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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 UN Security Council (UNSC) Resolutions. Specifically, the U.S. Government maintains comprehensive economic embargoes against Cuba, Iran, Sudan, Syria, and certain designated terrorist persons or groups. The U.S. Government also maintains certain partial embargoes, including programs relating to Rwanda and Iraq, consistent with international obligations.
Executive Order 13298 of May 6, 2003, lifted sanctions imposed on Angola by certain earlier Executive Orders. With the successful implementation of the Lusaka Protocol and the demilitarization of the National Union for the Total Independence of Angola (UNITA), the President determined that the circumstances that led to the declaration of a national emergency on September 26, 1993, no longer existed. The lifting of U.S. sanctions was consistent with UNSC Resolution 1448, which lifted UN measures imposed pursuant to prior UNSC resolutions related to UNITA. On January 22, 2004, the Department of Commerce published an amendment to the EAR that removed references to these sanctions, which had been administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC).
In May of 2004, the Commission for Assistance to a Free Cuba released its Report to the President. The Commission was chaired by Secretary of State Colin L. Powell. Secretary of Commerce Donald L. Evans was a Commission member. In the Report, the Commission made certain recommendations regarding plans and procedures to hasten and ease Cuba’s transition to democracy. The President adopted these recommendations, and tasked U.S. Government agencies with implementing them. The recommendations cover a broad range of activities, including meeting the Cuban population's basic human needs, the establishment of democratic institutions, and the modernization of Cuba's infrastructure after a transition, as well as measures to hasten the end of the dictatorship. The Commission recommended certain changes to the EAR to further deny financial and other resources to the Cuban Government. The changes suggested to meet this goal included: modifying the list of items authorized for inclusion in gift parcels sent to the island, revising the definition of "eligible recipient family" for gift parcels, and limiting the issuance of licenses authorizing the temporary sojourn of private planes and vessels. Commerce published a new regulation on June 22, 2004, implementing these changes (69 FR 34565) and continues to review its regulations and policies to ensure full implementation of the President’s decision.
On July 30, 2004, licensing jurisdiction for the export and reexport of items subject to the Export Administration Regulations to Iraq returned to the Department of Commerce. The Department is also administering the dual-use provisions of the ongoing United Nations arms embargo on Iraq. These provisions address exports, reexports, and transfers within Iraq of arms and related materiel and their means of production. Additionally, the Department imposed restrictions on exports, reexports, and transfers to persons designated in or pursuant to E.O. 13315 of August 28, 2003. These provisions relate to former senior officials of the Iraqi regime. The Department’s licensing policy and requirements for Iraq outside of the arms embargo are discussed in Chapter 4.
On April 23, 2004, the U.S. Government suspended some of its economic sanctions against Libya in response to Libya's continued efforts to dismantle its weapons of mass destruction and MTCR-class missile programs, and to adhere to its renunciation of terrorism. This modification of sanctions under the International Emergency Economic Powers Act (IEEPA) allowed resumption of most commercial activities between the United States and Libya. As a result of these actions, licensing jurisdiction for both the export and reexport of items subject to the EAR to Libya returned to the Department of Commerce from the Treasury Department. Also on April 23, 2004, the President terminated the applicability of the Iran-Libya Sanctions Act with respect to Libya. On April 29, 2004, Commerce published an amendment to the EAR revising the licensing requirements and policies for the export and reexport of items subject to the EAR to Libya. On September 20, 2004, the President signed an Executive Order terminating the national emergency with respect to Libya and revoked all IEEPA-based sanctions. Libya is included here because it was embargoed for part of the time period covered in this report. Libya is discussed in detail in Chapter 4.
On December 12, 2003, the President signed the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 (SAA) (Public Law 108-175). Congress passed the SAA to sanction Syria for its support for terrorism, its occupation of Lebanon, its pursuit and development of weapons of mass destruction and missiles, and its failure to support the stabilization and reconstruction of Iraq. The President signed Executive Order 13338 implementing the SAA on May 11, 2004. The Department of Commerce revised its licensing requirements and licensing policy for Syria to restrict exports or reexports to Syria of items subject to the EAR, with exceptions as specified in General Order No. 2 to Supplement No. 1 to Part 736 of the EAR, which was published in the Federal Register on May 14, 2004.
