary Worker Visas
Finally, Iranians qualified for H visas are authorized to work temporarily according to the approved activities set out in their visas. Prior to October 27,th section 560.505(c) only allowed for H-1b visas for temporary professional workers, namely persons of distinguished merit or ability doing a job for which the employer requires at least a four-year college degree or the equivalent. The provision as amended now merely references H visas of which there are three types. These three include the H-1b, as well as H-2 and H-3 visas. Those who can not satisfy the H-1b professional requirements may apply for an H-2 visa, while H-3 visas allow employers to invite Iranians for formal organized short term training programs. The amendment seemingly allows for the increased likelihood of temporary worker visas for Iranians.
For detailed legal information please contact: Steven I. Pinter, Chief of Licensing (tel.: (202) 622-2480) or William B. Hoffman, Chief Counsel (tel.: (202) 622-2410) Office of Foreign Assets Control, US Treasury Department, Washington DC 20220. You may also find helpful information at www.treas.gov/ofac.
Iman Shad received an MA from the George Washington University Elliott School of International Affairs and a JD from the UC Davis School of Law. He is currently a co-author of a soon to be published legal textbook on international trade law.