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This chapter discusses the Department of Commerce’s implementation of comprehensive and partial embargoes maintained by the U.S. Government pursuant to the EAR, either unilaterally or to implement U.N. Security Council (UNSC) Resolutions. Specifically, the U.S. Government maintains comprehensive economic embargoes against Cuba, Iran, Libya, and Sudan. The U.S. Government also maintained in 2003 certain partial embargoes, including programs relating to Syria, Rwanda, Angola and other persons.
Cuba
The Department of Commerce requires a license for export or reexport to Cuba of virtually all commodities, technology, and software subject to the EAR, except:
The Department of Commerce generally denies license applications for exports or reexports to Cuba. However, the Department of Commerce considers applications for the following on a case-by-case basis:
The Department of Commerce reviews applications for exports of donated and commercially supplied medicine or medical items to Cuba on a case-by-case basis and pursuant to the provisions of section 6004(c) of the Cuban Democracy Act of 1992. The United States does not restrict exports of these items, except in the following cases:
The Department of Commerce authorizes the use of License Exception Agricultural Commodities (AGR) for U.S. exports and certain reexports of agricultural commodities to Cuba. Section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (Title IX of Pub. L. 106-387), as amended (TSRA), requires the expedited review of proposed exports of agricultural commodities to Cuba. Under License Exception AGR, an exporter must submit prior notification of a proposed transaction to the Department of Commerce. The exporter may proceed with the shipment when the Department confirms that no reviewing agency has raised an objection (generally within 12 business days), provided the transaction meets all of the other requirements of the license exception. This expedited review includes the screening of the ultimate recipient of the commodities to ensure that it is not involved in promoting international terrorism. Exports of medicines and medical devices to Cuba are not eligible for License Exception AGR and continue to be subject to the license application and review requirements of Section 6004(c) of the Cuban Democracy Act of 1992.
Iran
The U.S. Government has a general policy of denial for all items controlled for chemical, biological, missile and nuclear proliferation reasons; military-related items controlled for national security or regional stability reasons (CCL entries ending in the number 18); and all other items controlled for national security or foreign policy reasons, for all end-users in Iran.9 Pursuant to Executive Order 12959 of May 6, 1995, and Executive Order 13059 of August 19, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports of CCL items to Iran and is responsible for licensing: (1) exports from the United States to Iran; (2) exports and reexports by U.S. persons to Iran, including agricultural and medical items classified as EAR99 (items not on the CCL) to Iran under the provisions of the TSRA; and (3) reexports of CCL items by any person to Iran. The Department of Commerce has licensing responsibility for reexports of EAR99 items to Iran by non-U.S. persons. To reinforce controls administered by the Department of theTreasury, the Department of Commerce has made it a violation of the Export Administration Regulations to export or reexport to Iran any item that is subject to the Treasury Department’s regulations and also subject to the EAR without Treasury authorization.
Libya
While the Department of the Treasury is primarily responsible for the licensing of exports to Libya, the Department of Commerce licenses reexports to Libya of U.S.-origin items subject to the EAR. A license is required for all such reexports, except:
The Department of Commerce will generally deny applications for reexport of the following:
The Department of Commerce will consider exceptions to this denial policy
on a case-by-case
basis for the following:
All other reexports, with the exception of humanitarian items and medical equipment as defined in the TSRA, will generally be denied.
Sudan
The U.S. Government has a general policy of denial for the export and reexport of all items controlled for chemical, biological, missile and nuclear proliferation reasons, military-related items controlled for national security or regional stability reasons (CCL entries ending in the number 18), and certain items controlled for national security or foreign policy reasons, such as aircraft, cryptologic items, and explosive device detectors, for all end-users in Sudan. Other items controlled to Sudan for national security or foreign policy reasons are subject to a policy of denial for military end-users or end-uses and are reviewed on a case-by-case basis for non-military end-users or end-uses. Pursuant to Executive Order 13067 of November 3, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Sudan. When a proposed export or reexport involves an item on the CCL requiring a license from both the Department of theTreasury and the Department of Commerce, the Department of Commerce will only review a license application if the Department of the Treasury has previously approved the export or reexport. The Department of the Treasury is solely responsible for licensing the export of agricultural and medical items not listed on the CCL to Sudan under the provisions of the TSRA.
Syria
The recently enacted Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 prohibits the export of all items on the CCL to Syria, unless the President exercises the waiver authority provided. The Department of Commerce will implement this prohibition, consistent with the President’s constitutional authority to conduct foreign policy. The impact of this prohibition is likely to be significant.
