All week long I have been getting calls from clients and media about how the alleged “Iran Bomb Plot” was going to impact sanctions against Iran. Many people, a number of which who have pending license applications before the United States Department of the Treasury Office of Foreign Assets Control (OFAC), were terrified that OFAC would take a harsher stance towards licensing transactions with Iran as a punitive measure towards the alleged assassination plot.

However, OFAC never fails to surprise us and today they continued in that tradition by promulgating a general license authorizing the export of food to Iran and Sudan. Let me repeat that: THERE IS NOW A GENERAL LICENSE TO EXPORT FOOD TO IRAN AND SUDAN. That means no more waiting around on your TSRA (Trade Sanctions Reform and Export Enhancement Act of 2000) license, right?

Not necessarily. The new general license only lifts the TSRA specific license authorization required for export of food. Food is defined as “items that are intended to be consumed by and provide nutrition to humans or animals in Sudan and Iran, including vitamins and minerals, food additives and supplements, and bottled drinking water, and seeds that germinate into items that are intended to be consumed by and provide nutrition to humans or animals in Iran. For purposes of this general license, the term food does not include alcoholic beverages, cigarettes, gum, or fertilizer.” Moreover, the following food items are not included under the general license: castor beans, castor bean seeds, raw eggs, fertilized eggs (other than fish and shrimp roe), dried egg albumin, live animals, Rosary/Jequirity peas, non-food-grade gelatin powder, and peptones and their derivatives. Also, specific licenses are still required for medicine and medical devices.

At least in the case of Iran these new changes do not authorize the export of food to military or law enforcement purchasers, however, those seeking to export food to such parties may seek a specific license. Despite this fact, there is also now a general license authorization for the arrangement of specifically licensed exports and re-exports. These arrangement transactions include financing, entering into executory contracts, making shipping arrangements, cargo inspections, etc.

It should be understood that this is a general license and not an exemption. That means that OFAC can rescind this authorization at any time and it is only valid for the next year, although it is my belief that if significantly cuts down on the backlog at OFAC and is not deemed to be harming the integrity of the sanctions program it will be extended.

The most remarkable facet of this development is that at a time when Congress and many hawkish pundits are advocating for tougher sanctions or worse for Iran, the executive branch did not go with the popular demands and did the right thing. This decision is good both for U.S. business particularly the agricultural industry, as well as for OFAC itself, as it will ease the burden on their licensing division. Furthermore, it will allow food to get to parts of the world where it is needed. I generally try to stay objective, but I have to applaud the decision made here.

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@ferrari-legal.com.