When your work involves export controls, it's good to remember that reform – especially in the form of decontrol – seldom has an immediate impact. It's been just over a year since the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") lifted its restrictions on the export and re-export of certain medicines and medical devices to Iran, and just over two years since OFAC lifted corresponding controls on the export and re-export of most foods to Iran and Sudan. Presumably, both of these changes freed up resources within OFAC's Licensing Division to enable the more expeditious review of applications filed under the Trade Sanctions Reform and Export Enhancement Act of 2000 ("TSRA"). It's impossible to know, however, since OFAC has not sent a single TSRA Quarterly Report to Congress for a month falling in the 2013 calendar year. Absent these reports or any other relevant guidance, those seeking TSRA licenses should continue to expect extended wait times.
The TSRA was enacted in October 2000 to replace a series of unilateral bans on the export and re-export of agricultural and medical products from the United States to embargoed countries, notably Cuba, Iran, and Sudan. Under the new scheme, starting in July 2001, prospective exporters of these goods could apply to OFAC for one-year specific licenses. In the first three months of TSRA licensing, OFAC received 153 applications, and posted a remarkable average license approval time of just 13 business days. That's a far cry from the 100-business-day average license approval time in the most recent TSRA Report to Congress, which covered the period from October to December 2012. And earlier in 2012, the average processing time for a TSRA license was 108 business days.
Despite OFAC's decontrol measures over the past two years, companies seeking to take advantage of the TSRA, particularly prospective exporters of medical devices, may not see a marked difference in license processing times, at least in the near future. To be fair, OFAC's 2011 relaxation of controls on food exports and re-exports immediately resolved 69 pending license cases, certainly freeing up significant OFAC resources for other matters. But OFAC's 2012 relaxation of controls on medicine and medical device exports and re-exports to Iran only closed six cases. Indeed, fewer than 7 percent of the TSRA license applications OFAC received in calendar year 2012 were to export medicines to Iran. Conversely, more than 75 percent of the TSRA license applications OFAC received that year involved medical device exports.
For medical device manufacturers, patience – and compliance – is the only option. OFAC's most recent enforcement action against a medical device manufacturer that failed to comply with export licensing requirements resulted in a $404,100 settlement over alleged exports whose value was only half that amount. We'll continue to watch for and report on developments in this area, including the publication of OFAC's overdue TSRA Quarterly Reports to Congress. But until something changes – to paraphrase the old saying – apply early and often for your necessary TSRA licenses.
This article is presented for informational purposes only and is not intended to constitute legal advice.
