New US Sanctions on Iran's Iron, Steel, Aluminum, and Copper Sectors

On May 8, 2019, the Trump administration issued an Executive Order (EO)(1) establishing new sanctions on Iran’s iron, steel, aluminum, and copper sectors. A few key points from the EO include, but are not limited to, the following:

  • “All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person(2) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State”:

    • to be operating in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

    • to have knowingly engaged, on or after the date of this order, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

    • to have knowingly engaged, on or after the date of this order, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;….

In addition to the above, there are additional prohibitions on financial institutions and financial transactions (occurring with the noted sectors). The prohibitions included in the EO include:

  • the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked; and

  • the receipt of any contribution or provision of funds, goods, or services from any such person.

Contact your GCSG Trade Compliance professionals for assistance in understanding how to reduce your risk and how this EO may affect your business.

References

(1) Executive Order (EO) on “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran” - May 8, 2019

(2) United States person - means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.(1)

(3) Knowingly - with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.(1)

(4) Entity - means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.(1)

EU - Japan trade agreement effective on Feb 1, 2019

On February 1, 2019 the European Union (EU) - Japan Economic Partnership Agreement (EPA) becomes effective. The EPA creates a trading area that covers 600 million people and close to a third of global gross domestic product.

The EPA is the biggest trade agreement concluded to date by the EU. 99% of the tariffs applied on EU exports to Japan which currently amount to €1 billion, will be removed.”(1)

The EU exports more than 58 billion in goods and 28 billion in services to Japan each year.(2)

References

  1. European Council Press Release - “EU-Japan trade agreement will enter into force on 1 February 2019” - 21/12/2018

  2. European Commission - “EU-Japan Economic Partnership Agreement” - Official Page

  3. European Commission - “Fact sheets about the agreement” - News archive

OFAC Amends the Iranian Transactions and Sanctions Regulations

On Thursday, June 28 the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) amended (1) the Iranian Transactions and Sanctions Regulations (2) in order to implement the President's May 8, 2018 decision (3) to end U.S. participation in the Joint Comprehensive Plan of Action (JCPOA).  The changes include, but are not limited to:

  • Amending the general licenses authorizing the importation into the US (4) of and dealings in, Iranian-origin carpets and foodstuffs, as well as related letters of credit and brokering services, to narrow the scope of the licenses and to allow for the wind down of these activities through August 6, 2018;
  • Adding a new general license to authorize the wind down, through August 6, 2018, of transactions related to the negotiation of contingent contracts for activities, previously approved under General License I (5), related to the export or re-export to Iran of commercial passenger aircraft and related parts and services; and 
  • Adding a new general license (6) to authorize the wind down, through November 4, 2018 of certain transactions, previously approved under General License H (7), related to foreign entities owned or controlled by a US Person (8).
    • Non-US entities that are owned or controlled by a US Person are still subject to the restrictions on US Person involvement during the wind down period (9).  

For more information contact your GCSG experts.

E  info@globalcompliancesg.com

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U.S. Sanctions NK and Chinese entities supporting Kim Regime

On January 24, 2018, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) sanctioned an additional nine entities, 16 individuals, and six vessels related to North Korea's violations of UN Security Council Resolutions (UNSCRs).  

The actions target actors located in North Korea, China, Russia, and Georgia.

"Treasury continues to systematically target individuals and entities financing the Kim regime and its weapons programs, including officials complicit in North Korean sanctions evasion schemes," - Secretary of the Treasury Steven T. Mnuchin (1)

Summary of OFAC Actions Taken

  • Designated 10 representatives of the Korea Ryonbong General Corporation (Ryonbong) and one Workers' Party of Korea official - Pursuant to Executive Order (EO) 13687
  • Designated 5 additional North Koreans with links to North Korean financial networks - Pursuant to EO 13810 or 13687
  • Designated Beijing Chengxing Trading Co. Ltd., Dandong Jinxiang Trade Co., Ltd., and Hana Electronics JVC - Pursuant to EO 13810
  • Designated five North Korean shipping companies (Gooryong Shipping Co Ltd, Hwasong Shipping Co Ltd, Korea Kumunsan Shipping Co, Korea Marine & Industrial Trdg, and CK International Ltd) and blocked six vessels (Goo Ryong, Hwa Song, Kum Un San, Un Ryul, Ever Glory, and UL JI Bong 6) as property of these five companies - pursuant to EO 13810
  • Sanctioned the North Korean Ministry of Crude Oil Industry

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India joins the Australia Group

On January 19, 2018 the Indian Ministry of External Affairs announced that India has joined the Australia Group (AG).  The AG, in a consensus decision, admitted India as the 43rd participant.  

The Australia Group, established in 1985, is a voluntary and informal export control arrangement in which 42 countries, as well as the European Union, coordinate their national export controls.  The purpose is to limit the supply of chemicals and biological agents-as well as related equipment, technologies, and knowledge-to countries and entities that are suspected of pursuing chemical or biological weapons capabilities. 

