General License 15 - Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates in Afghanistan (September 24, 2021)

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TURBOFAC Commentary (2161 words)

[3-5-2022 Update: refer to GTSR/FTOSR General License 20, which renders this largely, if not wholly, redundant.]

Notes:

1) BACKGROUND

For commentary concerning certain Afghanistan-related transactions that are not covered by this GL, refer to General Note Concerning the Status of the Unrecognized Government of Afghanistan Under the (System Ed. Note). For comments on the aspects of NGO-related GLs such as this that are conducive to cross-programmatic comment, refer to General Note on GLs Authorizing Transactions of and Related to Nongovernmental Organizations (NGOs) (System Ed. Note).

As of 12/22/2021, the general licenses specifically applicable to transactions directly or indirectly involving the Taliban or Haqqani Network are GTSR/FTOSR GL 14, GTSR/FTOSR GL 15, GTSR/FTOSR GL 16, GTSR/FTOSR GL 17, GTSR/FTOSR GL 18, and GTSR/FTOSR GL 19.

These GLs cover direct dealings with the Taliban, as well as dealings with (still unrecognized) Government of Afghanistan-related entities that might otherwise be prohibited due to a Taliban “interest.” The GLs are associated with a number of FAQs.

The interpretive issues specific to this GL are discussed below. The interpretive issues common to all or most of the Taliban-related GLs are addressed in the General Note Concerning the Status of the Unrecognized Government of Afghanistan Under the GTSR (System Ed. Note).

2) SIMILARITY TO GL 12; ORDINARILY INCIDENT

With the exception of the carveouts discussed below and the replacement of "Yemen" and "Ansarallah" for "Afghanistan" and "Taliban or the Haqqani Network," this GL is close to a word-for-word copy of GTSR/FTOSR General License 12, and is otherwise substantially similar to other agricultural/medical GLs in a way that allows for interpretation though reference to OFAC's practice in the context of other programs.

Read in conjunction with FAQ # 875 and FAQ # 877. FAQ # 875 specifies that transactions “ordinarily incident” to those licensed explicitly in GTSR/FTOSR General License 12 “includ[e] but [are] not limited to the processing and transfer of funds, payment of taxes, fees, and import duties, and purchase or receipt of permits, licenses, or public utility services.” Paragraph (c)(1) can be read as implying as much, but FAQ # 875 leaves no doubt. FAQ # 930 clarifies that "transfers of funds to or from Afghanistan that are ordinarily incident and necessary to give effect to the activities authorized in GL 15, including clearing and settlement involving banks in Afghanistan, are authorized under GL 15."

FAQ # 877 specifies that the following are included within the scope of the terms “medicine” and/or “medical device.”

“items that may be used in the fight against COVID-19, including personal protective equipment and other items such as medical gowns, medical eye shields and goggles, surgical gloves, face shields, respirators and masks such as N95, N99, and N100 masks, oxygen generators, full face mask respirators including Powered Air Purifying Respirators, diagnostic medical imaging equipment, decontamination equipment, and ventilators."

The same should be true of GL 15.

Finally, see FAQ # 954. "[P]urchases of fuel, payment for telecommunications services, payment for security services, payment of rent, and payment of utilities may be authorized under [this GL and others] provided that they are ordinarily incident and necessary to effectuate the activities authorized by the GLs".

3) RELATIONSHIP WITH TSRA: SCOPE OF DEFINED TERMS

i) This GL goes far above and beyond the baseline requirements of TSRA, most notably insofar as TSRA requires only the adoption of favorable licensing policies for eligible transactions, not general licenses. Nevertheless, a discussion of the relationship of this GL in the context of TSRA is worthwhile in part because the defined terms controlling the scope of the license are pulled directly from TSRA, and in part because some transactions that are not otherwise generally licensed may be still subject to TSRA-mandated favorable licensing policies. The basic functioning of TSRA is discussed in detail at General Note on the Cross Programmatic Relevance of TSRA, as it relates to Agricultural Commodities, Medicine and Medical Devices (System Ed. Note).

