By Zahid Khan
On July 14, 2015, Iran nuclear deal with the P5+1, proclaimed the—Joint Comprehensive Plan of Action (JCPOA) regarding the gulf state Islamic republic of Iran’s nuclear program. In the JCPOA, Iran agrees to shrink its nuclear program awfully to assure tranquil civvies use and re-pledge that under no circumstances will Iran develop or acquire any nuclear weapons. This relief is delineate in a step by step greet based on the primary premise that no sanctions will be lifted until the International Atomic Energy Agency (IAEA) substantiate that Iran has enacted the unequivocal complied nuclear-related measures, including in relation to transparency and IAEA monitoring. Timing of the initial implementation of the JCPOA is uncertain, but could take up to six months or longer. As a first step, the UNSC adopted resolution 2231.
The US has agreed to lift most secondary sanctions, but US primary sanctions largely will remain in place even after implementation of the JCPOA, which could place US companies at a competitive disadvantage. This also means that non-US persons will need to ensure that their transactions under the JCPOA do not involve an impermissible US nexus.
The current US sanctions against Iran broadly fall into two categories. The first type—often referred to as primary sanctions—comprises the traditional sanctions generally applicable to transactions involving US persons, which restrict most activities involving US persons and Iran. The second type—often referred to as secondary sanctions—comprises measures the United States imposes against non-US persons for engaging in certain sanctionable activities involving Iran, which, as a result of the US sanctions architecture, primarily affects non-US persons. The US commitments related to sanctions relief under the JCPOA apply principally to these secondary sanctions.
US should provide initial sanctions relief to the persons—that engage in certain financial activities involving Iran, including transactions with certain designated individuals and entities such as the Central Bank of Iran (CBI) and other specified Iranian financial institutions, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), National Iranian Tanker Company (NITC), and those identified as Government of Iran (GOI), Iranian Rial transactions, the provision of specialized financial messaging services to CBI and Iranian financial institutions, the provision to the GOI of US bank notes, and transactions related to the issuance of Iranian sovereign debt,—that will provide the underwriting services, insurance, or reinsurance in the connection with activities consistent with the JCPOA, including activities related to the energy, shipping, and shipbuilding sectors of Iran.
Relief of the persons, that engage in transactions involving Iran and petroleum—petroleum products (including refined petroleum products), petrochemical products or natural gas (including liquefied natural gas); provide goods or services used in connection with Iran’s energy sector, the development of its petroleum resources, its domestic production of refined petroleum products and petrochemical products, relief for the persons—that engage in transactions with vessels used to transport crude oil, petroleum products (including refined petroleum products), petrochemical products or natural gas (including liquefied natural gas) to or from Iran; operate a port in Iran, engage in activities in connection with, the shipping and shipbuilding sectors of Iran or a port operator in Iran, and provision of vessels to Iran.
US sanction relief for the persons—that sell, supply, export or transfer, directly or indirectly, to or from Iran, gold and other precious metals, along with associated services. Relief should provide, directly or indirectly, certain metals and software for integrating industrial processes, to or from Iran in connection with activities consistent with the JCPOA, including to the energy, petrochemical, shipping, and shipbuilding sectors of Iran, and Iranian ports, along with associated services, facilitate financial or other transactions for the sale, supply, or transfer to Iran of goods and services used in connection with the automotive sector of Iran.
Relief for the individuals—involving, Iran’s equipment and technology controlled by multilateral nuclear control regimes, provided it is consistent with the nuclear activities contemplated in the JCPOA. Additionally, relief for persons participating in joint ventures relating to the mining, production, or transportation of uranium with Iranian parties. Relief from exclusion of Iranian citizens from higher education coursework in the US related to careers in nuclear science, nuclear engineering, or the energy sector of Iran. The relief measures applicable to US persons on Implementation Day are far more limited.
The US will license, on a case-by-case basis, non-US entities owned or controlled by US persons to engage in activities otherwise consistent with the JCPOA. Under the current primary sanctions regime, non-US entities owned or controlled by US persons are subject to the same prohibitions that apply to US persons. This new licensing policy could provide relief for such entities provided that their proposed activities are otherwise consistent with the JCPOA and US sanctions. The US government will need to provide guidance in the future as to the scope of this relief and how it will be implemented.
The US will license to the export, re-export, sale, lease, or transfer to Iran of commercial passenger aircraft, spare parts, and components for commercial passenger aircraft and the provision of associated services, including warranty, maintenance, and repair services and safety-related inspections, provided the items and services are exclusively for use with commercial passenger aviation—The US will license the importation into the US of Iranian-origin carpets and foodstuffs, including pistachios and caviar. Finally, under the JCPOA, the US has committed to delisting in stages certain parties from the various prohibited parties lists, including the List of Specially Designated Nationals and Blocked Persons (SDN List), Foreign Sanctions Evaders List (FSE List), and Non-SDN Iran Sanctions Act List (ISA List). This includes parties identified on Attachment 3 of Annex II of the JCPOA, such as NIOC, NITC, NICO, the Islamic Republic of Iran Shipping Lines (IRISL), and South Shipping Lines.
- A copy of the resolution, which includes the JCPOA and its Annexes.
- Freshfields Bruckhaus Derigner, Iran sanctions relief implemented, 20 Jan 2016.
- Iran Sanctions Kenneth Katzman Specialist in Middle Eastern Affairs, Congressioanl Research Service, March 23, 2016, pp. 2-4.
- Attachment 3 to Annex II of the JCPOA.
- P5+1 Agreement with Iran on Nuclear Program Reaches Implementation Day, Baker Botts, 16 Jan 2016.
- Council conclusions on the agreement on Iran’s nuclear programme, 20 July 2015.
- Department of Treasury announcement of June 4, 2013.
- Attachment 3 of Annex II of the JCPOA.