Sanctions implemented include a prohibition on the export to Syria of items on the U.S. Munitions List and Commerce Control List with certain limited exceptions, a prohibition on the export to Syria of U.S. products except for certain items including food and medicine, and a ban on aircraft owned or controlled by the Syrian Government from taking off from or landing in the United States except in certain limited circumstances. In addition, the Department of the Treasury announced its intention to sever correspondent accounts between U.S. financial institutions and the Commercial Bank of Syria based on money-laundering provisions of the USA PATRIOT ACT. The Executive Order also grants the Secretary of the Treasury the authority, in consultation with the Secretary of State, to freeze assets belonging to entities and individuals that have engaged in conduct of concern specified in the Executive Order.
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]. OFAC discontinued the use of those bracketed initials following the termination of the national emergencies with respect to the FRY. On November 12, 2004, the Department of Commerce deleted the section that set forth license requirements for exports and reexports to designated persons identified by the bracketed initials [FRYM].
On November 15, 2004, the United Nations Security Council voted unanimously to impose an embargo on the export of arms and related material, as well as defense services, to the West African nation of Ivory Coast (known formally as Côte d'Ivoire). The embargo will remain in effect for a period of 13 months unless otherwise amended. The Department of State issued guidance on its Web site advising U.S. exporters that, effective November 16, 2004, no application for the export to Ivory Coast of defense articles or services covered by the International Traffic in Arms Regulations (ITAR) will be approved. The Department of Commerce already requires a license to export items controlled on the Commerce Control List for crime control or regional stability reasons to Ivory Coast, under a licensing policy requiring case-by-case review. The Department expects to implement the arms embargo against Ivory Coast in the near term through an amended regulation to be published shortly in the Federal Register.
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 generally denies license applications for exports or reexports to Cuba. However, the Department 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, 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.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers a comprehensive trade and investment embargo against Iran. No person may export or reexport items subject to both the EAR and OFAC’s Iranian Transactions Regulations without prior OFAC authorization.
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 (ECCNs) 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 Commerce Control List (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 but subject to the EAR) 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 the Treasury, it is also a violation of the EAR 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’s authorization.
On May 22, 2003, the United Nations Security Council (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 materiel. 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 programs for ballistic missiles with ranges greater than 150 km. On July 30, 2004, the President signed Executive Order 13350, terminating the national emergency declared in Executive Order 12722, and, thereby, revoking it and certain related Executive Orders. Among other things, the termination of the national emergency ended the Department of the Treasury's authority to maintain export controls pursuant to the related Executive Orders. By virtue of this action, export licensing jurisdiction reverted from the Department of the Treasury’s Office of Foreign Assets Control (OFAC) to the Department of Commerce. On July 30, 2004, the Department of Commerce published a rule defining the new licensing policy and requirements for Iraq. The new policy and requirements are covered in Chapter 4 of this report.
In administering the UN arms embargo, the Department of Commerce requires a license for the export or reexport to Iraq, or transfer within Iraq, of:
The Department reviews license applications for these items under a general policy of denial.
In addition, the Department requires a license for the export, reexport, or transfer of items subject to the EAR if the exporter knows, has reason to know, or is informed by the Department that the item will be, or is intended to be, used in Iraq for a "military end-use" or a “military end-user”, as defined in Section 746.3 of the EAR. As defined specifically for Iraq, a military end-user is any person or entity whose actions or functions are intended to support “military end-uses” and who is not recognized as a legitimate military organization by the U.S. Government. “Military end-use” is the incorporation of an item into a military item described on the U.S. Munitions List (USML)(22 CFR part 121, International Traffic in Arms Regulations), or the Wassenaar Arrangement Munitions List (WAML); or use, development, or deployment of military items described on the USML or the WAML. The Department reviews license applications destined to such end-users under a policy of denial.
