As we enter 2014 we look back at last year’s developments in the world of U.S. economic sanctions as administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and we see a number of shifts in policy, the law, and in practice. One of the most interesting shifts, and one which began prior to last year, was in relation to exports of food, medicine, and medical devices to Iran under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA). The TSRA licensing program calls for the licensing of humanitarian exports (food, medicine, and medical devices) to Iran and Sudan. The program has changed substantially in recent years as the export of most commodities under TSRA have been generally authorized and no longer need specific licensing from OFAC.

The transformation of TSRA from a specific licensing program to an authority under which OFAC generally authorizes a wide range of exports continued in 2013 with an expanded list of medical devices eligible for export pursuant to general license authority. But that was not the only change occurring in relation to TSRA exports this year. Due to the enactment of legislation which tightened the financial channels through which Iranian banks conducted trade finance, TSRA exports were severely impacted as numerous exporters reported facing difficulties in receiving payments for exports related to TSRA related commodities.

The irony here is that at a time where there is increased interest in TSRA related trade with Iran due to the promulgation of general licenses and expanded eligible commodities under those licenses, the financial means for which to effectuate such trade are becoming increasing limited. This is leading many of those exporters showing interest in TSRA related exports to Iran to lose interest fast. While some trade is still able to get through, it seems that most of it is being conducted by the larger commercial exporters with enough leverage over their foreign financial banking partners to compel them to process payments related to such trade. While that’s great for them, unless the smaller exports can secure cash in advance from parties in Iran from accounts outside of Iran, a lot of them seem to be out of luck. It’s a trend that will likely continue in 2014, unless the proposed financial channel for humanitarian exports noted in the Joint Plan of Action can relieve some of those these issues.