ii) SCOPE OF TYPES OF ITEMS ELIGIBLE

The GL exceeds the scope of TSRA at the level of product scope. For example, "replacement parts" for covered "medical devices" have traditionally been considered outside the scope of TSRA, whether generally licensed or subject to favorable licensing policies as a matter of agency discretion. The same is true of the "software updates". Compare Venezuela General License 4.

iii) SCOPE OF TERMS DEFINED IN TSRA; IN GENERAL AND VIS-À-VIS OTHER TSRA-RELATED GLs

Nothing in the GL acknowledges the existence of TSRA, but the precise language used to define the scope of the GL—combined with the fact that at least some of what is generally licensed would be subject to TSRA-mandated favorable licensing policies—suggests that the GL will be interpreted in harmony with other TSRA-related GLs.

The definitions of "agricultural commodities," "medicine" and "medical devices," are all pulled directly from TSRA. The GL uses a definition of "Agricultural commodities" that is pulled directly from TSRA, while adding "food for humans," where such food may or may not fall within the scope of TSRA's definition "Agricultural commodities." This is consistent with OFAC's longstanding practice concerning its administration of TSRA. See OFAC TSRA Program Description & Background (2017), in which OFAC explains the relationship between TSRA and the GLs covering "food for humans," with OFAC considering "food" to be within the scope of TSRA to effect the purpose of the statute. It should be safe to assume that the term “food” will be defined in harmony with the way in which it is defined in other TSRA-related contexts.

With respect to the scope of "agricultural commodities," see License Application Guidelines for Exports to Iran and Sudan of Agricultural Commodities, Medicine, and Medical Devices (2011), in which OFAC clarifies that one may rely on the list prepared by the USDA Foreign Agricultural Service for determining what qualifies as an "agricultural commodity" for the purposes of the definition of that term (See List of "Agricultural Commodities" for TSRA Purposes (Commodities Eligible for Shipment to Cuba Agricultural, Fish and Forestry)). See also 66 FR 36683, stating that "Exporters may consult the Department of Agriculture website at http://www.fas.usda.gov for assistance in determining whether a particular item meets the definition of agricultural commodities under the Agricultural Trade Act." Refer generally to Ukraine General License Number 4, and comments thereto. "Medical devices" would presumably cover the entirety of what is on the positive "Iran - List of Medical Supplies" (2015), as well as the negative "List of Medical Devices Requiring Specific Authorization" (2017), both of which purport to cover "medical devices," as that term is defined with reference to the definition of “medical devices” pulled from TSRA.

While OFAC practice in connection with other TSRA-related GLs is such that one should reference the baseline interpretations of “food,” “medical devices” and "agricultural commodities" for the purposes of interpreting this GL, note that, unlike certain other TSRA-related GLs, OFAC does not carve items out of this GL as it does in the context of other TSRA-related GLs. In other TSRA-related GLs, which apply to destinations subject to full export embargoes, the definitions of "agricultural commodities," "medicine" and "medical devices" carve out items subject to the and controlled at a level higher than EAR99 (see e.g. paragraph (d) of Ukraine General License Number 4). Those carveouts are an interpretation of the scope of TSRA in light of the embargo placed on Crimea. Sec 7203(2)(B) of TSRA allows for a carveout for items “controlled on any control list established under the Export Administration Act of 1979 or any successor statute…”

This GL, by contrast, has no carveouts to the definitions of "agricultural commodities," "medicine" and "medical devices" that reference the EAR. There is a limitation to the GL that "[n]othing in this general license relieves any exporter from compliance with the requirements of other Federal agencies, including the [BIS]."However, the scope of the GL is not in any way limited by the products at issue being EAR99. This is the case with the Iran and Crimea versions of this GL, which are so limited in view of the broad export embargoes applicable to those countries. The only limitations to this GL are those imposed by and other agencies.

Finally, note that the Iran and Crimea GLs for TSRA-related items are set up in a “dual track” format, where there is a scope of "agricultural commodities" and "medicine" that applies for the purposes for the GLs, and then a scope of "agricultural commodities" and "medicine" that are subject to specific licensing policies. The reason for the two scopes is that the broader one, pertaining to the specific licensing policies, is designed to cover the full range of that which is covered by TSRA, while the narrower definition carves out certain items that are within the definitions of "agricultural commodities" and "medicine" definitions of TSRA, but for which OFAC does not want to generally license exports for policy reasons.