On June 8, 2004, the UNSC passed resolution 1546 that permits the sale of arms and related materiel (including missiles with a range of less than 150 km.) to the Iraqi Government or the Multinational Forces. Additionally, the Department imposed restrictions on exports, reexports, and transfers to persons designated in or pursuant to E.O. 13315 of August 28, 2003. These provisions relate to former senior officials of the Iraqi regime.
The licensing requirements for Libya are delineated in Chapter 4.
On April 23, 2004, the President terminated the application of the Iran and Libya Sanctions Act with respect to Libya. On the same day, the Department of the Treasury modified the sanctions imposed under the IEEPA to allow the resumption of most commercial activities between the United States and Libya. As a result of these actions, licensing jurisdiction for both exports and reexports of items subject to the EAR returned to the Department of Commerce from the Department of the Treasury. On April 29, BIS published a rule defining the new licensing requirements and policy for Libya (69 FR 23626). The new licensing requirements and controls for Libya are discussed in Chapter 4.
The UNSC imposed an arms embargo on Rwanda on May 17, 1994. In 1995, the United Nations Security Council suspended the application of the arms embargo to the Government of Rwanda for items shipped through specified points of entry. Effective September 1, 1996, the Council terminated the application of these restrictions on sales or supplies to the Government of Rwanda. The sale or supply of such arms and arms-related materiel to non-governmental forces in Rwanda, however, 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 materiel 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 materiel 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. The Department reviews proposed exports or reexports to the Government of Rwanda on a case-by-case basis.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers a comprehensive trade and investment embargo against Sudan. No person may export or reexport items subject to both the EAR and OFAC’s Iranian Transactions Regulations without prior OFAC authorization. The Department of Commerce maintains anti-terrorism controls on exports and reexports to Sudan, as delineated in Chapter 4.
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. 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. However, Department of Commerce retains its regulations on Sudan.
In November 2004, in order to facilitate shipment authorization for humanitarian items destined for use in Darfur, the Department began accepting license applications for exports and reexports requiring a license for shipment to Sudan concurrently with applications submitted to OFAC. Previously, the Department maintained a policy of reviewing applications for items destined for end-use in Sudan only after the applicant received authorization from OFAC.
On May 11, 2004, the President issued Executive Order 13338 to implement Sections 5(a)(1) and 5(a)(2)(A) of the SAA. The Department of Commerce revised its license requirements and licensing policy for Syria to restrict all exports or reexports to Syria of items subject to the EAR, as specified in General Order No. 2 to Supplement No. 1 to Part 736 of the EAR, which was published in the Federal Register on May 14, 2004.
The Department of Commerce requires a license for export or reexport to Syria of virtually all commodities, technology, and software subject to the EAR, except:
The Department generally denies license applications for exports or reexports to Syria. However, the Department considers applications for the following on a case-by-case basis:
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.
The United States imposed an embargo four decades ago because Cuban Government 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.
The purpose of the controls is to restrict exports of items that would be useful in enhancing Iran’s military 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. Iran continues to support anti-Israel activity, and has intermittently been implicated in al Qaeda activities. The U.S. Government has deep concerns regarding Iran’s nuclear activities and lack of cooperation with the International Atomic Energy Agency (IAEA). U.S. export controls remain in place due to terrorism concerns and nuclear activities. By restricting the export of 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.
The purpose of the controls is to restrict exports to insurgents within Iraq and other inappropriate military end-users in Iraq, including the former Iraqi leadership, thereby limiting their ability to enhance or expand their activities.
For part of the reporting period, the United States maintained an embargo on Libya 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. The UNSC lifted its embargo on Libya with UNSC Resolution 1506 in September 2003, as a result of Libya’s successful efforts to address the UNSC requirements related to the 1988 bombing of Pan Am Flight 103. However, the U.S. Government continued to maintain unilateral sanctions pending continued improvement with regard to Libya’s efforts against terrorism, and Libya’s nonproliferation efforts related to WMD and missile delivery systems. (See Chapter 4 for a discussion of U.S. export control policy for Libya today.)