Iraq
On May 22, 2003, the UNSC issued Resolution 1483 that lifted the comprehensive UNSC trade sanctions on Iraq, while retaining restrictions on the sale or supply to Iraq of arms and related matériel. Resolution 1483 also reiterated certain provisions of related UNSC Resolutions 707 of August 15, 1991, and 687 of April 3, 1991. In particular, those provisions require that Iraq eliminate its nuclear weapons program and restrict its nuclear activities to the use of isotopes for medical, industrial or agricultural purposes. Such provisions further mandate the elimination of Iraq’s chemical and biological weapons programs as well as its ballistic missile program. The Department of Commerce is presently in the process of preparing an amendment the EAR to reflect Iraq’s significantly changed status. At present, the Department of the Treasury continues to require a license for the export to Iraq of most items on the Commerce Control List, other than items controlled for anti-terrorism reasons only.
Rwanda
The UNSC imposed an arms embargo on Rwanda on May 17, 1994. In 1995, the UNSC suspended the application of the arms embargo to the Government of Rwanda if items were shipped through specified points of entry, and later terminated (effective September 1, 1996) the application of these restrictions on sales or supplies to the Government of Rwanda. The sale or supply of such arms and arms-related materiél to non-governmental forces in Rwanda remains prohibited.
On July 30, 2003, the Department of State implemented the partial lifting of the arms embargo for those items subject to the International Traffic in Arms Regulations (ITAR) destined for the Government of Rwanda. The Department of Commerce will implement a comparable partial lifting of the arms embargo by amending the EAR. Until it does so, arms and related materiél subject to Department of Commerce licensing jurisdiction remain under embargo to all end-users in Rwanda. The U.S. Government continues to require a license for foreign policy purposes for the export or reexport by a U.S. person to any non-government end-user in Rwanda of all ITAR-controlled arms and arms-related materiel of all types, regardless of origin, including weapons and ammunition, military vehicles and equipment, paramilitary police equipment and spare parts for these items. The embargo applies to all end-users for all arms and arms-related materiél controlled in the EAR. The U.S. Government also requires a license for the use of any U.S. aircraft or vessel to supply or transport any such items to Rwanda. The U.S. Government has a general policy of denial for export or reexport of ITAR controlled items to non-government end-users and EAR controlled items to all end-users in Rwanda. Proposed exports or reexports to the Government of Rwanda are reviewed on a case-by-case basis.
Designated Terrorist Persons and Groups
The Department of Commerce requires a license for the export from the United States or by U.S. persons of all items subject to the EAR to Specially Designated Global Terrorists (SDGTs), Specially Designated Terrorists (SDTs), and Foreign Terrorist Organizations (FTOs). The Department of Commerce also requires a license for the reexport by non-U.S. persons of items on the CCL to such SDGTs, SDTs, or FTOs and a general policy of denial applies to all applications. SDGTs, SDTs, and FTOs are identified on a list of designated persons maintained by the Department of the Treasury in Appendix A to 31 CFR Chapter V.
Persons Named Pursuant to Executive Order 13304
On May 28, 2003, the President issued Executive Order 13304, which terminated the emergencies with respect to the Federal Republic of Yugoslavia (Serbia and Montenegro) (FRY) that were declared in 1992 and 1998. This action modified the restrictions on exports and reexports of any items subject to the EAR to persons designated in previous Executive Orders 13088 and 13192 pertaining to former Yugoslav President Slobodan Milosevic and others associated with him. These persons were included in the Department of the Treasury’s list of Specially Designated Nationals and Blocked Persons (the SDN List) identified by the bracketed suffix initials [FRYM]. The U.S. Government continues controls on some of these persons who remain on the SDN List but under new bracketed suffix initials [BALKANS] created pursuant to Executive Order 13304. The Department of Commerce incorporates the SDN List in Supplement No. 3 to Part 764 of the EAR. The Department of Commerce will amend the EAR to eliminate the [FRYM] designation currently listed in Part 744.16 of the EAR. This designation has already been removed from the SDN List.
Angola
The President declared a national emergency relating to UNITA by Executive Order 12865 on September 26, 1993, in coordination with international sanctions adopted by the UNSC. The U.S. sanctions were further tightened by Executive Order 13069 of December 12, 1997, and Executive Order 13098 of August 18, 1998. The United States took these actions in accordance with United Nations Security Council Resolutions 1127 of August 28, 1997, Resolution 1173 of June 12, 1998, and Resolution 1176 of June 26, 1998.
