Normalized United States-Libya Relations Expected to Ease Export Restrictions

June 8, 2006

In a May 15, 2006 announcement, the Bush Administration signaled Libya’s removal from the list of countries not supporting U.S. antiterrorism efforts and the reopening of diplomatic relations with Libya. On the same day, Secretary of State Condoleezza Rice announced that Libya would not be certified this year as a country not cooperating fully with U.S. antiterrorism efforts. This change in policy is expected to eventually have far reaching implications for U.S. exporters to Libya, removing some existing restrictions on trade with that country. 

These changes, however, will not be automatic. Congress has 45 days from the President’s announcement to review and approve the change in Libya’s status. And even with Congress’ approval, current regulations will remain in place until changes are published by relevant agencies. The Bureau of Industry and Security, the State Department and the Defense Department will have to rewrite relevant regulations, which could take several months. 

After implementation of Libya’s status change, Export Administration Regulations ("EAR") anti-terrorism controls licensing requirements for Libya are expected to be removed. Additionally, Libya may also be removed from Country Group E:1 under the EAR, which may cause additional license exceptions to become available for items remaining subject to licensing requirements. Libya may also be removed from the list of countries at 22 C.F.R. 126.1, which identifies countries for which there is a policy of not granting licenses under the International Traffic in Arms Regulations (“ITAR”). Until such changes are published, however, exporters should be aware that current limits remain in effect.

Exporters should also be aware that important limitations to exporting to Libya will not be affected by Libya’s change in status. For example, non-antiterrorism related controls, e.g., under the EAR, will not be affected by this announcement. Also, restrictions on transactions with Libyan Specially Designated Nationals ("SDNs") and other restricted persons will also remain in effect. 

Until the President’s announcement, the United States and Libya had not had official diplomatic relations since 1972, when the United States withdrew its ambassador over concerns that Libya was sponsoring terrorism. Export controls on military equipment and civil aircraft were imposed during the 1970s. The U.S. Government designated Libya as a "state sponsor of terrorism" in December 1979. 

Gibson Dunn & Crutcher’s International Trade Regulation and Compliance practice group will continue to monitor developments regarding Libya’s status under export regulations and other rule changes stemming from the President’s announcement on Libya.

For further information, please contact Judith A. Lee (202-887-3591), Jim Slear (202-955-8578) or David Wharwood (202-887-3579) in Gibson, Dunn & Crutcher’s Washington, D.C. office.

© 2006 Gibson, Dunn & Crutcher LLP