The controls on arms-related items to Rwanda remain in place to prevent any U.S. contribution to potential conflict within Rwanda and to conform to United Nations-mandated sanctions.
The Government of Sudan has cooperated in U.S. counterterrorism efforts in the war on terror, although the United States continues to have concerns about the presence in Sudan of Palestinian rejectionist groups, including HAMAS and the Palestine Islamic Jihad (PIJ). In October 2003, the President certified to the Congress, 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 were negotiating in good faith. In recent months, however, the humanitarian crisis in Darfur has become an important focus of U.S. policy efforts. The United States is the largest donor of humanitarian aid to Darfur, having pledged $299 million (through 2005), of which $138.5 million has been spent. 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. The United States will not normalize relations with Sudan until the situation in Darfur is satisfactorily addressed.
The Syrian Government continues to provide political and limited material support to a number of Palestinian groups that have committed terrorist acts, but contends that the groups’ offices in Syria only undertake political and informational activities. Syria also allows Iran to resupply Hizballah in Lebanon through Syrian territory. Prior to Operation Iraqi Freedom, the U.S. Government had several areas of concern particular to Syria and its neighbor, Iraq, including Syria’s illicit oil trade with the Saddam Hussein regime and the illicit transshipment of dual-use and military-related items into Iraq. The U.S. Government continues to view with grave concern the unmonitored movement of anti-Coalition insurgents across the Syria-Iraq border. Additionally, the U.S. Government continues to have concerns about Syria’s provision of a safe haven for terrorist organizations as well as its nuclear, missile, and chemical/biological programs.
U.S. export controls reflect U.S. opposition to these activities. The controls also promote other U.S. foreign policy interests, including human rights and regional stability. The controls maintained on exports and reexports to Syria are consistent with the EAA, as implemented by the President.
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.
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 peaceful transition to democracy and a free market economy and to expand humanitarian assistance to the Cuban people.
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.
The United States’ adherence to the United Nations arms embargo and restrictions on exports, reexports, and transfers to certain Iraqi persons demonstrate U.S. opposition to the WMD activities of the former Iraqi regime and to the destabilizing influence of the insurgents currently operating in Iraq. In parallel with its obligations as a member of the United Nations, the United States will continue to adhere to the UN arms embargo, and will also continue to seek the cooperation of other countries in cutting off the flow of military goods, arms, and related materiel to inappropriate end-users in Iraq.
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.
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.
The United States maintains controls in response to Syria’s lack of concrete steps to end support for the terrorist groups that maintain a presence in Syria and Syrian-controlled areas of Lebanon. Although many other countries concur that Syria’s activities are destabilizing, few countries maintain controls similar to those implemented by the United States.
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 that the extension of these controls will not have any significant adverse foreign policy consequences. The controls complement U.S. foreign policy and other aspects of U.S. relations with these persons and countries. They encourage these persons and governments 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, and 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, however, have challenged certain U.S. controls as extraterritorial. Opposition to U.S. foreign policy-based controls by many of our 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.
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 to up to 28 years in prison.
Other countries share U.S. concerns regarding Iran’s support of terrorism, human rights abuses, and attempts to acquire WMD. Ongoing disclosures have also highlighted Iran’s efforts to develop its nuclear weapon 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.
The United States continues to impose an arms embargo on Iraq in parallel with its obligations as a member of the United Nations. Many other member states also comply with these obligations and impose an arms embargo on Iraq. Other nations also share U.S. concerns about insurgent activities in Iraq.
The arms embargo on Rwanda is consistent with UN objectives. The U.S. Government has received no significant objections to these UNSC-mandated controls.
The United States imposed an embargo in response to credible evidence that Sudan assists international terrorist groups, destabilizes neighboring governments, and violates human rights. Although the United States has been pleased with past 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. The United States is also in consultation with other countries regarding the humanitarian crisis in Darfur.
The United States maintains controls in response to Syria’s lack of concrete steps to end support for the terrorist groups that maintain a presence in Syria and Syrian-controlled areas of Lebanon. Although many other countries concur that Syria’s regional activities are destabilizing, few countries maintain controls similar to those implemented by the United States.
