Author: Poblete Tamargo LLP

Prior to this change, under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), these types of food exports required exporters subject to U.S. laws and regulations to apply for a specific OFAC license that was valid for one year.

In a summer edition of the Stars and Stripes newspaper, there is an article detailing recently published guidelines for U.S. troops stationed the Middle East during the Muslim holy month of Ramadan. “Troops in Mideast given guidance on Ramadan,” discuses how troops were instructed to respect local customs by, among other things, no drinking alcholic beverages as well as no chewing gum or smoking in public. When we read the new regulations, we found curious the exclusion of alcoholic beverages, cigarettes, and gum.

The new regulation definitions specify that food does not include alcoholic beverages, cigarettes, gum, or fertilizer.” Fertilizer seem logical because, in nefarious hands, many types of fertilizers can used to do bad things. But we could not find a legal or policy reason for excluding alcohol, gum, and cigarettes. We know what you are likely thinking, is this an effort by OFAC at Sharia-proofing our sanctions programs? We do not think so, but it is a curious grouping of items that we see every now and then in the trade arena.

For example, the U.S.-Singapore Free Trade Agreement that went into effect in 1992, and revised several times thereafter, at one point banned the import of chewing gum to Singapore because the country was having problems with gum chewers sticking used gum in places other than waste receptacles. This resulted in a lobbying effort by U.S. confectioners that, ultimately, allowed for the export of gum to Singapre having “therapuetic value.”

We asked around about the Iran alcohol, cigarette, and gum exclusion in the new regulations and, you guessed it, no one has any idea why it was included. We’ve just chalked it up to one of those many unknown unkowns that make up U.S. export controls and sanctions programs (and give lawyers who advise clients in this arena something more to speculate about).

You can dowload the Federal Register notice here.

 

The Congressionally-mandated annual certification process is an important instrument of U.S. international narcotics control policy. Under this law, the President is required annually to identify the major illicit drug producing and transit countries and then “certify” whether they have cooperated fully with the United States or taken adequate steps on their own to implement the 1988 U.N. Drug Convention.

The Obama Administration must impose certain economic sanctions on countries that do not meet these requirements unless the President certifies that the vital interests of the United States require that sanctions not be imposed. The sanctions include cutting off our foreign assistance, other than our humanitarian and counternarcotics foreign assistance, to countries denied certification and voting against their requests for loans from certain multilateral lending institutions.

With regards to the Western Hemisphere, the President has waived possible economic sanctions in the cases of Venezuela and Bolivia in order to continue advancing U.S. policy goals in the region. And by adding Belize and El Salvador to the list, the entire Central America region is now listed as a major transit and major illicit drug producing region.

While the annual certification is not of immediate concern to U.S. companies doing business in the region, this information should form part of a company’s complete trade security compliance program. An effective trade security compliance program takes in to account numerous variables including the business climate in a particular country such as economic transparency, corruption, and many other inputs that include U.S. policy toward that particular country or region. 

The 2012 Presidential determination is available for download here.

Based on Poblete Tamargo’s research and background discussions with contacts in the U.S. Government, we expect an increase in these type of events. The U.S. Government continues to press U.S. and foreign companies, as well as their subsidiaries, on making choices that boil down to choosing between doing business in the United States and having access to U.S. financial systems, or doing business in Iran.

Follow this link to read The Miami Herald article.