In the past week, there has been an easing of sanctions against Sudan, and requirements have been added to the export control regulations regarding exports and reexports of certain commodities, technology, and software to Hong Kong. As to Sudan, on January 13, 2017, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a new General License (31 C.F.R. 538.540) amending the Sudanese Sanctions Regulations (SSR) to authorize all transactions initially prohibited by the SSR and Executive Orders 13067 and 13412, with a few exceptions as discussed below. While this is significant, the amendments to the U.S. Department of Commerce's Bureau of Industry and Security's (BIS) Export Administration Regulations (EAR) did not remove the EAR license requirements for exports and reexports to Sudan. Thus, while the OFAC has eased its license requirements, under the EAR, licenses are still required for the export, reexport, and transfer of a significant number of U.S.-origin commodities, technology, and software to Sudan. These amendments to the SSR and EAR took effect immediately.

As to Hong Kong, the BIS amended the EAR to require exporters and reexporters of certain EAR- controlled items to Hong Kong to obtain copies of the import authorizations from the Hong Kong government prior to exporting the controlled items under an EAR license or license exception. The EAR amendments further require that persons who will reexport the EAR controlled items from Hong Kong must obtain the required reexport authorization from the Hong Kong government prior to reexporting the EAR-controlled item. These requirements become effective on April 19, 2017.

Implications of SSR Amendments

Pursuant to the General License, the SSR newly authorized transactions include:

• the processing of transactions involving persons in Sudan;
• the importation of goods and services from Sudan;
• the exportation of goods, technology, and services to Sudan; and
• transactions involving property in which the government of Sudan has an interest.

The SSR licensing requirements for transactions with individuals on the Specially Designated Nationals and Blocked Persons (SDN) list or other individuals and entities restricted under other sanctions programs remain in effect. Agricultural commodities, medicine, and medical devices are also eligible for export under the General License as long as the exports occur within a year of the signing of the related contract.

Licensing Requirements Remain Under the EAR for Sudan

As mentioned above, on January 17, 2017, the BIS, in coordination with the OFAC, amended the EAR with respect to Sudan. The BIS changes, however, were limited to implementing a favorable licensing policy for:

• certain items that are intended to ensure the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft to Sudan; and
• the export or reexport of certain items for use to inspect, design, construct, operate, improve, maintain, repair, overhaul, or refurbish railroads in Sudan.

No license requirements were removed, and thus, any item, commodity, technology, or software listed on the EAR's Commerce Control List (CCL) requires a license for export to Sudan. Further, most CCL items continue to require a license for reexport to Sudan.

Looking Ahead on Sudan

The relaxation of the sanctions was due to President Obama's determination that the human rights situation in Sudan had improved, and it is not clear whether the new administration will continue with the easing of the sanctions. A report from the U.S. Secretary of State, in consultation with the U.S. Secretary of the Treasury, the Director of National Intelligence, and the Administrator of the U.S. Agency for International Development, which will provide a report assessing the positive actions by the government of Sudan and make recommendations, will be published in or around July 2017. This report may provide for more changes in the export, reexport, and import and licensee requirements for transactions involving Sudan.

Additional Requirements for the Export and Reexport to Hong Kong and from Hong Kong of Controlled U.S.-Origin Items

Effective April 19, 2017, exporters and reexporters of certain EAR-controlled items must obtain copies of the required import authorization from the Hong Kong government prior to exporting or reexporting the EAR controlled items under a license or license exception. The EAR amendment does not impose any new license requirements; it only imposes additional documentation requirements, and the documents are not to be submitted with a license application.

The documentation requirement applies to exports and reexports of items controlled on the CCL for national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1), or chemical and biological weapons (CB) reasons. These controlled items are developed from the multilateral export control regimes the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (NS on the CCL), the Missile Technology Control Regime (MT on the CCL), the Nuclear Suppliers Group (NP column 1 on the CCL), and the Australia Group (CB on the CCL), and both the U.S. and Hong Kong are members of these regimes.

The documentation requirement is a copy of the valid import license issued to the importer by the Hong Kong government or a copy of a written statement from the Hong Kong government, including a written statement issued to the general public (i.e., a statement on the government of Hong Kong's website), that no import license is required. Further, reexporters of these controlled EAR items must also obtain the required authorization from the Hong Kong government prior to the reexport. The authorization may be a license from the Hong Kong government or a written statement from the Hong Kong government, including publicly available statements, that no license is required for the shipment of the EAR-controlled item from Hong Kong. These amendments are aimed at helping to minimize the risk of diversion of the controlled items.

For more information on the recent amendments or if you have a specific export controls or sanctions question, please contact Josephine Aiello LeBeau, 202-973-8813, jalebeau@wsgr.com; Anne Seymour, 202-973-8874, aseymour@wsgr.com; or any member of Wilson Sonsini's export control and economic sanctions regulatory practice.