Executive Order 13298 of May 6, 2003, lifted all sanctions imposed on UNITA in these earlier Executive Orders. With the successful implementation of the Lusaka Protocol and the demilitarization of UNITA, the President determined that the circumstances that led to the declaration of a national emergency on September 26, 1993, no longer exist. The lifting of sanctions was consistent with United Nations Security Council Resolution 1448, which lifted the measures imposed pursuant to prior Security Council resolutions related to UNITA. The Department of Commerce will publish an amendment to the EAR to remove references to the sanctions administered by OFAC.
Cuba
The United States imposed an embargo four decades ago because Cuban actions
posed a serious threat to the stability of the Western Hemisphere and the
Cuban Government expropriated
property of U.S. citizens without compensation. In March 1982, as a result
of Cuba’s support for insurgent groups that engaged in terrorism, the
Secretary of State designated it as a state sponsor of terrorism under Section
6(j) of the Act.
Iran
The purpose of the controls is to restrict exports of items that would be useful in enhancing Iran’s military or terrorist-supporting capabilities and to address other U.S. foreign policy concerns, including nonproliferation, human rights, and regional stability. In 2003, Iran was the most active state sponsor of terrorism. Its record against al-Qaida has been mixed, and it continues to support anti-Israel activity. The U.S. Government also has concerns regarding Iran’s nuclear activities and cooperation with the International Atomic Energy Agency (IAEA). U.S. export controls remain in place due to these continued Iranian activities. By restricting items with military use, the controls demonstrate the resolve of the United States not to provide any direct or indirect military support for Iran and to support other U.S. foreign policy objectives. The United States’ support for exports and reexports of food items, medical supplies, and medical equipment ensures that the Iranian population receives what it needs for humanitarian purposes.
Libya
The purpose of the controls is to demonstrate U.S. opposition to, and to distance the United States from, Libya’s intervention in the affairs of neighboring states and support for acts of international terrorism and international subversive activities. Libya has continued its efforts to identify itself with the war on terrorism and the struggle against Islamic extremism. Libya has addressed the UNSC requirements related to the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, and, as a result the UNSC lifted the embargo on Libya via UNSC Resolution 1506 on September 12, 2003. However, the U.S. Government continues to maintain unilateral sanctions pending improvement not only in terms of Libya’s efforts against terrorism but also regarding their WMD activities and missile delivery systems. U.S. unilateral sanctions, in place since 1986, broadly prohibit U.S. persons from engaging in unauthorized financial transactions involving Libya. The U.S. Government continues to maintain its general policy of denial for items listed in Part 746.4(c)(2)(iv-vii), although this policy was originally implemented per the requirements of certain parts of UNSC Resolutions 748 and 883.
Meanwhile, the U.S. Government’s policy of support for exports and reexports of food, medicines, and medical equipment ensures that the Libyan population has access to items necessary for basic human needs.
Sudan
The U.S. Government continues to have concerns about the Government of Sudan’s support for certain terrorist groups, such as Hamas and the Palestine Islamic Jihad, but the United States is pleased with Sudan’s cooperation and the progress made in its antiterrorist activities. The President also certified to the Congress, most recently on October 22, 2003, consistent with section 6(b)(1)(A) of the Sudan Peace Act (Pub. L. 107-245), that the Government of Sudan and the Sudan People’s Liberation Movement are negotiating in good faith and that the negotiations should continue. In addition, the President noted that the situation with respect to humanitarian access has improved dramatically in southern Sudan since October 2002. At the same time, access to significant populations in need of assistance outside of southern Sudan remains limited. The U.S. embargo and export controls remain in place against Sudan to restrict access to items that could make a significant contribution to Sudan’s military capability and ability to support international terrorism.
Rwanda
The controls on arms-related items to Rwanda remain in place to prevent any U.S. contribution to potential conflict and to conform to United Nations-mandated sanctions.
Designated Terrorist Persons and Groups
The purpose of controls on designated terrorist persons and groups is to restrict exports of items that would be useful in enhancing the capability of SDGTs, SDTs and FTOs to undertake terrorist acts and to further the general policy of the United States to prevent supporters of terrorism and terrorist elements from acquiring technology that might enhance terrorist capabilities. The controls enable the Department of Commerce to use its licensing and enforcement resources to support U.S. counterterrorism efforts by monitoring and investigating unlicenced exports, reexports, and diversion of items subject to the EAR to parties designated as terrorists by the U.S. Government.
1. Probability of Achieving Intended Foreign Policy Purpose. The Secretary has determined that these controls are likely to achieve the intended foreign policy purpose, in light of other factors, including foreign availability from other countries and that the foreign policy purpose cannot be achieved through negotiations or other alternative means. The restrictions have denied these persons and nations certain trade relations with the United States and other nations. The controls put pressure on these persons to modify their actions. In addition, the applicable controls may serve to reduce the potential for conflict.
