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3 Things the Aviation Industry Needs to Know About the US Lifting Certain Iran Sanctions

Posted by Tyson Geib

4/19/16 10:30 AM

 

On January 16 2016, the United States announced that they are l041416-plane.pngifting certain US sanctions against Iran that are consistent with the announcement of Implementation Day and in compliance with the Joint Comprehensive Plan of Action (JCPOA). The United States Department of Treasury, Office of Foreign Assets Control (OFAC) released a general guidance document regarding the lifting of US sanctions under the JCPOA.

  1. Certain activities in the aviation sector are now permitted.

    The activities that are now permitted (thanks to the lifting of certain US Iran sanctions under the JCPOA) are heavily regulated and have specific guidelines that need to be followed.
    Transactions are allowed if the if:  

    - The transaction is not greater than 10% US-origin by value
    - No US person is involved
    - No US financial system is involved
    - No Specially Designated Nationals (SDNs) are involved

    However, certain transactions will be considered on a case-by-case basis.  If the transaction contains greater than 10% US-origin by value, or a US person or the US financial system is involved, then OFAC will consider licensing on a case-by-case basis. In addition, OFAC will consider license applications that provide associated services otherwise prohibited by the Iranian sanctions. The services must relate to a specific export, re-export, sale, lease, or transfer of a commercial passenger aircraft or related parts and services.

    Pursuant to section 5 of Annex II and section 17.5 of Annex V of the JCPOA, the US government has established a licensing policy, which allows case-by-case authorization to engage in export transactions. These transactions include the export, re-export, sale, lease, or transfer of commercial passenger aircraft and related parts and services to Iran, if the licensed items are used exclusively for commercial passenger aviation.

    Wide-body, narrow-body, regional and commuter aircraft used for commercial passenger aviation are the types of aircraft that may be approved under the new policy.   The types of aircraft that will not be eligible for licensing include cargo aircraft, state aircraft, military aircraft, and aircraft used for general aviation or aerial work.
  1. Not all businesses in the aviation sector of Iran is permitted as of Implementation Day.

    If a Specially Designated National (SDN) is involved, the transaction is forbidden. In addition, if an Unmanned Aerial Vehicle contains US-origin content that is 10% or greater by value, the transaction is prohibited.

  2. Be aware that under the JCOPA, the United States can reintroduce the lifted sanctions at any time where it appears that Iran is not fulfilling its commitments under the JCPOA.

    The United States has taken the position that snapped-back US sanctions will apply as of the date of snap-back such that any activity under contracts entered into during the period when sanctions were lifted must be terminated.

Feeling a little overwhelmed? Please contact Tradewin for assistance in navigating the complexity of the JCPOA.

Stay tuned for more information regarding JCPOA, more blogs coming soon.


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Written by Tyson Geib

Tyson joined the Tradewin team in November of 2015. Prior to that, Tyson spent 13 years in the aerospace and defense industries overseeing trade compliance at US and international locations. He has proven experience in classification, licensing, auditing, training, and the drafting and execution of export compliance policies, procedures, and screening processes. He has served as an Export Compliance Officer and Empowered Official, and had responsibility for overseas locations where he audited compliance processes, provided training to executive leadership, drafted multi-million dollar agreements and provided support to management during a Consent Agreement.