The House of Commons European Scrutiny Committee has made a number of comments in its 33rd Report (3 July 2018) about the EU Blocking Regulation being extended to Iran sanctions (see previous blog). In particular it notes that:
1. The practical impact of the EU Blocking Regulation is not clear, because “its enforcement in the 1990s in response to the extraterritorial effects of previous US sanctions—targeting commercial links with Iran, Libya and Cuba—was fragmented at best.”
2. If the US administration is not responsive to “the pressure exerted by the reactivation of the Statute, it puts EU and UK companies in the position of having to choose between risking enforcement measures at home (if they choose to comply with the American sanctions) or in the US (if they abide by the Blocking Statute and ignore the US legislation).”
3. It is good that the UK is “pressing” the European Commission for guidance, “given the potential commercial ramifications of being shut out of the American market.”
4. The European Investment Bank has already expressed concern about being asked to provide investment support for Iran to compensate for restrictions on private investment because it requires access to US capital markets for its general operations, and “similar concerns are likely to abound in the private sector as well”.
On 18 June 2018, the UK Secretary of State for International Trade Liam Fox published an Explanatory Memorandum saying the UK supports the EU proposal and intends to “uphold the policy intent of this regulation in our statute book once we have left the EU, so that we can mitigate the impact of extra-territorial sanctions on [UK] trading interests”. The UK “will be engaging at a national level and EU level to ensure that business gets as much clarity and guidance as possible” on how to comply with the amended Regulation.