President Trump Decertifies the Iran Deal. Now What?

3 min

President Trump declared last Friday that he will not recertify the Iran nuclear deal, known as the Joint Comprehensive Plan of Action ("JCPOA" or "Agreement"). The declaration is consistent with recent reports that the President's national security team unanimously recommended that he not recertify the JCPOA. The Agreement signed under President Barack Obama was intended to thwart the potential for Iran to build a nuclear bomb by curbing nuclear activities the United States and other partners considered most troubling. In exchange, Europe lifted most sanctions on Iran while the United States lifted most "secondary sanctions."

However, Congress requires the president to certify Iranian compliance with the deal every 90 days. In addition to certifying Iran's compliance, President Trump must also declare whether the Agreement remains "vital to the national security interests of the United States." So far, the President has twice certified Iran's compliance with the terms of the nuclear deal, first in April and then in July. And while most international inspectors say that Iran continues to meet its technical obligations, the President decided not to recertify compliance or declare that the Agreement remains vital to the U.S. By law, Congress now has 60 days to decide whether to reimpose sanctions lifted by the deal.

Despite not recertifying the deal, the President is not expected to seek reimposition of nuclear sanctions. Sources in the administration indicate that the current strategy is to decertify the JCPOA, continue to waive the statutory sanctions, slap on new non-nuclear sanctions, and potentially work with Congress to establish "trigger points" that could result in the reimposition of sanctions. For instance, Senators Bob Corker and Tom Cotton recently announced plans to introduce legislation that would require the reimposition of sanctions if Iran comes within a year of nuclear capability. Furthermore, President Trump's speech on Friday specifically referenced addressing Iran's ballistic missiles program. However, for now, Trump's declaration leaves nuclear-related Iran sanctions exactly as they are.

In conjunction with the President's declaration, the Office of Foreign Assets Control (OFAC) designated several Iranian companies and one Chinese company for "proliferation activities related to a key supporter of Iran's military." Furthermore, OFAC designated the Iranian Revolutionary Guard Corps (IRGC) pursuant to E.O. 13224 for its support of terrorism. The recent designation of the IRGC, which plays a major role in Iran's economy, will have little practical effect, as the IRGC is already listed as a Specially Designated National (SDN) by OFAC.

The future of the JCPOA is unclear as some members of Congress, particularly foreign policy hawks (many of whom campaigned against the Iran deal) may bristle at the idea of being asked to hold off on reimposing sanctions. Meanwhile, many members of Congress, including prominent Republicans, have expressed opposition to reimposing sanctions. Therefore, we may see further legislative proposals for "trigger points," such as Senators Corker and Cotton's. Furthermore, even if the U.S. were to reimpose sanctions, it is unclear how those sanctions would be enforced and what effect they might have. This is due to the fact that most of the sanctions the U.S. waived under the deal were "secondary sanctions," or sanctions on foreign persons and entities for engaging in prohibited transactions with Iran. If the United States were to reimpose "secondary sanctions" without support from the EU, this could result in significant diplomatic tensions between the U.S. and the EU, as the EU is likely to resist U.S. attempts to renew "secondary sanctions" on EU persons and entities. However, if the U.S. refrains from imposing "secondary sanctions," then U.S. sanctions will, in effect, remain as they are under the JCPOA.

We continue to track developments regarding the sanctions and the JCPOA. Please feel free to reach out to any of Venable's International Trade attorneys with questions as to how this may impact your business.