On February 18, 2015, in a coordinated action, the Commerce Department's Bureau of Industry and Security (BIS) and Treasury Department's Office of Foreign Assets Control (OFAC) announced and implemented changes to the regulations regarding exports and reexports to Sudan. Both agencies relaxed the restrictions on exports and reexports to Sudan of certain consumer-related products, technology, software, and services by authorizing a broader array of personal communications-related items to go to Sudan without a license. The BIS amendments also provided greater clarity into BIS License Exception Consumer Communications Devices. These BIS and OFAC amendments further the U.S. government's commitment to improve the flow of items to, from, and among persons in countries subject to a U.S. embargo and to better harmonize the Iran, Sudan, and Cuba regulations with regard to exports and reexports of personal communications-related software, commodities, and services.
BIS: Expansion and Clarification of License Exception Consumer Communications Devices
BIS added Sudan as an eligible destination for items exported under License Exception Consumer Communication Devices (CCD), which had previously covered only Cuba. License Exception CCD includes communication-related hardware and software classified as EAR99 or controlled for anti-terrorism reasons only. Eligible items include certain communications equipment, personal computers, mobile phones, televisions, and digital cameras that are commonly used to exchange information and facilitate interpersonal communications, as well as certain telecommunications and information security-related software under the specified Export Control Classification Numbers (ECCNs). BIS also authorized Global Position System receivers or similar satellite receivers classified under ECCN 7A994 for export to Sudan, but not Cuba, under this License Exception.
In addition to the above substantive amendments, BIS clarified the scope of this License Exception by defining "consumer" for certain commodities and software covered by the License Exception. Consumer commodities are defined as those that are (1) generally available to the public by virtue of their unrestricted sale from stock at the retail level and (2) designed to be installed by the user without substantial support from the supplier. This closely mirrors the first part of the mass market definition in Category 5, Part 2 of the Export Administration Regulations (EAR). As noted below, OFAC has adopted the same consumer definition in its appendices of authorized items, thereby better harmonizing the BIS and OFAC regulations.
BIS also relaxed its licensing policy for the export and reexport of telecommunications equipment and associated computers, software, and technology to Sudan for civil end-use. The policy is now case-by-case review, as opposed to a policy of denial.
OFAC: Expansion of Exports of Personal Communications-Related Products, Technology, Software, and Services
OFAC expanded the scope of its General License for Personal Communications in Sudan, contained in Section 538.533 of the Sudanese Sanctions Regulations, to cover fee-based software and services incident to the exchange of personal communications, as well as additional personal communications hardware, software, and related services subject to the EAR. The changes to this General License brought it into alignment with General License D-1 for Iran and the changes made by BIS. As with the Iran General License D-1, this Sudan General License includes an appendix describing the additional software, hardware, and related services authorized for export to Sudan under the General License, and the items are classified as EAR99 or subject to anti-terrorism controls only under the EAR. The appendices for the Sudan General License and Iran General License D-1 are the same. Further, these appendices adopt the definition of consumer used in the EAR's License Exception CCD.
OFAC also added a new authorization for the export, reexport, or provision of certain no-cost services and software to the Government of Sudan so long as such items are widely available to the public. The purpose of this amendment was to enable companies to continue to make no-cost tools for personal communications available to Sudan. In addition, the phrase "widely available" represents a shift from the previous "publicly available" requirement for such items. OFAC made this clarification to distinguish this standard from the publicly available section in the EAR, which is used to describe items not subject to the EAR.
Conclusion
While these changes ease some of the restrictions on doing business in Sudan, the changes are limited and one must continue to determine whether a transaction is authorized under both the BIS and OFAC regulations and whether a license needs to be obtained from one or both of the agencies. If you have a specific transaction in mind, please consult with us to determine whether a license is required from the U.S. government.
