President Trump pulls the US out of the JCPOA

On 8 May, President Trump announced that he was pulling the US out of the Joint Comprehensive Plan of Action (‘JCPOA’), the landmark nuclear deal agreed under the Obama administration between Iran and the US, China, France, Russia, the UK, Germany and the EU in 2015. Under the deal, Iran is relieved from US, EU and UN nuclear-related sanctions in return for the scaling back of its nuclear capacity.

Trump said that the US intends to impose ‘the highest level of economic sanctions’ against Iran, targeting ‘critical sectors’ of Iran’s economy, such as its energy, petrochemical and financial industries.

The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has published FAQs clarifying the US will re-impose all nuclear-related sanctions lifted under the JCPOA after a wind-down period of either 90 or 180 days, depending on the activity. According to Trump, any entity continuing to trade with Iran after the wind-down period will face ‘severe consequences.’

Sanctions that will re-imposed after the 90-day wind-down period ending on 6 August 2018 are:

• Sanctions on the purchase or acquisition of US dollar banknotes by the government of Iran;
• Sanctions on Iran’s trade in gold or precious metals;
• Sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes;
• Sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
• Sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
• Sanctions on Iran’s automotive sector.

After 6 August, the US government will revoke various JCPOA-related authorisations, including ‘the importation into the United States of Iranian-origin carpets and foodstuffs and certain related financial transactions pursuant to general licences under the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR)’ as well as activities undertaken in connection with the Statement of Licensing Policy for Commercial Aircraft.

Further sanctions will be re-imposed after the 180-day wind-down period ending on 4 November 2018.

From 5 November, OFAC will revoke General License H, which authorised foreign subsidiaries of US companies to engage in transactions with Iran in certain circumstances. Sanctions will also be re-imposed on persons removed from the List of Specially Designated Nationals and Blocked Persons (‘SDN List’) and/or other lists on January 16, 2016. All of the US nuclear-related sanctions waived under the JCPOA will be re-imposed and ‘in full effect’ after 4 November 2018.

More details on how the snap-back of sanctions will be implemented is expected to be published in the coming weeks.

Panelists at this year’s WorldECR Forum in DC and London will discuss the impact of the President’s decision as it affects both US and non-US companies and the primary and secondary sanctions involved. Details of the Forum can be found at https://www.worldecr.com/conference-2018/

President Trump’s presidential memorandum can be found here: https://www.whitehouse.gov/presidential-actions/ceasing-u-s-participation-jcpoa-taking-additional-action-counter-irans-malign-influence-deny-iran-paths-nuclear-weapon/

OFAC’s statement can be found here:
https://www.treasury.gov/resource-center/sanctions/Programs/Pages/iran.aspx

OFAC’s FAQs can be found here:
https://www.treasury.gov/resource-center/sanctions/Programs/Documents/jcpoa_winddown_faqs.pdf