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United States: BIS implements the rescission of Sudan’s designation as a State Sponsor of Terrorism

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On January 14, 2021, the US Commerce Department’s Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to remove Sudan’s designation as a State Sponsor of Terrorism (SST) (the “Amendments”).  The Amendments implement the rescission of Sudan as an SST as announced by the Trump Administration in December 2020 by removing Anti-Terrorism (AT) and related controls on Sudan, which had remained in force following the US Government’s revocation of comprehensive sanctions in October 2017.  Our previous blog posts on these developments are available here and here.

Although list-based sanctions remain in force targeting certain Sudanese persons and designating them as Specially Designated Nationals (SDNs), the removal of Sudan’s SST designation eliminates licensing requirements under the EAR for a number of items destined to Sudan.  On January 19, 2021, BIS also issued a set of Frequently Asked Questions (“Sudan SST Rescission FAQs”) that provide guidance on the changes brought about by the Amendments.

Amendments to the EAR

The Amendments to the EAR include the following significant changes:

  • Removal of Anti-Terrorism (AT) Controls and Removal from Country Group E:1/Changes to License Review Policy:  The Amendments remove AT controls from Sudan, which has therefore also been removed from Country Group E:1.  As a result, EAR § 742.10 (Anti-Terrorism: Sudan) has been removed in its entirety.  Pursuant to § 742.10 of the EAR, a license was previously required for the export/reexport to Sudan of all items on the Commerce Control List (CCL), including items controlled for AT reasons only, and license applications for such exports/reexports were subject to a general policy of denial.  Sudan is now subject to licensing requirements applicable to items on multilateral export control lists and certain items subject to unilateral controls for Crime Control (CC) or Regional Stability (RS) reasons.  License applications for exports/reexports to Sudan will now be dependent upon the relevant items’ reasons for control, the end-uses, and the end-users.
  • Change to Applicable De Minimis Level:  The EAR apply to foreign-made items outside the United States that contain more than a de minimis amount of controlled US-origin content by value.  Sudan’s removal from Country Group E:1 raises the applicable de minimis level for most items destined to Sudan to 25 percent.  This 25 percent de minimis level also applies to certain foreign-made encryption items that are destined for Sudan and that meet criteria specified in EAR § 734.4(b)(1).  There is no de minimis level for foreign-made items that incorporate US-origin 9×515 or “600 series” paragraphs a. through x. content when such items are destined to Sudan.
  • Addition to Country Group B and Availability of EAR License Exceptions:  Sudan has been added to Country Group B.  Generally, countries in Country Group B are eligible for a broad range of license exceptions and are subject to flexible license review policies, and exports/reexports to Sudan are now eligible for a range of EAR license exceptions, provided that the relevant eligibility criteria are met.  However, exports/ reexports destined to Sudan are not eligible for License Exceptions Shipments to Country Group B Countries (GBS) (EAR § 740.4) or Technology and Software under Restriction (TSR) (EAR § 740.6).

The Amendments do not affect list-based sanctions maintained by the Office of Foreign Assets Control (OFAC) relating to the conflicts in Darfur and South Sudan.  US Persons remain prohibited from engaging in any transactions with Sudanese Specially Designated Nationals designated under the Sudan Darfur and South Sudan OFAC sanctions programs or for terrorism-related activities.

Sudan SST Rescission FAQs

BIS’ Sudan SST Rescission FAQs clarify the impact the Amendments will have on certain items and on current licenses for items controlled only for AT reasons.  The FAQs confirm that a license is no longer required for the permanent export or reexport of civil aircraft to Sudan and that aircraft on temporary sojourn to Sudan no longer need to rely on License Exception Aircraft, Vessels or Spacecraft (“AVS”) (EAR § 740.150).  The FAQs also emphasize that telecommunications items with encryption capabilities still require a license for export/reexport to Sudan if the item is controlled for any other reason than AT in the CCL.  Importantly for current license holders, the FAQs note that transfers of items that are controlled only for AT reasons and that are currently in Sudan must be reauthorized by BIS if the terms of the current license prohibit in-country transfers of the items.

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Terry Gilroy is a partner in the New York office of Baker McKenzie and a member of the Compliance and Investigations Practice Group. Prior to joining the Firm in 2018, Terry served as Americas Head of the Financial Crime Legal function at Barclays. Terry advises businesses and individuals on white collar and financial crime issues and has significant experience conducting investigations relating to compliance with the US Foreign Corrupt Practices Act (FCPA) and related bribery and corruption statutes, economic sanctions regulations as administered by the US Department of the Treasury's Office of Foreign Assets Control (OFAC), and the Bank Secrecy Act and related anti-money laundering (AML) regulations and statutes. Terry spent six years on active duty in the United States Army as a Field Artillery officer.

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Lise Test, an associate in Baker & McKenzie’s International Trade Group in Washington, DC, practices in the area of international trade regulation and compliance — with emphasis on US export control laws, trade sanctions, anti-boycott laws and the Foreign Corrupt Practices Act. Prior to joining Baker & McKenzie, Ms. Test served as a lawyer at the Danish Ministry of Defence where she focused on international public law and Danish torts, administrative law and military criminal law. In addition to her practice, Ms. Test also taught international humanitarian law and contract law at the Danish Royal Naval Academy.

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Ryan Poitras is a member of the Firm's International Trade Practice Group in our Washington, DC office. He joined the Firm as a summer associate in 2018 and became a full-time associate in 2019. Ryan’s experience also includes working as an intern with the Office of the US Trade Representative.

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