Cuba
The United States maintains an embargo against Cuba to express U.S. opposition to the continued repressive policies of the Castro government. The United States has modified the embargo on numerous occasions to aid the Cuban people in bringing about a transition to democracy and a free market economy and to expand humanitarian assistance to the Cuban people.
Iran
The controls on Iran restrict its access to specified U.S.-origin items that could be used to threaten U.S. interests. The United States has sought, and will continue to seek, the cooperation of other countries in cutting off the flow of military and military-related equipment to Iran.
Libya
The United States maintains export and reexport prohibitions for commodities controlled for national security reasons, for certain types of oil terminal and refining equipment, for items used to service or maintain Libyan aircraft and airfields, and for all other items subject to the EAR, with few exceptions. The intent of these restrictions is to prevent U.S. contributions to Libya’s involvement in activities detrimental to the U.S. national security and foreign policy interests. The continuation of the controls send a clear signal that, despite the recent United Nations Security Council resolution that lifted the United Nations embargo, the United States is unwilling to resume normal trade relations until Libya’s behavior significantly improves.
Sudan
The controls on Sudan affirm the commitment of the United States to oppose Sudan’s ability to obtain and use U.S.-origin items in support of military activities.
Rwanda
The embargo on exports of arms-related items to Rwanda is maintained consistent with recent UNSC action. Based on the multilateral nature of these controls, the probability is substantial that the desired effect will result.
Designated Terrorist Persons and Groups
Controls on exports and reexports to SDGTs, SDTs, and FTOs are intended to prevent acts of terrorism and to affirm U.S. opposition to international terrorism by limiting the ability of designated terrorist organizations and individuals to obtain and use U.S.-origin items in terrorist operations.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives and will not have any significant adverse foreign policy consequences with the extension of these controls. The controls complement U.S. foreign policy in other aspects of U.S. relations with these persons and countries. They encourage these persons to modify their actions with the goal of improving conditions in their region. These controls are consistent with U.S. foreign policy goals of promoting peace and stability, preventing weapons proliferation, and human rights abuses.
3. Reaction of Other Countries. The Secretary has determined that any adverse reaction to these controls is not likely to render the controls ineffective, nor will any adverse reaction by other countries be counter-productive to U.S. foreign policy interests. However, most countries have not imposed embargoes as comprehensive as those of the United States. Some countries have challenged certain U.S. controls as extraterritorial. Opposition to U.S. foreign policy-based controls by many of its major trading partners, including some close allies, continues to be a point of contention. This reaction has led some foreign firms to design out U.S. components or to cite the lack of their own national sanctions as a marketing tool to secure business contracts that might have gone to U.S. companies. In some instances, foreign governments have instructed foreign firms to ignore U.S. reexport controls.
Cuba
Although most countries recognize the right of the United States to determine its own foreign policy and security concerns and share U.S. concerns regarding the Cuban regime, many countries, particularly Canada, Mexico and the members of the European Union, opposed the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms-Burton) and continue to oppose unilateral U.S. controls on Cuba. Many nations have joined the United States in promoting political freedom, as a result of the Cuban Government’s March 2003 sentencing of 75 pro-democracy advocates for up to 28 years in prison. The European Union has taken significant steps to pressure the Cuban Government to reform by imposing diplomatic sanctions.
Iran
Other countries share U.S. concerns regarding Iran’s support of terrorism, human rights abuses, and attempts to acquire WMD. Recent disclosures have highlighted Iran’s efforts to develop nuclear weapons capabilities. The member states of the G-8, the European Union, the members of the Nuclear Suppliers Group, and other multilateral bodies have joined the United States in expressing strong concern over Iran’s nuclear activities and have called on Iran to cooperate more fully with the International Atomic Energy Agency (IAEA). In general, however, U.S. controls on commercial goods to Iran are more stringent than those of other countries. Iran’s trade partners include Germany, Japan, the United Kingdom, and many other nations.
Libya
Many countries concurred with UNSC Resolution 1506 of September 12, 2003, which ended the multilateral embargo on Libya because Libya fulfilled its obligations to the United Nations in regard to the Pan Am 103 bombing. Most countries did not support the U.S. renewal of the Iran-Libya Sanctions Act in 2001 for another five-year period and would like to see the United States remove the sanctions maintained under the IEEPA on items including aircraft parts and components and oil well equipment. The U.S. Government continues to maintain its general policy of denial for items listed in Part 746.4(c)(2)(iv-vii), although this policy for these items was originally implemented per the requirements of certain parts of UNSC Resolutions 748 and 883. The United States has sought and will continue to seek the support of other countries in cutting off the flow of sensitive items to Libya.
