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On 8th May 2018 President Donald Trump announced the United States’ (U.S.) withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and renewal of U.S. far reaching sanctions. The Agreement, signed in 2015 between Iran, the P5+1 (China, France, Russia, United Kingdom, United States—plus Germany) and the European Union (EU), aimed to curb Iran’s efforts to develop its nuclear program and enrich uranium.
Since the implementation of the JCPOA, the EU and UN relaxed sanctions regimes on trade with Iran. The U.S. however, maintained primary sanctions, prohibiting trade in U.S. products or business by U.S. persons with Iran. President Trump’s announcement was issued alongside a National Security Presidential Memorandum directing the Office of Foreign Assets Control (OFAC) and other agencies to take steps necessary to re-impose U.S. sanctions previously revoked under the JCPOA.
In effect, this means that there is a 90-180 day ‘wind-down’ timeline, leading to 6th August and 4th November 2018, after which OFAC expects that all the U.S. nuclear-related sanctions that had been lifted under the JCPOA will be re-imposed with full effect. The 90 and 180 day wind-down periods have different criteria which must be fulfilled by the respective dates.
The 90-day wind-down period
After the 90-day wind down period ends on 6th August 2018, the U.S. government will re-impose the following measures:
The 180-day wind-down period
Following 4th November 2018, OFAC expects that all U.S. nuclear-related sanctions lifted under the JCPOA will be re-imposed. Most notably, this involves:
In the hours following from President Trump’s announcement, the international community was particularly proactive in issuing statements on their positions. While some countries such as Israel, Saudi Arabia, the United Arab Emirates, and Bahrain have praised President Trump for his decision, most world leaders expressed concern, emphasising their continued commitment to the agreement and urging Iran to remain in full compliance. Within hours, UK Prime Minister Theresa May, German Chancellor Angela Merkel and French President Emmanuel Macron released a joint statement of commitment to the JCPOA. The UN, the EC, China, Russia, Japan, and Turkey were amongst others that released official statements pledging and calling for commitment to JCPOA.
It is anticipated that additional sanctions will focus on prohibiting use of the U.S. banking system and financial markets in relation to business with Iran. Despite more relaxed regulations in other jurisdictions, worldwide, many banks have implemented sanctions policies in line with U.S. requirements. It is anticipated that many European banks will remain conservative, making it next to impossible for many non-U.S. companies to trade with Iran. This could have practical implications for existing contracts with Iran, even before the 90 day wind-down period expires.
Implications on Trade – How should companies respond?
The announcement comes with significant implications for companies engaged in business with Iran. From a trade compliance perspective, we recommend you take the following first 3 steps to understand the changes required to your business model:
To further understand how the U.S.’ withdrawal from the JCPOA may affect your business, please contact our Deloitte Global Export Controls and Sanctions Team.
Stacey Winters leads our Aerospace and Defence sector in the UK. Serving our most prominent Aerospace and Defence clients, Stacey has years of experience in supporting both commercial Aerospace and Defence programmes around the world. Her subject matter expertise is focused on regulatory risk and compliance, with a particular focus on export controls, including the US ITAR. Functionally, Stacey leads our Global Export Control and Sanctions practice, and has over 17 years’ experience in standing up compliance programmes for complex organisations with diverse global compliance obligations. Her experience spans organisational and functional design, programme development and management, automation, risk assessments, audits, and investigations, and Government liaison. Stacey also has global responsibility for our Risk Advisory services across the Aerospace and Defence sector. Stacey works with a number of our clients across industries, particularly in the field of sanctions compliance, and has recently supported a number of companies assessing the potential risks and opportunities presented by the lifting of EU sanctions against Iran. Her sanctions experience has focused on EU and US sanctions against Russia, Iran and the US trade embargo on Cuba. Stacey has worked across the media, telecommunications and energy sectors to help clients assess risk and implement effective internal controls when working with these jurisdictions. Stacey is on the editorial board of World ECR and an active member of various trade associations in the UK and the US. In 2008, Stacey was awarded Professional Woman of the Future by the Woman of the Future Awards and Real Business magazine and was named one of the UK’s “35 Women Under 35” by Management Today. She is an advocate for gender equality and enjoys her role as a mentor to inspiring young women. Stacey earned a B.A degree with Honors in Export Management and European Languages from Napier University, Edinburgh, Scotland. Stacey is mother of two boys and an active supporter for breast cancer research charities.