Those items, which are not carved out of the definition of "agricultural commodities" and "medicine" for the purposes of this GL, are evidently within the scope of the GL. Refer again to Ukraine General License Number 4. “Excluded agricultural commodities” and “excluded medicines” as defined in paragraphs (a)(3) and (a)(4) are presumptively within the scope of this GL. Excluded “agricultural commodities” and medicine,” as defined in paragraphs (b)(1) and (b)(2) are presumptively outside the scope of this GL, since paragraphs (b)(1) and (b)(2) are clarifications as to how OFAC interprets the scope of those terms as they appear in TSRA.

4) See Fact Sheet: Provision of Humanitarian Assistance and Trade to Combat COVID-19, for interpretations of the term "medical device" as it relates to items useful for responding to COVID-19.

5) DEALINGS PERTAINING TO EXPORTS OF TSRA-RELATED ITEMS FROM THIRD COUNTRIES; THE SCOPE OF "ORDINARILY INCIDENT AND NECESSARY TO" FOR THE PURPOSES OF THE GL

As discussed above, for the purposes of this GL, the scope of "agricultural commodities," "medicine" and "medical devices" is not limited with reference to their ECCNs. To the degree that the export of an item subject to BIS or other agency licensing requirements has been licensed, all activities described in the GL with respect to the export are covered by the GL. With respect to transactions incident to the export of items from third countries to Afghanistan that involve the Taliban or the Haqqani Network, there are no apparent exclusions or exceptions, irrespective of the degree to which those items would be controlled if they were of U.S. origin, or how they are controlled in fact by third countries from which they are exported.

With respect to the question of transactions incident to those not involving U.S. persons in general, compare this GL to, e.g. 560.530 and Ukraine General License Number 4. Unlike those, this GL is not limited on its face to exports from the U.S. or involving U.S. persons. Instead, The GL appears to permit U.S. person involvement in all transactions that could be engaged in directly by U.S. persons, irrespective of whether the exports involve U.S. persons or items subject to the EAR. The term “ordinarily incident to” is generally straightforward in the context of direct exports of physical items. It would cover, at a minimum, “the making of shipping and cargo inspection arrangements, the obtaining of insurance, the arrangement of financing and payment, shipping of the goods, receipt of payment, and the entry into contracts (including executory contracts).” See Ukraine General License Number 4. See generally Notes Common to the 400-Level Interpretive Provisions Authorizing Transactions "Ordinarily Incident" to a Licensed Transaction; Transactions Incident to Others in General (System Ed. Note), and General Note and Associated Matrix Pertaining to U.S. Person Engagement in Transactions Incident to Transactions by Foreign Persons (System Ed. Note).

Query whether this GL covers the provision of brokering services in connection with covered exports. Brokering Services has been deemed to be outside the scope of GLs authorizing “exports” to embargoed countries of TSRA-related goods, but the structure of this GL is a bit different from the others as it specifically contemplates actions in furtherance of underlying transactions to which no U.S. person is a party. See General Comment on the Relationship Between Brokering Sales of Goods and the Scope of Transactions "Ordinarily Incident" to Transactions Authorized (System Ed. Note).

6) The Meaning of the Term "Financial Transfers"; Importance Thereof

[Refer to General Note Concerning the Status of the Unrecognized Government of Afghanistan Under the GTSR (System Ed. Note).]

7) The Meaning of “The Taliban” and “Haqqani Network”

[Refer to General Note Concerning the Status of the Unrecognized Government of Afghanistan Under the GTSR (System Ed. Note).]

8) Application to Dealings Involving Natural Person SDNs Blocked Due to Their Relationship with the Taliban

[Refer to General Note Concerning the Status of the Unrecognized Government of Afghanistan Under the GTSR (System Ed. Note).]

Welcome!

Welcome!

General License 15 - Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates in Afghanistan (September 24, 2021)

TURBOFAC Commentary (2161 words)