International Law Advisory - OFAC to Publish Final Rule Amending the Sudanese and Iranian Sanctions Regulations Regarding the Importation and Exportation of Goods and Technology via Diplomatic Pouch

The U.S. Treasury Department, Office of Foreign Assets Control (“OFAC”) will publish in tomorrow’s Federal Register (April 3, 2007) a final rule amending the Iranian Transactions Regulations (“ITR”) and the Sudanese Sanctions Regulations (“SSR”). The ITR and SSR each implement a separate set of Executive Orders aimed at addressing the threat posed to the United States by Iran and Sudan, respectively.

The anticipated amendments will expand the scope of authorized transactions as they pertain to the importation and exportation of goods and technology via diplomatic pouch. The ITR and SSR, in their current form, contain exceptions that authorize the importation into the United States from Iran or Sudan, or the exportation from the United States to Iran or Sudan, of diplomatic pouches and their contents. The forthcoming amendments broaden those exceptions by removing the implied restriction that such shipments take place only between the United States and Iran or Sudan. That is, under the anticipated final rule, the exportation or reexportation of goods and technology shipped via diplomatic pouch will be allowed to be effected by U.S. persons, wherever located, as well as by third-country governments. With these amendments, OFAC will essentially be reflecting the view that an export via diplomatic pouch to an embassy based in a foreign country is considered to be an export to the country of the embassy, not an export to the country of destination. The rule reminds exporters, however, that the exportation or reexportation of certain U.S.-origin goods or technology to a third-country government, or to its contractors or agents, may require authorization by the U.S. Department of Commerce under the Export Administration Regulations (EAR).

In terms of the specific changes to the regulations, OFAC will subdivide 560.521 of the ITR and 538.516 of the SSR, with their respective subsections (a) constituting the original authorizations and their respective subsections (b) constituting the broadened authorizations. The amendments will take immediate effect upon publication of the final rule in tomorrow’s Federal Register. A copy of the Federal Register notice with the specific language of the upcoming rule is attached for your convenience.

If you have any questions regarding the impending final rule, the ITR, or the SSR, please feel free to contact Edward Krauland (1.202.429.8083; ekrauland@steptoe.com) or Andy Irwin at (1.202.429.8177; airwin@steptoe.com).