Many countries support U.S. efforts to fight terrorism through blocking designated terrorist groups and individuals from acquiring commodities that could assist these groups in committing future acts of violence. Although 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 U.S. foreign policy objectives.
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 has 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, and the expansion of agricultural commodities eligible for export authorization under the procedures specified in License Exception AGR to the Cuban Government.
In FY 2004, the Department of Commerce approved 326 license applications valued at over $1.6 billion for Cuba. Although there has been a decline in the number of license applications in FY 2004 in comparison with FY 2003, the value of licenses approved in FY 2004 has increased somewhat. In FY 2004, the Department authorized 211 notifications valued at $1.45 billion under License Exception AGR. The Department of Commerce and reviewing agencies had no objections to these notifications.
| 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 |
| 2004* | 537 | $3,096,634,000 |
| TOTAL | 2,677 |
$11,318,630,736 |
* Includes both license applications and notifications under License Exception AGR.
The majority of export licenses approved for Cuba in FY 2004 (259 of the 326 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 63 cases.
The U.S. embargo on Cuba is unilateral. According to the CIA’s World Factbook 2004, Cuba imported $4.5 billion in commodities in 2003. Leading Cuban imports include petroleum, foodstuffs, machinery, and chemicals. Cuba’s leading suppliers were Spain, Venezuela, Italy, the United States, and China. 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.
The U.S. Government maintains a policy of denial for 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 fell dramatically. Beginning in 2001, as the result of the implementation of the TSRA, exports and reexport of food, agricultural equipment, medicine, medical supplies and medical equipment could be authorized. In 2003, total U.S. exports to Iran were valued at $99 million. The top U.S. commodities exported to Iran were soybeans, tobacco, pulpwood and wood pulp, medical equipment, and pharmaceutical preparations.
Since 1997, the Department of the Treasury has had primary jurisdiction for the export and reexport of items subject to the EAR to Iran, and the Department of Commerce has jurisdiction for “deemed exports” (transfers of controlled U.S. technology to Iranian nationals legally working in the United States). In FY 2004, the Department of Commerce approved 31 deemed export licenses for Iranian nationals. Table 2 shows the impact of the 1993 NDAA and the trade embargo on U.S. trade with Iran:
| 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 |
| 2004 | 31 | $173 |
| TOTAL | 363 |
$708,348,604 |
The U.S. trade and investment embargo transformed the composition of U.S. trade with Iran. 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 2003, Iran imported $25.3 billion worth of industrial raw materials and intermediate goods, capital goods, foodstuffs, technical services, and military supplies from its leading trade partners: Japan, China, Italy, and South Korea. Iran’s primary imports were industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, and military supplies.
| 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 |
| 2004 | 31 | $173 |
| TOTAL | 363 | $708,348,604 |
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.
Although the security situation and the presence of insurgents in Iraq, among other issues, continue to be of concern to the United States, the United States also fully supports Iraq’s reconstruction and economic revival. Current licensing policy and requirements reflect Iraq’s complexity and challenges.
From May 2003 through May 2004, U.S. exports to Iraq were valued at $432.2 million, which represents an increase of $398.7 million from the same time period in calendar years 2002 and 2003. In FY 2004, U.S. exports to Iraq were worth $599.3 million. In addition to foodstuffs, other strong categories of U.S. exports to Iraq included generators and engines, telecommunications equipment, pharmaceutical preparations, and agricultural supplies.
Commerce’s July 30, 2004, rule on U.S. export control policy and regulations for Iraq is designed to address two significant foreign policy goals. In particular, the rule advances the goal of ensuring that exports and reexports of controlled items destined to civil infrastructure rebuilding do not suffer undue licensing delays. At the same time, in furtherance of applicable UNSC Resolutions and U.S. foreign policy interests, the rule revises section 746.3 of the EAR (15 CFR parts 730-799) and retains substantial restrictions on exports to Iraq destined for inappropriate end-users or end-uses.
