As an area housing a large Iranian American community, Western Los Angeles is landscaped by numerous Persian restaurants, Persian groceries stores with signs written in Farsi, and of course countless Persian/Oriental rug stores, many of which have very Persian names attached to them such as: Mehraban, Mansour, and Aga John. For centuries, Persian rugs, known for their artistry and elegance, have been one the most significant identifiers of Persian culture to the outside world.

Despite prohibitions on the importation of goods and services from Iran found in the Iranian Transactions Regulations, the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has traditionally authorized the importation of carpets from Iran via the issuance of a general license. As such, the flow of authentic Persian rugs has not been impeded upon by U.S. economic sanctions against Iran. However, as many readers of this blog know, last week President Obama signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”). This new law dramatically expands the scope of Iran Sanctions and installs many new prohibitions; prohibitions which may indeed end the flow of authentic Persian Rugs into the U.S. and cause the transformation of many storefronts from Orange County to the Valley and beyond.

This topic caught my attention when I returned to my office after a fantastic Fourth of July weekend and listened to my voice mail messages. I had received numerous calls from Persian Rug store owners in Los Angeles asking how they will be impacted by the new sanctions. Moreover, over the past few days I have fielded calls from other Persian rug store owners from Southern California asking me the same question: will the importation of rugs or carpets from Iran still be allowed under these new sanctions?

Unfortunately, the technical hard and fast answer here is no. Under section 103 of the CISADA all imports of goods and services from Iran to the U.S. are prohibited except for the following: the importation of information and informational materials, personal communications, donations of food, clothing, or medicine intended to relieve human suffering, and all those transactions incident to travel. In other words, if there is not an exemption carved out in the International Emergency Economic Powers Act (“IEEPA”) then the importation from Iran to the U.S. is prohibited.

Now there are a couple of things to keep in mind here. First, these new prohibitions do not take effect until ninety (90) days after the effective date of the CISADA; July 1, 2010. In other words, this ban does not go into full effect until September 29, 2010. Second, OFAC has not updated the Iranian Transactions Regulations (“ITR”) to reflect the mandates of the CISADA. As such, it remains to be seen how OFAC will address the question of importation of carpets. It is promising that they have previously authorized such importations by general license. They may continue to do so. They also could make such importations a licensable activity, whereby individuals and entities could apply for authorization to import carpets from Iran.

What OFAC will do in regards to this ban are uncertain. However, what is certain is that if OFAC maintains a strict adherence to the CISADA then a lot of store owners not just in Los Angeles, but all over the country, will be adversely impacted.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.