Iran, Sudan Food Regulation Changes
Posted on November 3, 2011
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) published a notice in the Federal Register on October 12, 2011, announcing the issuance of a general license for the export of food products to Iran and Sudan. Previously, exports to the two countries required specific one-year licenses from OFAC; these new regulations will open the trade corridor for North Dakota food product companies who are interested in exporting to Iran and Sudan.
Previously, although the export of agricultural and medical products to Iran and Sudan was allowed, those exports required to apply for specific one-year licenses from OFAC that were difficult to obtain.
“OFAC has been historically slow in issuing license under the Trade Sanctions Reform Act program,” said Doug Jacobson, international trade attorney with Douglas N. Jacobson, PLLC, based in Washington, DC. “The new general license will greatly reduce the time and expense associated with making sales of eligible products to Iran and Northern Sudan.”
The general license specifically covers “food” which is a subset of agricultural products. Product categories enumerated in the two general licenses are as follows:
- Vitamins and minerals
- Food additives and supplements
- Bottled drinking water
- Seeds used to produce food
- Various bulk agricultural commodities (e.g. durum wheat, various kinds of oils)
Items that are agricultural products but not “food” will still require licenses. There are several types of food products that specifically excluded from eligibility for this general license. It is advised that your company check with OFAC guidelines, or work with an international regulations expert to determine whether your company’s product adheres to the guidelines.
In addition to product guidelines, it is important to note that OFAC only authorizes the following payment options for exports made under this general license:
- Payment of cash in advance (i.e. wire transfer);
- Sales on open account, provided that the account receivable may not be transferred by the person extending the credit; or
- Financing by third-country financial institutions that are neither U.S. persons nor Government of Iran entities. Such financing may be confirmed or advised by U.S. financial institutions.
Therefore, payment by a letter of credit issued by an Iranian bank still requires a specific license to be obtained from OFAC.
The new General Licenses are a means of authorizing legal trade in food products, to replace the specific licensing process that has been costly, burdensome and time-consuming for businesses. In order to successfully navigate markets such as Sudan and Iran, Jacobson advises companies to work closely with international business experts.
“Because of the current focus on Iran, it is important for North Dakota exporters to work with experienced freight forwarders and shipping companies to assist them with the process in order to avoid and issues with U.S. Customs on the outbound movement from the U.S.,” said Jacobson.
Douglas N. Jacobson, PLLC, and other international service providers, can also assist companies with obtaining licenses from OFAC or the Commerce department’s Bureau of Industry and Security. To obtain a list of international business resources, contact Brittany Posey at Brittany@ndto.com.
To view the updated Federal Register – Vol. 76, No. 197/Wednesday, October 12, 2011 – download the PDF here.