Corrected BP Summary of OFAC Final Rule Banning Iranian Carpets, Food, and Other Imports/Exports

The final rule also implements the import and export prohibitions in section 103 of the CISADA.

This summary corrects information on the noncommercial import prohibitions of the final rule and provides certain additional information on OFAC’s implementation of CISADA.

Carpet and Foodstuff Import Exceptions to Trade Ban Revoked

Effective September 29, 2010, the final rule revokes 31 CFR 560.534 (on authorized imports of certain foodstuffs and carpets from Iran) and 31 CFR 560.535 (on letters of credit and brokering services relating to these authorized foodstuff and carpet imports).

Commercial import ban. This means that OFAC will no longer authorize, by general or specific license, the commercial importation into the U.S. of the following products of Iranian origin:

• foodstuffs intended for human consumption that are classified under HTS chapters 2-23 (including pistachios, caviar, etc.); or
• carpets and other textile floor coverings and carpets used as wall hangings that are classified under HTS chapter 57 or heading 9706.00.0060.

Noncommercial import ban, unless exempt. As a result of this revocation, noncommercial importation of the above foodstuffs and carpets of Iranian origin into the U.S. and related services will also be prohibited, unless otherwise authorized or exempt. One such authorization is the general license for the importation of Iranian-origin household goods and personal effects² set forth in 31 CFR 560.524(b). OFAC states that this general license continues in effect.

(See ITT’s Online Archives or 09/28/10 news, 10092860, for BP summary of a U.S. Customs and Border Protection (CBP) CSMS message that describes the carpet and foodstuff bans of the CISADA.)

3rd Country Carpets and Foodstuffs Transshipped Through Iran also Banned

OFAC states that this revocation will also affect the specified foodstuffs and carpets of third-country origin that are transshipped through Iran for importation into the U.S.

This is because the Iranian Transactions Regulations (ITR) define the terms “goods of Iranian origin” and “Iranian-origin goods” to include: (1) goods grown, produced, manufactured, extracted, or processed in Iran; and (2) goods which have entered into Iranian commerce. Based on this definition, foodstuffs and carpets of third-country origin that are transshipped through Iran become goods of Iranian-origin.

Only Carpets and Foodstuffs Entered for Consumption Before Sept 29 Allowed

OFAC cautions that any of the subject goods must be entered for consumption prior to September 29, 2010 to be allowed entry.

Import and Export Prohibitions Implemented by Adding CISADA to Authority Citations

OFAC notes that Subsection 103(a) of CISADA provides that, in addition to any other sanction in effect, the economic sanctions described in subsection 103(b) of CISADA (prohibitions on imports and exports³) will apply with respect to Iran beginning 90 days after CISADA’s enactment (or September 29, 2010).

OFAC states that it will implement these prohibitions through an amendment to the ITR, which already implement, pursuant to, inter alia, the International Emergency Economic Powers Act (IEEPA), prohibitions similar to those set forth in subsections 103(b)(1) and (b)(2) of CISADA. Consequently, OFAC is amending the ITR by adding CISADA to the ITR’s authority citations.

CISADA and ITR Both Contain Certain, Sometimes Different, Exceptions

Notwithstanding the ITR’s prohibitions of imports and exports, OFAC authorizes certain otherwise prohibited transactions through general licenses set forth in the ITR and specific licenses issued pursuant to the ITR. In addition, the ITR contain certain exemptions from its prohibitions of imports and exports. Similarly, subsections 103(b)(1) and (b)(2) of CISADA include a number of exceptions to CISADA’s prohibitions of imports and exports, respectively. The exceptions to CISADA’s prohibitions differ in some cases from the exemptions and authorizations contained in or issued pursuant to the ITR.

CISADA Provides Authority to Resolve These Differences Through Regulation

To the extent that the ITR exemptions and licenses authorize import and export transactions beyond CISADA’s exceptions, subsection 103(d)(1) of CISADA provides the authority to resolve these differences. That subsection authorizes the President to prescribe regulations to carry out section 103 and specifically states that these regulations may include regulatory exceptions to the sanctions described in subsection 103(b).

Certain ITR General/Specific Licenses Maintained as CISADA Exceptions

Therefore, except with respect to sections 560.534 and 560.535 of the ITR, which are being removed, OFAC is relying on the authority of subsection 103(d)(1) of CISADA to maintain in effect the general and specific licenses set forth in or issued pursuant to the ITR, and to treat those licenses as regulatory exceptions to the import and export prohibitions in subsection 103(b) of CISADA. This extends to general and specific licenses authorizing transactions that are beyond those specified in the exceptions set forth in subsections 103(b)(1) and (b)(2) of CISADA and that otherwise would be prohibited by CISADA.

Non ITR-Exempt or Authorized Transactions Will Need Specific Licenses

Conversely, to the extent that the transactions described in CISADA’s exceptions are neither exempt from nor authorized in or pursuant to the ITR, those transactions will remain prohibited pursuant to the ITR and, inter alia, IEEPA. In an explanatory statement, the Conference Committee on CISADA stated that notwithstanding the exceptions in CISADA, any requirement under IEEPA to seek a license for the transactions described in those exceptions remains in effect. In addition, CISADA states in subsection 103(a) that the sanctions imposed by subsection 103(b) are ‘‘in addition to any other sanction in effect.’’ Accordingly, a specific license from OFAC is required to engage in transactions described in CISADA’s exceptions if such transactions are neither exempt from nor authorized in or pursuant to the ITR.

¹The CISADA, which became Public Law 111-195 on July 1, 2010, amends the Iran Sanctions Act (ISA) to expand the sanctions imposed against Iran. (See ITT’s Online Archives or 06/30/10 and 09/20/10 news, 10063049 and 10092013, for BP summaries of the major trade-related provisions of the CISADA.)

²OFAC notes that CBP Form 3299, ‘‘Declaration for Free Entry of Unaccompanied Articles,’’ is used to enter Iranian-origin household and personal effects into the U.S.

³The economic sanctions described in subsections 103(b)(1) include prohibitions on the importation of goods or services of Iranian origin directly or indirectly into the U.S., and the economic sanctions described in subsection (b)(2) include prohibitions on the exportation of U.S.-origin goods, services, or technology from the U.S. or by a U.S. person, wherever located, to Iran.

(See ITT’s Online Archives or 09/28/10 news, 10092826, for original BP summary, which has been edited to reflect corrections on non-commercial imports.)

(FR Pub 09/28/10)