Overview
Overview
On August 24, 2026, the U.S. government took further steps towards normalizing trade, financial, and investment relations with the Government of Syria so that U.S. persons may undertake business with, in, and involving Syria and not be confronted with as many terrorism financing concerns. More specifically, the U.S. Department of State (“State”) rescinded Syria’s designation as a State Sponsor of Terrorism ("SST") pursuant to the Foreign Assistance Act (specifically 22 U.S.C. § 2371), the Arms Export Control Act (specifically 22 U.S.C. § 2780), and the Export Control Reform Act (specifically 50 U.S.C. § 4826), and delisted Hay’at Tahrir al-Sham’s (“HTS”) designation as a Specially Designated Global Terrorist (“SDGT”).
In parallel, the U.S. Department of the Treasury’s (“Treasury”) Office of Foreign Assets Control (“OFAC”) announced additional Syria sanctions actions, including that HTS was removed from the Specially Designated Nationals and Blocked Persons List (“SDN List”) pursuant to State’s delisting. State, Treasury, and the U.S. Department of Commerce (“Commerce”) also issued updated tri-seal guidance for Syria. As Steptoe previously noted last year, most U.S. economic sanctions related to Syria and the Government of Syria have been removed and certain U.S. export-controlled transactions now qualify for license exceptions, even though certain individuals and entities (collectively, “Persons”) associated with the Al-Assad regime remain Specially Designated Nationals and Blocked Persons (“SDNs”) and certain U.S. export controls remain in place against Syria as a destination or recipient of goods, software, technology, and defense articles or defense services (collectively, “Items”).
The updated tri-seal advisory underscores the continuing importance of international trade and regulatory compliance attention because certain changes to the Export Administration Regulations (“EAR”) and the International Traffic in Arms Regulations (“ITAR”) have not been promulgated yet, but are expected soon.
State Department Formal Rescission of Syria’s Designation as a State Sponsor of Terrorism
The State Department’s August 24 announcement formally rescinds Syria’s SST designation. SST status carries consequences under a range of statutes and regulations, such as restrictions relating to U.S. exports, assistance, and sovereign immunity litigation. In general, trade involving Syria and the United States, U.S. Persons, and/or with respect to Items subject to U.S. jurisdiction will face less strict controls and any necessary licenses will be subject to more favorable review policies. U.S. government interactions with Syria may also increase, as Syria is now eligible to receive financial assistance from the United States through a variety of avenues, including under the Food for Peace Act, Peace Corps Act, and the Export-Import Bank Act.
Sanctions Against HTS Lifted
HTS, formerly headed by now President of Syria Ahmed Al-Sharaa (formerly known as Mohammad Al-Jawlani), was previously designated on the SDN List as an SDGT. (State previously revoked HTS’s designation as a Foreign Terrorist Organization (“FTO”) effective July 8, 2025.) The coordinated August 24 actions by State and Treasury delist HTS as an SDGT and remove HTS and its listed aliases from the SDN List, ending the blocking prohibition on HTS and any entity that HTS owns, directly or indirectly, 50 percent or more. However, some individuals who have held formal HTS or HTS-predecessor positions remain sanctioned by OFAC as SDNs under separate authorities.
EAR and ITAR Amendments Are Still Needed to Align Export Controls with Current Syria Policy
Exporters, reexporters, and retransferors of Items controlled by the EAR or defense articles and services controlled by the ITAR should therefore view the August 24 actions as the next positive step toward Syria’s economic reintegration, but significant U.S. export licensing controls remain in place until further notice. Use of a license exception (such as Syria Peace and Prosperity (“SPP”)) is necessary for all Items going to or within Syria, except food and medicine designated EAR99. Thus, Syria remains a jurisdiction requiring an elevated export controls compliance posture, unless and until Commerce’s Bureau of Industry and Security (“BIS”) and State’s Directorate of Defense Trade Controls (“DDTC”) promulgate amendments to the EAR and ITAR with the force and effect of law.
