International Trade Law News

The Treasury Department's Office of Foreign Assets Control (OFAC) published in yesterday's Federal Register the Belarus Sanctions Regulations (31 C.F.R. Part 548) to implement Executive Order 13405 issued by President Bush in June 2006 that authorized the blocking of assets of individuals and entities determined to be responsible for undermining democratic processes or institutions in Belarus or engaging in political repression or public corruption.

The Belarus Sanctions Regulations are targeted only at certain persons and entities who have been specifically designated by the U.S. and do not prohibit trade or the provision of banking or other financial services involving  Belarus, unless the transaction or service involves a person whose property and interests in property have been blocked.

The names of persons and entities in Belarus and elsewhere whose property and interests in property are blocked pursuant to EO 13405 are included on OFAC's Specially Designated Nationals and Blocked Persons List (‘‘SDN’’ list) with the identifier "[BELARUS]." Included on the SDN List is Belneftekhim, the largest enterprise in Belarus and was previously the largest exporter of Belarusian products to the United States.

Labels: Belarus, OFAC

Several leading U.S. business organizations and associations sent a letter today to National Security Advisor James Jones and National Economic Council Director Lawrence Summers urging the Obama Administration to oppose the Iran sanctions bills currently pending in Congress.

The bills, the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2194), which passed the House in December by a wide margin, and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009 (S. 2799), which was approved by the Senate Banking Committee and placed on the Senate calendar, would expand the scope of current U.S. sanctions on Iran in a variety of ways, including making a number of changes to the Iran Sanctions Act, requiring certain sanctions to be imposed against non-U.S. companies that supply refined petroleum products to Iran and broadening the circumstances in which a U.S. company
could be penalized when one of its non-U.S. subsidiaries engages in business with Iran.

The letter states:

While we agree that preventing Iran from developing the capability to produce nuclear weapons is an urgent U.S. national security objective, the unilateral, extraterritorial, and overly broad approach of these bills would undercut rather than advance this critical objective.

The proposed sanctions would incite economic, diplomatic, and legal conflicts with U.S. allies and could frustrate joint action against Iran. They could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed.

The proposals could have a large impact on the U.S. Export-Import Bank, precluding it from partnering with counterpart agencies abroad to co-finance U.S. exports that have no relation to Iran’s energy sector. A significant portion of the bank’s portfolio could be impacted, compromising its ability to boost U.S. exports.

The letter concludes by requesting the Obama Administration to "weigh in vigorously with Congress to eliminate these highly problematic proposals."

The letter was signed by the National Foreign Trade Council, the U.S. Chamber of Commerce, USA*Engage, the Business Roundtable, the Coalition for Employment through Exports, the Emergency Committee for American Trade, the National Association of Manufacturers, the Organization for International Investment and the U.S. Council for International Business.

The full text of the letter can be found here.

In other Iran sanctions-related news, German engineering firm Siemens announced at its annual shareholder meeting today that starting in mid-2010 the company  would no longer accept any new orders from Iran.

In addition, Bloomberg today published a detailed story today entitled "Dubai Helps Iran Evade Sanctions as Smugglers Ignore U.S. Laws," describing how Dubai is used as a conduit to supply U.S. goods to Iran.

Labels: Belarus, Sanctions; Iran

The Treasury's Office of Foreign Assets Control (OFAC) today added three Belarus enterprises affiliated with Belneftekhim, also known as the Belarusian State Concern for Oil and Chemistry, to the Specially Designated Nationals List.

The Belarusian enterprises designated today are Lakokraska OAO, Polotsk Steklovolokno OAO, and the Belarusian Oil Trade House. According to OFAC:

• Lakokraska OAO is a subsidiary of Belneftekhim and manufactures varnishes and paints.
  
• Polotsk Steklovolokno OAO, also a subsidiary of Belneftekhim, manufactures glass, silica fibers, and other related products.
  
• The Belarusian Oil Trade House is an enterprise of Belneftekhim and acts as a clearinghouse for financial, contractual, and web-based transactions on behalf of Belneftekhim Concern and its subsidiaries. The Belarusian Oil Trade House also operates an online auction trading system called United Trading Site.

As a result of OFAC's designations, any assets of these entities that are within U.S. jurisdiction must be frozen and U.S. persons are prohibited from conducting financial or commercial transactions with these entities.

Belneftekhim was added to the SDN list on November 13, 2007.

Labels: Belarus, OFAC

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued a document entitled "Guidance on Entities Owned By Persons Whose Property And Interests In Property Are Blocked." While this guidance applies to most of OFAC's sanctions programs, this guidance was sought by banks, exporters and importers as a result of numerous questions raised after OFAC issued a blocking order on November 13, 2007 against Belarus' Belneftekhim (commonly known as Belarusian State Concern for Oil and Chemistry) and its U.S. representative office, Belneftekhim USA.

Belneftekhim is the largest enterprise in Belarus and is the largest exporter of Belarusian products to the United States. Belneftekhim also manages operations for a large number of companies in Belarus.

OFAC's guidance states:

A person whose property and interests in propert are blocked pursuant to an Executive order or regulations administered by OFAC (a "block person" is considered to have an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50% or greater interest. The property and interests of such an entity are blocked regardless of whether the entity itself is listed in the annex to an Executive order or other placed on OFAC's list of Specially Designated Nationals ("SDNs"). Accordingly, a U.S. person generally may not engage in any transactions with such an entity, unless authorized by OFAC. In certain OFAC sanctions programs (e.g. Cuba and Sudan), there is a broader category of entities whose property and interests in property are blocked based on, for example, ownership and control.

OFAC also noted that U.S. persons are "advised to act with caution when considering a transaction with a non-blocked entity in which a blocked person has a signficant ownership interest that is less than 50% or which a blocked person may control by means other than a majority ownership interest."

OFAC indicated that as regulations implementing new sanctions programs are issued, this guidance will be incorporated into those regulations and OFAC expects to amend existing sanctions programs to incorporate today's guidance into the implementing regulations.

The PDF version of OFAC's guidance can be found here.

Labels: Belarus, OFAC