Sudan
The United States imposed an embargo in response to credible evidence that Sudan assists international terrorist groups, destabilizes neighboring governments, and violates human rights. While the United States has been pleased with the progress made by the Sudanese Government, it continues to consult with key allies and urges them to take all possible measures to convince Sudan to halt its support of terrorism.
Rwanda
The arms embargo on Rwanda is consistent with U.N. objectives; the U.S. Government has received no significant objections to these UNSC-mandated controls.
Designated Terrorist Persons and Groups
Many countries support U.S. efforts to fight terrorism through blocking designated terrorist groups and individuals from acquiring commodities that could assist said groups in committing future acts of violence. While some countries are considering restrictive legislation, very few maintain export controls similar to those implemented by the United States.
4. Economic Impact on United States Industry. The Secretary has determined that any adverse effect of these controls on the economy of the United States, including on the competitive position of the United States in the international economy, does not exceed the benefit to United States foreign policy objectives.
Cuba
The U.S. Government requires a license for the export and reexport of all U.S.-origin commodities, technology, and software subject to the EAR to Cuba. In recent years, the number of license applications that the Department of Commerce approved to Cuba increased significantly before decreasing somewhat in 2003. The increase in approved export license applications to Cuba can be attributed to changes made during the late 1990s in U.S. export policies, including the resumption of direct flights, exports of medicines and medical supplies and equipment, exports of food and certain agricultural commodities for sale to independent non-government entities, and the expansion of agricultural commodities eligible for export authorization under the procedures specified in License Exception AGR. License Exception AGR was created in 2001 to implement the licensing requirements for exports of agricultural commodities to Cuba under TSRA.
In FY 2003, the Department of Commerce approved 337 license applications valued at over $1.8 billion for Cuba. This is a decrease in comparison to the number of approved licenses in FY 2002 but an increase in the value of the approved licenses. In FY 2002, the Department approved 389 applications (valued at $1.59 billion) and returned without action (RWA’d) 42 licence applications (valued at $140.5 million). The high number of RWAs is attributed largely to exporters submitting license applications for agricultural commodities when, in fact, they were eligible to submit notifications to use License Exception AGR. In FY 2003, the Department authorized 192 notifications valued at $1.02 billion under License Exception AGR. The Department of Commerce and reviewing agencies had no objections to these notifications, which would have converted the notification into a license application. Five notifications (valued at $5.14 million) were RWA’d because the products were not eligible for export under License Exception AGR.
Table 1: Export License Applications Approved and License
Exception
AGR Notifications Authorized for Cuba (FY 1996-2003)
| Fiscal Year | Number of Applications / Notifications |
Total Value in U.S. Dollars |
|---|---|---|
| 1996 | 83 |
$592,738,313 |
| 1997 | 87 |
$493,414,819 |
| 1998 | 128 |
$544,659,988 |
| 1999 | 181 |
$75,840,789 |
| 2000 | 310 |
$737,108,231 |
| 2001* | 241 |
$454,908,260 |
| 2002* | 582 |
$2,521,457,648 |
| 2003* | 528 |
$2,801,868,688 |
| TOTAL (1996-2003) |
2,140 |
$8,221,996,736 |
* Includes both license applications and notifications under License Exception AGR.
The majority of export licenses approved for Cuba in FY 2003 (250 of the 337 cases) were for EAR99 items, including medicines and medical supplies, instruments, equipment, and gift parcels. Licenses for aircraft and ocean vessels on temporary sojourn accounted for 83 cases.
The U.S. embargo on Cuba is unilateral. According to the CIA’s World Factbook 2001, Cuba imported $4.8 billion in commodities in 2001. Leading imports were petroleum, foodstuffs, machinery, and chemicals, and leading suppliers were Spain, France, Canada, China, and Italy. In general, southern Florida (particularly the port area of Tampa) and exporters that would benefit from the cost advantages of U.S. proximity to Cuba are significantly affected by the trade embargo. Other U.S. companies who are significant exporters likely are also affected.