Since licensing jurisdiction for Iraq was returned to the Department of Commerce, the majority of license applications received have been for equipment in support of or for use in reconstruction of Iraq and training activities for its police and military. The Department expects that the number and diversity of applications will increase as more U.S. companies begin work in Iraq.
The arms embargo on Rwanda has had little impact on U.S. industry. Total Rwanda imports were valued at $246 million in 2003. Leading imports for Rwanda in 2003 were foodstuffs, machinery, steel, and petroleum. Leading sources of Rwandan imports were Kenya (24 percent), Germany (8 percent), and Belgium (7 percent). In 2003, U.S. exports to Rwanda were valued at $7.9 million, and primarily were comprised of animal/vegetable fats, and edible vegetables. The Department of Commerce did not receive any license applications for arms-related items to Rwanda in 2004.
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, most of the small number of items that Sudan imported from the United States did not require an export license and, thus, were not affected by export controls. According to Census Bureau statistics, in CY 2003, U.S. exports to Sudan were valued at $26.2 million, and primarily consisted of wheat, corn, and vegetables. The CIA estimates that Sudan’s total imports from all sources were valued at $2.4 billion in 2003. Leading suppliers to Sudan were China, Saudi Arabia, France, Germany, and the United Kingdom. Leading imports were foodstuffs, manufactured goods, refinery and transport equipment, and medicines. For 2003, U.S. exports to Sudan were limited to humanitarian goods, including food and medicine.
After sanctions were imposed, the Treasury Department assumed licensing responsibility for the export and reexport of items subject to the EAR to Sudan. However, the Department of Commerce’s regulations remain in place. Therefore, exporters are required to obtain authorization to export items controlled on the CCL to Sudan from both Treasury and Commerce. Starting in November 2004, the two agencies began to process applications simultaneously to minimize shipping delays, especially for non-governmental humanitarian organizations. Previously, applicants were instructed to obtain authorization from Treasury before submitting an application to Commerce. The Department of Commerce has licensing jurisdiction for the “deemed export” of technology to Sudanese nationals. 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.
In support of humanitarian efforts, the Department of Commerce approved four license applications for Sudan in FY 2004 valued at $10.6 million (including aircraft on temporary sojourn). During the same time, eight applications were returned without action, with instructions for the exporter to contact the Department of the Treasury. No applications were denied during FY 2004.| 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 |
| 2004 | 31 | $173 |
| TOTAL | 363 |
$708,348,604 |
In CY 2003, U.S. exports to Syria were valued at $214 million, and were primarily corn, drilling and oilfield equipment, and tobacco. Top U.S. exports to Syria in 2003 were cereals (about 32 percent of the total U.S. exports), various types of machinery (e.g., parts for bulldozers and internal combustion engines) (about 20 percent of the total U.S. exports), and tobacco (7 percent of the value of U.S. exports). The CIA estimates that Syria's total imports from all sources were $4.845 billion in 2003. Leading suppliers to Syria were Germany, Italy, China, France, South Korea, and Turkey. Leading Syrian imports were machinery and transport equipment, electric power machinery, food and livestock, metal and metal products, chemicals and chemical products, plastics, yarn, and paper.
| Fiscal Year | Total Applications Approved | Total Value (in U.S. dollars) |
|---|---|---|
| 1991 | 8 | $1,041,504 |
| 1992 | 31 | $46,366,527 |
| 1993 | 106 | $42,896,103 |
| 1994 | 167 | $76,379,096 |
| 1995 | 139 | $68,298,135 |
| 1996 | 80 | $81,006,877 |
| 1997 | 100 | $107,003,346 |
| 1998 | 81 | $80,707,010 |
| 1999 | 100 | $86,534,591 |
| 2000 | 121 | $141,539,669 |
| 2001 | 106 | $70,269,323 |
| 2002 | 95 | $108,101,460 |
| 2003 | 127 | $200,664,118 |
| 2004 | 100 | $246,979,100 |
| TOTAL | 1,361 | $1,357,786,859 |
The SAA as implemented by the President, with the exception of certain items noted below, prohibited the export of all products of the United States with the exception of food and certain medicine. The Department of Commerce published General Order No. 2 on May 14, 2004, implementing the SAA for purposes of the EAR. The impact of the prohibition was significant.