GCSG's compliance experts closely follow dual-use developments.  Contact us at info@globalcompliancesg.com with any additional question's or for more information.

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Monday Compliance News - Around the World

GCSG's Monday Compliance News (published Tuesday the week of Jan 22) is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

The Impact of Retroactive Transfer Pricing Adjustments on the EU Customs Valuation | KPMG Meijburg & Co

"With its judgment of December 20, 2017 in the Hamamatsu Photonics Deutschland case, the Court of Justice of the European Union finally provided some clarity about the impact of retroactive transfer pricing adjustments...." (Click here for the article) - European Union

UK companies will face huge new VAT burden after Brexit | The Guardian

"More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit...." (Click here for the article) - UK, European Union

Ban Ki-Moon's Nephew Pleads Guilty in Bribery Case | The Wall Street Journal

"Joo Hyun Bahn, the nephew of former United Nations Secretary-General Ban Ki-Moon, pleaded guilty on Friday to U.S. charges connected to a scheme to bribe a foreign official...." (Click here for the article) - Vietnam, U.S., Global

Canada takes the U.S. to WTO in wide-ranging trade complaint | The Globe and Mail

"The Canadian government is taking the United States to the world's trade court in a wide-ranging complaint that accuses Washington of flouting the rules of commerce." (Click here for the article) - Canada, U.S.

Deferred prosecution agreements proposed to take companies task | The Straits Times

"A new legal framework that can grant companies amnesty for certain corporate offences is being proposed in Singapore." (Click here for the article) - Singapore

Cigarettes and Murky Joint Ventures Help North Korea Evade Crackdown  | The Wall Street Journal

"Global businesses faced a deadline last week to exit joint ventures operating in North Korea, but dozens of them are still there." (Click here for the article) - North Korea, U.S., South Korea, China, Global

US Company Settles Whistleblower Lawsuit, Pays for Importer's Customs Fraud  | Global Trade Magazine

"Federal prosecutors in New York recently announced the settlement of a remarkable lawsuit relating to a scheme to evade import duties." (Click here for the article) - U.S.

SFO opens investigation into Chemring Group PLC and its subsidiary  | U.K. Serious Fraud Office News Release

"The SFO confirms it has opened a criminal investigation into bribery, corruption and money laundering arising from the conduct of business by Chemring Group plc and CTSL..." (Click here for the article) - U.K.

Japan Imposes Additional Unilateral Sanctions on North Korea

On Friday, December 15, 2017 Japan imposed additional unilateral sanctions against 19 North Korean entities.  This includes companies involved in the financial services, coal, and oil trading sectors.

With the additional 19 entities, the total number of North Korean entities under Japanese sanctions now stands at 56.

(1) "According to a Foreign Ministry official, all the companies are already subject to U.S. sanctions, starting from January last year." 

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Sudan Sanctions Revoked

     On January 13, 2017 the US President issued Executive Order (E.O.) 13761 (further amended by E.O. 13804 on July 11, 2017) providing for the revocation of certain Sudan-related sanctions.  The action was taken in recognition of the positive actions taken by the government of Sudan.  Following the initial E.O., on October 6, 2017, the US Government officially revoked economic sanctions on the Government of Sudan under E.O.'s 13067 and 13412

     The revocation of certain sanctions indicates the Government of Sudan has continued to make strides in reducing conflict areas in Sudan, improving humanitarian access, and in cooperating with the US Government with regional conflicts and terrorism.

What changed?

  • Effective October 12, 2017 sections 1 and 2 of E.O. 13067 and all of E.O. 13412 were revoked.  Sections 1 and 2 blocked property of the government of Sudan and prohibited U.S. persons from engaging in transactions with Sudan and the government of Sudan.  The revocation of these provisions will allow U.S. persons to engage in transactions that were previously prohibited under the Sudanese Sanctions Regulations (SSR), 31 CFR 538.
  • Effective October 12, 2017, General License A authorizes exports and re-exports of certain agricultural commodities, medicine, and medical devices still controlled as a result of Sudan remaining on the State Sponsors of Terrorism List (SST List

What hasn't changed? 

  • The national emergency declared under E.O. 13067 remains in effect in regards to Sudan.
  • The OFAC sanction related to the Darfur conflict imposed under E.O. 13400 remains in effect.
  • OFAC designations of any Sudanese persons under E.O. 13067 and 13412 remain in effect
  • Sudan remains on the SST List; and as a result some agricultural, medicinal, and medical device exports and re-exports to Sudan still require an OFAC license (see General License A comment above).   
  • US persons and non-US persons will still need to obtain Department of Commerce Bureau of Industry and Security (BIS) licenses to export or re-export certain items such as commodities, software, and technology that are on the Commerce Control List (CCL), Supplement No. 1 to part 774 of the Export Administration Regulation (EAR), 15 CFR parts 730-774 or that require a license due to end-use or end-user concerns, 15 CFR 744. 

     Contact GCSG experts at info@globalcompliancesg.com with any questions or for more information on how we can assist you with your compliance program.  Visit our website at http://www.globalcompliancesg.com to learn more about our products and services. 

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