Iran
The U.S. Government maintains a policy of denial of license applications for dual-use exports to Iran, consistent with the provisions of the Iran-Iraq Arms Non-Proliferation Act of 1992, contained in the National Defense Authorization Act of FY 1993 (NDAA), and the U.S. trade and investment embargo of 1995. Prior to the 1993 NDAA and the imposition of the embargo, U.S. exports to Iran rose sharply in the early 1990s in response to Iran’s removal of certain import restrictions. From 1991 through 1994, U.S. exports to Iran totaled close to $2.2 billion, making the United States the sixth-largest exporter to Iran during this period. Such exports, however, amounted to only 5 percent of Iran’s total imports and less than 1 percent of overall U.S. exports. As a result of the denial policy mandated by FY 1993 NDAA and the 1995 U.S. trade and investment embargo, U.S. exports to Iran have fallen dramatically. In 2002 U.S. exports in Iran totaled $27.1 million, mostly tobacco and cereals.
Since 1997, the Department of Commerce has approved only applications for “deemed exports” (transfers of controlled U.S. technology to Iranian nationals legally working in the United States), rather than actual exports. In FY 2003, the Department of Commerce approved 16 deemed export licenses for Iranian nationals. In contrast, during the four fiscal years prior to FY 1995 (FY 1991-94), the Department of Commerce approved an average of $177 million in applications to Iran each year. Table 2 shows the impact of the 1993 NDAA and the trade embargo on U.S. trade with Iran:
Table 2: Approved Applications to Iran (FY 1991-2003)
| Fiscal Year | Number of Applications | Total Value (in U.S. Dollars) |
|---|---|---|
| 1991 | 89 |
$ 60,149,182 |
| 1992 | 131 |
$567,559,528 |
| 1993 | 44 |
$ 63,834,952 |
| 1994 | 10 |
$ 16,774,377 |
| 1995 | 0 |
0 |
| 1996 | 0 |
0 |
| 1997 | 5 |
$19 |
| 1998 | 6 |
$10,012 |
| 1999 | 10 |
$20,408 |
| 2000 | 23 |
$35 |
| 2001 | 19 |
$32 |
| 2002 | 10 |
$23 |
| 2003 | 16 |
$36 |
| TOTAL | 363 |
$708,348,604 |
The U.S. trade and investment embargo transformed the composition of U.S. trade with Iran. Since 1996, the first full year of the embargo, top U.S. exports to Iran have been completely different than in previous years. In calendar year 2003, U.S. exports were mainly tobacco and cereals and other foodstuffs, with pharmaceutical products making up the remainder. As Table 3 demonstrates, the agricultural, aerospace, and oil industries have been among those most directly affected by the embargo. From 1991 through 1994, U.S. exports of aircraft engine parts to Iran totaled nearly $9.4 million, averaging $2.3 million per year and peaking at more than $7.5 million in 1994. By 1996, aerospace exports declined to virtually zero.
Prior to the embargo, the United States competed with Iran’s major trading partners in exports of industrial machinery, motor vehicles and auto parts, power generating machinery, measuring and controlling devices, computers, plastics and resins, and industrial organic chemicals. In 2002, Iran imported a total of $21.8 billion in goods and its leading trade partners were Germany, Italy, France, China, and South Korea.
Table 3: Top U.S. Exports to Iran, 1991-1995 (FAS Value, in U.S. Dollars)
| S.I.C. Number | Description of Goods | Total Value |
|---|---|---|
| 3511 | Turbines and turbine generator sets | $322.5 million |
| 3531 | Construction machinery and parts | $307.8 million |
| 3533 | Oil and gas field equipment | $250.1 million |
| 2044 | Milled rice and by-products | $166.3 million |
| 115 | Corn | $137.4 million |
| 2873 | Nitrogenous fertilizers | $124.2 million |
| 3714 | Motor vehicle parts and accessories | $50.8 million |
| 2821 | Plastics materials and resins | $45.4 million |
| 3743 | Railroad equipment and parts | $42.7 million |
| 3569 | General industrial machinery and equipment | $41.8 million |
The U.S. embargo on Iran has had a damaging impact on U.S. industry, because of the reaction of foreign firms to U.S. reexport requirements. U.S. exporters report that their products are often designed out of foreign manufactured goods to ensure that foreign exports do not fall within the scope of U.S. controls. This “designing out” damages U.S. exports, both for sales to embargoed countries and non-embargoed countries.
Libya
According to Census Bureau statistics, U.S. exports to Libya in calendar year 2002 totaled $18.2 million, mostly consisting of cereals. However, this accounts for a negligible percentage of Libya’s total imports of $6.3 billion in 2002, according to the CIA’s World Factbook. Libya’s major suppliers include Italy (29 percent of imports), Germany (12 percent), the United Kingdom (7 percent), and Tunisia (6 percent). Libya’s major imports were machinery, transport equipment, food, and manufactured goods.