In implementing the SAA, the President exercised his national security waiver authority for certain transactions. The President provided waivers for six categories of items: (1) items for the use of the U.S. Government; (2) certain medicines and medical devices; (3) parts and components intended to ensure the safety of fight for civil passenger aircraft; (4) aircraft used by the Syrian Government for its official use; (5) telecommunication equipment and associated parts and components; and (6) items for the use of the United Nations in Syria. The U.S. Government reviews applications for the export or reexport of items eligible under waivers on a case-by-case basis.
Since implementation of the SAA on May 14, 2004, the Department of Commerce has approved 100 license applications, valued at $123 million. The top three categories of approved licenses include EAR99 medical items, aircraft parts and components, and information security equipment. (EAR99 covers any export or reexport of any item not specified on the Commerce Control List, unless excluded in the EAR, or subject to the jurisdiction of another agency.) The Department has also returned without action 80 license applications, valued at $51 million, and rejected 14 license applications, valued at $3.9 million. As a result of General Order No. 2, the Department revoked 24 previously valid licenses valued at $154.5 million. The largest single license revoked was for a temporary sojourn of aircraft for $135 million. In addition to licenses revoked and applications denied, many would-be license applicants chose not to apply because no available exceptions for their commodity existed. In addition to licenses revoked and applications denied, many would-be license applicants chose not to apply because no available exceptions for their commodity existed.
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 Controls. 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 common.
In a September 28, 2004, 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, as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS Web page. The comment period closed on November 19, 2004. Twelve comments were received, and two of these comments addressed embargoed countries and persons.
One comment stated support for the use of controls to prevent human rights abuses. The commentator advocated that future development of the controls should focus on gaining international support for such controls. He suggested the U.S. Government should find ways to make the controls work better, rather than seeking more controls. Without international support, the comment argued, U.S. industries could suffer and human rights violations could escalate throughout the world.
Another comment addressed the perceived dangers of unilateral foreign policy-based export controls, but did not specifically cite embargos. The commentator provided general comments about unilateral controls, stating that these controls can lead to the growth of international competition to U.S. goods. He cited as an example the rise of Airbus following U.S. restrictions on aircraft exports to the Middle East several decades ago. Other comments relating to multilateral control regimes are discussed in Chapters 6, 7, 8, and 12. A detailed review of all comments received can be found in Appendix I.
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.
The Administration has worked hard with other nations, especially countries in Europe and Latin America, to resolve disputes that arise because of implementation of the U.S. embargo. Differences remain between the United States and other countries concerning the best method to encourage democracy and human rights. However, the European Union and others continue to share with the United States the ultimate goal of a free, peaceful, democratic, and market-oriented Cuba.
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 the continuing disclosures about Iran’s nuclear program. In addition, the UN through the IAEA is working to verify and monitor Iran’s nuclear program. The U.S. Government supports these efforts and has provided personnel and materials to the IAEA to facilitate the IAEA’s actions.
Prior to Operation Iraqi Freedom and the lifting of the embargo on Iraq, the United States maintained an ongoing dialogue with other United Nations member states, as well as separately, with its allies and partners. Since the lifting of the embargo, the United States has continued discussions with many other countries on both a bilateral and multilateral basis.
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.
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 United Nations as well as the Intergovernmental Authority on Development (IGAD), which is the entity sponsoring peace talks between the Government of Sudan, and the Sudan Peoples’ Liberation Movement/Army (SPLM/A).
The United States is in constant communication with other countries regarding the Syrian Government's policies of concern. Additionally, the United States has communicated its concerns directly and forcefully through the U.S. Ambassador in Syria and the Syrian Ambassador in Washington.
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 UN denunciations, and curtailing or discouraging bilateral educational, scientific, or cultural exchanges. The U.S. Government has had some success using these alternative means to reach the intended foreign policy objectives. Nonetheless, these trade sanctions remain a critical part of the U.S. Government’s foreign policy. 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. Although 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.
