US Expects More Companies to Use Export Mechanism for Humanitarian Goods to Iran

The first humanitarian exports were sent through the joint mechanism created by the Treasury and State departments nearly three months after the channel was created (see 1910250057), Treasury said Jan. 30. Treasury said the mechanism successfully facilitated transactions from a “humanitarian channel” in Switzerland that sent cancer and transplant-related drugs to Iranian medical patients. The channel is subject to “strict due diligence measures,” Treasury said, adding that the successful transactions prove “a model for facilitating further humanitarian exports to Iran.”

Although the mechanism imposes a long list of due diligence requirements in order to allow exports to Iran, the Trump administration expects more companies to use the channel, said Brian Hook, the U.S.'s special representative for Iran. Hook said the requirements are strict because the Iranian government has a history of using front companies to pose as humanitarian organizations and to import goods for the government “elite” or for resale on the black market. ”We've created a very high standard of due diligence ... but this is not an impossible bar,” Hook said during a Jan. 30 press conference. “It's already been met by one European company.” The State Department has spoken with other companies that want to use the mechanism to export medicine and medical devices to Iran, Hook said. ”You can expect to see more transactions moving through this.”

The mechanism will “improve the flow of humanitarian goods to the Iranian people,” Treasury Secretary Steven Mnuchin said in a statement, adding that the agency will “encourage companies to use this humanitarian mechanism.” Trade experts and members of Congress have criticized U.S. sanctions on Iran for inadvertently blocking humanitarian exports (see 1912120027)

Hook suggested the mechanism has already proven more successful than Instex (see 1908260035), the European payment system introduced in January 2019 intended to facilitate trade with Iran despite U.S. sanctions. Instex “has not processed a single transaction, so we're very pleased that we've been able to process this transaction,” Hook said. “It's the first one, but there will be more to come.”

Hook also urged member states of the Joint Comprehensive Plan of Action to abandon the deal and join the U.S.'s “foreign policy strategy” of maximum pressure against Iran. Although the United Kingdom, France and Germany triggered the JCPOA's dispute settlement system (see 2001140020), the process can take months and may allow European countries to stall, Hook said. “The Europeans have shown a great deal of patience with the Iranians,” Hook said. “Member-states in the deal can decide whether they want to go and end it or whether they want to buy time. We'll have to see.”