U.S. exports to Libya have declined steadily since 1979 when U.S. export controls were first expanded. Since then, the United States has authorized exports to fulfill pre-1982 contractual obligations and humanitarian aid. Annual U.S. exports and reexports to Libya fell from $860 million in 1979 to less than $1 million annually from 1987 through 1994. Total U.S. exports to Libya have been minimal since then, with occasional shipments of cereals. In FY 2003, the Department of Commerce issued two reexport licenses valued at $682,000 including licenses for medical equipment and satellite communications. The Department also RWA’d five applications (valued at $1.1 million) in FY 2003, and rejected three applications for reexport of medical equipment valued at $36,177 on foreign policy grounds.
Sudan
U.S. unilateral export sanctions on Sudan have had a minor impact on U.S. industry. Sudan’s poor economic performance over the past decade has prevented the country from importing a significant amount of goods from any supplier, including the United States. Before the U.S. embargo went into effect on November 4, 1997, the small amount of items that Sudan imported from the United States generally did not require an export license and, thus, was not affected by the export controls. According to Census Bureau statistics, U.S. exports to Sudan in calendar year 2002 totaled $10.8 million – mostly wheat, cereals, and vegetables. The CIA estimates that Sudan’s total imports from all sources were $1.5 billion in 2000; leading suppliers were China, Saudi Arabia, Germany, and the United Kingdom. Leading imports were foodstuffs, manufactured goods, machinery and transport equipment, and medicines.
The U.S. aerospace industry appears to have been the most affected by the AT controls on Sudan. Aircraft exports from the United States to Sudan totaled more than $6.4 million in 1992, but no such exports have been reported since 1994. Exports of aircraft engines and aircraft engine parts show a similar decline, falling from $845,142 in 1992 to barely $10,000 in 1997. By 1998, U.S. aerospace exports to Sudan had fallen to virtually zero.
The number of U.S. export licenses issued for Sudan was negligible before the sanctions were implemented, since low-level technology items (which did not require export licenses) constituted the bulk of U.S. exports. After sanctions were imposed, the Treasury Department assumed licensing responsibility for Sudan. Since then, the Department of Commerce has only processed license applications with Sudanese end-users when the application is for a “deemed export.” The Department of Commerce only reviews other license applications if the Department of the Treasury has previously approved the export or reexport. However, the Department of the Treasury is solely responsible for licensing the export of agricultural commodities and medical items not listed on the CCL to Sudan under the provisions of TSRA. There were no Department of Commerce license applications approved or rejected for Sudan in FY 2003 and three were returned without action, with instructions for the exporter to contact the Department of the Treasury.
Table 4: Approved Licenses for Sudan (FY 1992 to FY 2003)
| Fiscal Year | Total Applications Approved | Total Value (in U.S. dollars) |
|---|---|---|
| 1993 | 2 |
$5,404,000 |
| 1994 | 0 |
0 |
| 1995 | 0 |
0 |
| 1996 | 7 |
$571,992 |
| 1997 | 10 |
$7,095,973 |
| 1998 | 0 |
0 |
| 1999 | 1 |
$1 |
| 2000 | 1 |
$1 |
| 2001 | 0 |
0 |
| 2002 | 0 |
0 |
| 2003 | 0 |
0 |
| TOTAL | 21 |
$13,071,967 |
Rwanda
The arms embargo on Rwanda has had little impact on U.S. industry. U.S. exports to Rwanda were $10.4 million in 2002, of which about 70 percent was comprised of animal/vegetable fats, edible vegetables, and milling products. Much of the remainder was various types of electrical and mechanical equipment. The Department of Commerce did not receive any license applications for non-arms related items to Rwanda during FY 2003.
Designated Terrorist Persons and Groups
The Department of Commerce did not review any license applications for SDGTs, SDTs, or FTOs in FY 2003. As a result, the economic impact of these controls is presumably minimal. The Department of the Treasury maintains restrictions on activities of U.S. persons involving designated terrorist entities, which the Department of Commerce’s controls augment.
5. Effective Enforcement of Control. The Secretary has determined the United States has the ability to effectively enforce these controls. Controls on exports to embargoed and sanctioned countries and persons, including those discussed in this chapter, raise a number of challenges. These include the need to concentrate limited resources on priority areas, developing new strategies to limit reexport violations, strengthening the cooperative relationship with other law enforcement agencies in the United States and overseas, and maintaining a consistent outreach effort to help limit U.S. business vulnerability. Overall, the embargoes are generally understood and supported by the U.S. public. Voluntary cooperation from most U.S. exporters is expected.
