Did you know that unrelated business you (or, in some cases, your affiliates) conduct outside the United States could affect your ability to continue conducting business in the automotive industry in the U.S.?
General Motors recently notified its direct suppliers of U.S. Executive Order (EO) 13645, effective July 1, 2013. In its notification, General Motors clearly stated that a sanction under EO 13645 may result in a breach of agreements with General Motors, and may also result in General Motors and its global subsidiaries being prohibited from conducting any business with a sanctioned party. It is a safe assumption that others in the automotive industry will take a similar position.
In addition to other prohibitions and limitations, EO 13645 grants the U.S. Secretary of State and the U.S. Secretary of Treasury the power to impose sanctions on a Person (which includes entities) upon determining that the Person knowingly engaged in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the automotive sector of Iran. Sanctions may also be imposed on successors, parent entities, subsidiaries and affiliates of the Person under certain circumstances.
Under EO 13645, “automotive sector of Iran” is defined as the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles.
Sanctions can include denial of guarantees, insurance, licenses or other permissions in connection with exportation of goods, technology and services from the United States, such as: (i) restricting or prohibiting importation of goods, technology and services into the United States, (ii) inability to contract with government agencies, (iii) denial of visas to any corporate officer, principal or shareholder, or (iv) blocking all property and interests in property in the United States, or in the possession or control of any United States person, and prohibiting such property and interests in property from being transferred, paid, exported, withdrawn or otherwise dealt in.
If you or any of your affiliates conducts any business in Iran or involving an Iranian citizen, you should review those arrangements immediately to ensure compliance with EO 13645 or your automotive business could be severely impacted going forward.