May 20, 2019

May 20, 2019

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May 17, 2019

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A Break From the Past: Historic Deal with Iran Marks A New Day in U.S.-Iran Relations

Today, President Obama announced a landmark agreement with Iran designed to prevent Iran from obtaining a nuclear weapon in exchange for lifting sanctions that have retarded the country’s development for the decades since the revolution. The agreement is the result of 20 tough months of negotiations among Iran and the so-called P5+1 (the United States, the UK, China, France, Russia, and the EU). As far as we are aware, this is the first time in over forty years that nonproliferation diplomacy has resulted in an enforceable agreement not to develop nuclear weapons. The last four entrants to the nuclear club (India, Israel, Pakistan, and North Korea) were not likewise persuaded to cease their development of nuclear weapons. Their nuclear detonation tests in 1974, 1979, 1998, and 2006 respectively signaled the end of negotiations in each case.

According to a statement released today by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the agreement will provide Iran with phased sanctions relief upon verification that Iran has implemented key nuclear commitments.  President Obama was clear in his message that the deal with Iran is “not built on trust.  It is built on verification.”

Under the agreement, the International Atomic Energy Agency (IAEA) must verify that Iran has implemented key nuclear-related measures described in the plan. The parties have described the date of such verification as “Implementation Day.” At that time, U.S. sanctions relief will be provided in a phased-in manner through suspension and eventual termination of nuclear-related secondary sanctions.

The P5+1 and Iran also decided today to extend through “Implementation Day” the sanctions relief provided in the Joint Plan of Action (JPOA) of November 24, 2013.  Finally, all specific licenses that: (1) were issued pursuant to OFAC’s Second Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry, and (2) have an expiration date on or before July 14, 2015, are authorized to remain in effect according to their terms until “Implementation Day.”

Key Provisions of the Deal

Iran

P5+1

Will reduce its current stockpile of low-enriched uranium

Will phase the lifting of sanctions to allow Iran to begin selling oil and develop its energy sector

Will reduce the number of centrifuges operating to enrich uranium

Will phase the lifting of sanctions to allow Iran to use global financial markets

Will not engage in designing warheads and conducting experiments on nuclear-weapons-related technologies

Will gradually lift the arms embargo based on IAEA’s verification of Iran meeting nuclear program commitments

Will be restricted from certain activities related to arms for five years and ballistic missiles for eight years

Will snap sanctions bank into place if Iran is judged to not meet its commitments

Though the true long-term effects of the agreement will remain to be seen, oil prices fell slightly today after President Obama’s announcement of the deal.  Relief from the sanctions that have limited Iran’s ability to develop its energy sector could eventually affect the global energy market much further.  Iran has the fourth-largest crude oil reserves and the world’s second largest reserves of natural gas.

Under U.S. law, Congress has 60 days to review the agreement and to vote to accept or reject it. President Obama has promised to veto any resolution rejecting the agreement. Congress would then require a two-thirds majority in each house to override the veto.

Though President Obama now faces the challenge of persuading Congress to approve the deal, we leave you with the President’s words: “Consider what happens in a world without this deal. Without this deal, there is no scenario where the world joins us in sanctioning Iran until it completely dismantles its nuclear program. Nothing we know about the Iranian government suggest that it would simply capitulate under that kind of pressure. And the world would not support an effort to permanently sanction Iran into submission. We put sanctions in place to get a diplomatic resolution. And that is what we have done.”

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

J. Scott Maberry, Lawyer, Sheppard Mullin, International Trade, Trade Practice
Partner

Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-terrorism, economic sanctions, anti-boycott controls, and Customs.  He also represents clients in negotiations and dispute resolution under the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other multilateral and...

202-469-4975
Fatema Merchant, international, trade, Lawyer, Sheppard Mullin
Associate

Fatema Merchant is an associate in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Fatema’s practice focuses on investigations and compliance counseling related to international trade laws.  She has extensive experience with U.S. Foreign Corrupt Practices Act and U.S.-Sanctioned Countries investigations, compliance, due diligence, and training.  Fatema also advises clients on compliance with International Traffic in Arms Regulations, Export Administration Regulations, Customs and Anti-Money Laundering regulations.  At Sheppard Mullin, she serves on the D.C. Diversity Working Group, Recruiting Committee, and is co-chair of the DC women lawyers’ group.  Fatema also serves on the pro bono committee and is actively involved in various pro bono matters, including preparing asylum applications and working with students at American University to seek resettlement for Iraqi refugees as part of the Iraqi Refugee Assistance Program.   

202-469-4930