Under the EAR, Syria remains listed in Country Group E:1, which is associated with broad Anti-Terrorism (“AT”) controls discussed in Part 742, limits on the availability of license exceptions, and the low jurisdictional de minimis threshold of 10 percent U.S.-origin controlled content. (Foreign-made Items destined to most destinations are not subject to the EAR’s jurisdiction based on incorporated controlled content unless such content rises above 25 percent of the fair market value of the Item.)
For Syria-destined Items “subject to the EAR,”[1] the required analysis continues to include Country Group E:1 and AT controls, Commerce Control List-based controls, license requirements, license exception eligibility, prohibited end uses and end users, and all applicable list-based restrictions (e.g., Entity List, Denied Persons List, Unverified List, and the designation of Syria’s Military Intelligence Service as a military-intelligence end user). Also, Syria remains subject to the Country Group D:5 U.S. arms embargo relevant to 600 series and 9x515 Items subject to the EAR. However, as we noted in September, BIS established presumptions of approval and case-by-case licensing policies for an expanded number of Items.
Syria also remains listed in ITAR § 126.1 as a proscribed country, imposing a policy of denial on any license application consistent with the current U.S. arms embargo. Assuming this status changes via regulatory amendment, an export, reexport, or retransfer transaction involving defense articles or defense services controlled by the ITAR, or related brokering activities involving U.S. or foreign-origin defense articles or defense services, may be approved, but would require a license or other approval by DDTC on a case-by-case basis.
Commerce and Treasury Anti-Boycott Considerations Persist
BIS maintains antiboycott rules in EAR Part 760 prohibiting U.S. Persons and their controlled-in-fact foreign affiliates from certain transactions that are inconsistent with U.S. foreign policy and that foster or support an international boycott. Also under BIS’s rules, even the receipt of certain requests related to a boycott in the interstate or foreign commerce of the United States requires reporting. While BIS does not maintain a list of countries or Persons with whom a boycott element is presumed by operation of law, BIS does maintain a Boycott Requester List for due diligence purposes and has published civil enforcement actions and settlements alleging prohibited conduct and/or failing to report boycott requests involving Syria.
Treasury publishes a quarterly list of countries that require participation in, or cooperation with, an international boycott including Syria. That list informs the tax reporting and tax benefit rules administered by the Internal Revenue Service (“IRS”) under section 999 of the Internal Revenue Code and relating to IRS Form 5713. To date, Syria has not been removed from Treasury’s list.
Consequently, U.S. Persons and U.S. tax filers should carefully review tenders, letters of credit, shipping instructions, certifications, questionnaires, and customer correspondence for boycott-related terms related to Syria that could be prohibited or penalized, and to determine whether any reportable request has been received under the U.S. antiboycott regimes.
Syria Sovereign Immunity Under U.S. Terrorism Statutes
A current SST designation can eliminate a foreign government’s immunity under the Foreign Sovereign Immunities Act’s terrorism exception at 28 U.S.C. § 1605A. The rescission limits the ability to bring new claims against the Government of Syria arising from events occurring on or after the August 24, 2026 (i.e., the effective date of State’s rescinding of Syria’s SST status). One such avenue for suing a foreign government is the Anti-Terrorism Act, as further amended by the Justice Against Sponsors of Terrorism Act (“ATA/JASTA”). ATA/JASTA establishes an avenue for U.S. nationals to sue due to injury to their person, property, or business arising from international terrorism and prevents foreign governments engaged in international terrorism from invoking sovereign immunity to prevent the suit from moving forward. The SST rescission significantly bolsters Syria’s ability to assert sovereign immunity from any lawsuits in U.S. federal courts for terrorism-related injuries or damages occurring on or after August 24, 2026.
Conclusion
The August 24 actions continue the U.S.’s support for Syria’s reintegration with the world economy by removing certain terrorism financing concerns under U.S. law, but additional U.S. government agency action is required to fully implement the removal of all SST-related restrictions. Steptoe attorneys stand ready to assist clients in assessing the evolving rules, conducting diligence, managing export control and sanctions risks, and prudently undertaking Syria-related activities to limit international trade and regulatory compliance liabilities.
[1] U.S.-origin Items and non-U.S.-origin Items exported from the U.S., containing U.S.-origin controlled content above 10 percent (as described above), and/or subject to the “springing” jurisdiction of one of the EAR’s foreign direct product rules.
