BIS Amends Regulations and Loosens Export Restrictions Involving Sudan

Holland & Knight LLP

Highlights

  • The U.S. Department of Commerce Bureau of Industry and Security (BIS) has published a final rule amending the Export Administration Regulations (EAR) to implement the rescission of Sudan's designation as a State Sponsor of Terrorism (SSOT). The rule became effective Jan. 14, 2021.
  • The rule removes anti-terrorism controls on Sudan and makes various conforming changes to the EAR. Specifically, the rule removes Sudan from Country Group E:1 (Terrorist Supporting Countries) and adds Sudan to Country Group B.
  • As a result, the applicable de minimis level of U.S.-origin content in foreign-made products destined to Sudan has changed from 10 percent to 25 percent, certain restrictions on Sudan in particular license exceptions have been removed, and several license exceptions are now potentially available for exports to Sudan. Certain export and reexports to Sudan will remain subject to export licensing, which will be granted on a case-by-case basis.

The U.S. Department of Commerce Bureau of Industry and Security (BIS) published a final rule on Jan. 19, 2021, amending the Export Administration Regulations (EAR) to implement the rescission of Sudan's designation as a State Sponsor of Terrorism (SSOT). The rule became effective Jan. 14, 2021.

Background

Since 1993, Sudan has been designated as an SSOT due to the Government of Sudan's policies in support of terrorism and human rights abuses. However, on Oct. 26, 2020, then-President Donald Trump submitted to Congress a report justifying the decision to rescind Sudan's designation as an SSOT. The report certified that Sudan had not provided any support for acts of international terrorism during the preceding six-month period and that Sudan had provided assurance that it would not support acts of international terrorism in the future. On Dec. 14, 2020, the U.S. Department of State formally rescinded Sudan's designation as an SSOT. BIS published its rule amending the EAR to implement the rescission.1

Summary of Major Changes

The rule removes anti-terrorism controls on Sudan and makes various conforming changes to applicable EAR provisions. Specifically, the rule removes Sudan from Country Group E:1 (Terrorist Supporting Countries) and adds Sudan to Country Group B. As a result, the following major changes took effect on Jan. 14:

  1. Changes to Applicable De Minimis Level. As amended, foreign-made items destined to Sudan will not be subject to the EAR unless the item contains at least 25 percent U.S.-origin content (the threshold was previously 10 percent). However, foreign-made items destined for Sudan that incorporate U.S.-origin 9x515 or "600 series" paragraphs a. through .x content will continue to be subject to the EAR regardless of the level of U.S.-origin content.
  2. Changes to License Exceptions. The rule amended license exceptions (APP, TMP, ARP and CCD) that previously contained specific references to and limitations with respect to Sudan or Sudanese nationals. For example, the amended License Exception Computers (APP) permits the release of technology and source code to Sudanese nationals (with Sudan as a Computer Tier 3 destination) up to the prescribed limit. As another example, the reference to Sudan under License Exception Consumer Communications Devices (CCD) has been removed because such authorization is no longer necessary.
  3. Availability of Other Exceptions. As a Country Group E:1 country, Sudan was eligible for only a limited number of license exceptions. The amended regulations now make Sudan and Sudan nationals eligible for several additional license exceptions, which are generally subject to less stringent license review policies. However, BIS has determined that exports and reexports to Sudan are not eligible for License Exception Shipment to Country Group B Countries (GBS) (§ 740.4) and License Exception Technology and Software Under Restriction (TSR) (§ 740.6).
  4. Applicable Controls and Licensing Policies. Sudan will be subject to licensing requirements that apply to the export and reexport of items: 1) on the multilateral export control regime lists (e.g., the Wassenaar Arrangement), 2) controlled for Crime Control (CC) or Regional Stability (RS), and 3) controlled for encryption (EI) or Chemical Weapons (CW). End User and End-Use-based controls will continue to apply. License applications will be reviewed on a case-by-case basis pursuant to applicable licensing policies set forth in the EAR.

Although the broad-based sanctions regulations with respect to Sudan were removed in June 2018, U.S. persons remain prohibited from engaging in transactions with a number of Sudanese individuals and entities that are listed on the U.S. Specially Designated Nationals List. Further, Sudan continues to be an U.S. Arms Embargoed Country, which limits certain exports and reexports under both the EAR and the International Traffic in Arms Regulations (ITAR).

Notes

1 Implementation in the Export Administration Regulations of the United States' Rescission of Sudan's Designation as a State Sponsor of Terrorism, Final Rule (86 Fed.Reg. 4929).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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