Earlier this week the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) released their quarterly report pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”). The report covers the period of July 2012-September 2012 and provides information concerning the licensing of exports to Iran and Sudan of agricultural commodities, medicine, and medical devices. The report shows that licenses applications for exports to Iran were down by about 11% from the that same time period in 2011 to 383 license applications. However, there were still more licenses applied for than during the same period in 2010. The reason for this drop in license applications could be a number of factors, including difficulties U.S. exporters are having in getting paid for TSRA authorized exports to Iran, the issuance of a general license for exports of food in October of 2011, and a general hesitation by U.S. exporters to engage in business with Iran due to ever increasing sanctions targeting that country.

Notwithstanding the above, there are still numerous licenses being applied for. Perhaps even more interesting is that OFAC’s TSRA office did not deny one single license application for exports of agricultural commodities, medicine, or medical devices to either Iran or Sudan. Clearly, exporters are still applying for licenses and OFAC is still issuing them, despite the fact that many exporters of TSRA type exports are reporting difficulties in getting paid from Iran for their exports.

In a recent Voice of America interview Undersecretary of Terrorism and Financial Intelligence, David Cohen, stated that they aren’t hearing about the same problems regarding exports of food as they are for the exports of medicine. I found this a bit odd considering that our clients have reported similar problems for both food and medicine exports. I believe part of the reason for the focus on medicine is that some of the journalists that have reported on this issue have been focused more on impact on medicine exports. Indeed, it has been my experience when giving interviews concerning these difficulties that those interviewing me were not that interested in hearing about the difficulties of our food exporting clients, they were only focused on medicine. There is no doubt, however, that sanctions have impacted exports of food to Iran as well. There have been some reports which have stated that the price of basic food staples in Iran has quadrupled in the past year. As such, while headlines on the impact of food prices might not make the same splash as those about medicine, it is my understanding that all types of TSRA related exports are being impacted.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.