U.S. and European Union sanctions on Tehran were eased and lifted in January, restoring Iran’s access to world’s markets. Under the agreement, Iran is obligated to take steps to put it further away from developing a nuclear weapon while keeping a peaceful nuclear energy program. In return, Iran will be able to sell its oil on the world stage and will be able to connect to the global system.
The EU agreed to remove sanctions in the financial, banking and insurance industries, the energy sector, transportation and shipping, and un-freeze the assets of Iranian banks, individuals and other organizations. Many sanctions on the U.S. side, however, still remain in place, of which businesses including transportation intermediaries and logistics service providers must be aware. For example, for the most part, U.S. businesses and ordinary citizens will remain unable to do business with Iran without having specific authorization. There are a few exceptions though, including in civil aviation and foods and medicines (which the U.S. has previously allowed to be traded) and some potential loosening of restrictions on foreign subsidiaries of U.S. firms.
This means that Boeing and other makers of commercial aircraft and parts will have the authority to do business as Iran revitalizes its aging airliner fleet. In addition, foreign subsidiaries of U.S. companies will get some relief of as yet unknown quantity under the General Licenses (GL) issued by the Treasury Department. These licenses will clarify how much access private businesses with U.S. ties will have to the Iranian market. There are, however, significant constraints on transactions that involve the direct or indirect exportation or goods, technology, or services from the United States to Iran; the transfer of funds to, from, or through the U.S. financial system; or any entity on the SDN (Specially Designated Nationals) List. Therefore, even if a U.S.-based company is granted a license for a foreign subsidiary, it will have to take great measures to ensure its American business is separate from any Iranian entities still sanctioned under U.S. law. If it’s found that a business has run afoul of these prohibitions, it would not receive the benefit of the General License and could lead to U.S. sanctions liability for both the U.S. parent and its subsidiary.
We’ll be looking at this new phase in the Iran-U.S. relationship and the extent of the impact on American businesses down the road. Roanoke Underwriting offers the products and services insurance agents and brokers are looking to secure global supply chains and transportation and logistics service providers. To learn more about our insurance solutions, please contact one of our specialists at 1.855.213.4545.