In a October 21, 2003, Federal Register notice, the Department of Commerce solicited comments from industry on the effectiveness of U.S. foreign policy-based export controls. Comments were solicited from all six of the Department’s Technical Advisory Committees (TACs), which advise the Bureau of Industry and Security (BIS), as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS webpage. The comment period closed on November 21, 2003, and eight comments were received.
Federal Express commented that the United States’ maintenance of unilateral embargoes that are not consistent with the controls by the multilateral export control regimes causes a significant burden on its business given the nature of its business. Federal Express recommended that the U.S. Government use “smart” sanctions that target only specific activities of concern in lieu of broad embargoes against an entire country. The company contends that this would level the playing field for U.S. companies in worldwide competition. Federal Express also cited the confusion between the Commerce and Treasury Departments’ regulations for embargoed destinations. As examples, the company points out that certain provisions of the EAR pertaining to Iran are in conflict with those of the Treasury regulations, and highlighted the particular concern about the lack of regulatory provisions in the EAR pertaining to the U.S. embargo on Sudan.
While none of its comments specifically addressed embargoed countries or persons, the Industry Coalition on Technology Transfer (ICOTT) provided general comments about all foreign policy-based export controls, stating that these controls are unilateral and largely ineffective. ICOTT recommended that unilateral controls should only be used when the symbolism of the act of imposing controls outweighs the injury to American workers and businesses. In addition, ICOTT suggested that if unilateral controls are to be imposed while the United States negotiates with its trading partners to seek multilateral support, those unilateral controls should be of limited duration. A detailed review of all comments received can be found in Appendix I.
The Department of Commerce continues to receive inquiries and to consult with industry in regard to licensing policy and practices for embargoed countries. The Department also works in coordination with the Department of State, the Department of Defense, and the Department of the Treasury to keep industry informed of changes in licensing requirements and policies toward embargoed countries. During FY 2003 the Department of Commerce issued a CD with detailed country overviews for the sanctioned and embargoed destinations, and added these overviews to the BIS webpage under a new “Regional Considerations” heading.
The U.S. Government has made reasonable efforts to achieve the purposes of the U.S. embargoes and sanctions through negotiations with other countries, through international fora, and through the United Nations, as specified in the specific country descriptions that follow.
Cuba
The Administration has worked hard with other nations, especially nations in Europe and Latin America, to resolve disputes that arise because of implementation of the U.S. embargo. Although differences remain between the United States and other countries concerning the best method to encourage democracy and human rights, the European Union’s decision to impose diplomatic sanctions on Cuba in response to the Cuban Government’s March 2003 sentencing of 75 pro-democracy advocates remains very helpful.
Iran
The United States has an ongoing dialogue with its allies and partners on Iran’s activities. The United States continues to work with other states to curb Iran’s proliferation activities, especially in light of recent disclosures about Iran’s nuclear program.
Libya
Extensive consultation with other nations on Libyan controls continues to take place under the auspices of the United Nations, which lifted its embargo on Libya on September 12, 2003. The United States also has conducted numerous bilateral discussions on this topic.
Sudan
The United States continues to consult with other countries regarding the internal conflict in Sudan and the humanitarian needs of the population. Many of these consultations have occurred within the forum of the United Nations.
Rwanda
Most countries support international efforts to stabilize Rwanda and to prevent further ethnic conflict and regional instability, including through compliance with the United Nations arms embargo.
Designated Terrorist Persons and Groups
The United States cooperates with allies and partners and shares information on the activities of designated terrorist entities. It is expected that strong international support for the U.S. fight against terrorism will further facilitate dialogue on foreign export control expansion.
The U.S. Government imposes embargoes and sanctions in an effort to make a strong statement against a particular country’s policies or a person’s actions. Restrictions on exports can supplement other actions that the U.S. Government takes to change the behavior of the target countries and persons, including such actions as severing diplomatic relations, banning imports into the United States, seeking U.N. denunciations, and curtailing or discouraging bilateral educational, scientific, or cultural exchanges. U.S. Government embargoes and sanctions complement diplomatic measures and continue to be used to influence the behavior of these countries and persons.
The foreign availability of items controlled under Section 6(a) has been considered by the Department of Commerce. In general, numerous foreign sources of commodities and technology similar to those subject to these controls are known, especially for items controlled by the U.S. Government. While the embargoes and comprehensive sanctions described in this chapter are widely followed and many have significant multilateral support, the U.S. Government’s continued use of embargoes and sanctions serve foreign policy interests that override the impact of foreign availability.
9 The general policy of denial stated in the EAR is superceded by a policy of denial pursuant to the Iran-Iraq Arms Nonproliferation Act of 1992. See infra at 52, discussion regarding the Iran-Iraq Arms Nonproliferation Act
