President Trump has announced that the United States will withdraw from the Joint Comprehensive Plan of Action (JCPOA, also informally known as the Iran nuclear deal) that was entered into in 2015 by Iran, the United States, China, France, Germany, Russia and the United Kingdom. The JCPOA was negotiated in an effort to ensure that Iran’s nuclear program would be used exclusively for non-military, peaceful means. On January 16, 2016, the JCPOA was formally implemented and certain trade and economic sanctions against Iran were relaxed by the other parties to the deal. From its inception, the Iran nuclear deal has had its share of proponents and critics, and was a hot-button issue during the 2016 presidential election. During the campaign, and since, President Trump repeatedly stated that the deal was “one of the worst and most one-sided transactions the United States has ever entered into.” In making today’s announcement, President Trump stated that the JCPOA was “defective at its core” since it would not prevent Iran from ultimately developing a nuclear bomb. He argued that the sunset provisions of the deal and the onsite inspection provisions were clearly inadequate, and at the time when the United States had “maximum leverage,” it entered into a deal that gave Iran, a “leading state sponsor of terrorism,” billions of dollars. The president called the agreement “a great embarrassment to me as a citizen and all citizens of the United States.”
The withdrawal comes as no great surprise. In October 2017 and again in January 2018, the president made clear that he was reluctantly continuing to waive nuclear sanctions on Iran and set forth conditions for either fixing the agreement or ultimately withdrawing from the JCPOA. (See Trump and Trade Updates dated October 13, 2017 and January 12, 2018.)
The ramifications of the withdrawal and potential fallout with U.S. allies could be significant. Just in the past week, France, Germany and the United Kingdom argued at length with the Trump administration for remaining in the JCPOA. Further, Iran has adamantly stated that it will not renegotiate the JCPOA or accept any additional conditions placed on the deal by the United States. Instead, Iran has insisted that should the United States withdraw, it would reactivate its nuclear weapons program.
While specific details were not provided by President Trump in his brief statement or in a Fact Sheet released by the White House, the president indicated that the United States will begin to reinstate all sanctions that it had relaxed pursuant to the JCPOA. The re-imposed sanctions will “target critical sectors of Iran’s economy, such as its energy, petrochemical, and financial sectors.” Further, those doing business in Iran “will be provided a period of time to allow them to wind down operations in or business involving Iran” and that those “who fail to wind down such activities with Iran by the end of the period will risk severe consequences.” Shortly after President Trump’s statement, the Department of the Treasury released the following statement:
Consistent with the President’s guidance, Departments and Agencies will begin the process of implementing 90-day and 180-day wind-down periods for activities involving Iran that were consistent with the U.S. sanctions relief specified in the JCPOA. To effectuate the wind-down periods, today the State Department issued the necessary statutory sanctions waivers to provide for a wind-down period and plans to take appropriate action to keep such waivers in place for the duration of the relevant wind-down periods. As soon as is administratively feasible, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) expects to revoke, or amend, as appropriate, general and specific licenses issued in connection with the JCPOA. At that time, OFAC will issue new authorizations to allow the wind down of transactions and activities that were authorized pursuant to the revoked or amended general and specific licenses. At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect.
Trump and Trade will update this post as additional information and materials become available.