It was almost two years ago that President Bush terminated the national emergency with Libya, effectively ending the United States’ longstanding unilateral embargo on that country. (See Reed Smith’s April 2004 Client Bulletin.)While this decision represented a major step forward in the normalization of trade relations between the countries, it did not remove all obstacles to doing business with Libya. Most notably, Libya remained one of the United States’ designated “terrorist” supporting nations. As a result, a number of license requirements for Libya under the Export Administration Regulations (“EAR”) and the International Traffic in Arms Regulations (“ITAR”) remained in effect, significantly limiting potential commercial opportunities.

On May 12, 2006, President Bush issued a Presidential Determination that specifically addressed this last major hurdle. The Determination served as a notification to Congress that the United States was formally rescinding Libya’s designation as a state sponsor of terrorism. President Bush highlighted the steps that Libya had taken over the past seven years to distance itself from terrorism. Specifically, Libya transferred two suspects in the Lockerbie disaster for trial in Scotland and established a $2.7 billion escrow account for the families affected by the incident. Libya further abandoned its weapons of mass destruction program and cooperated in international efforts to combat terrorism. The Determination concluded by emphasizing that Libya will serve as a useful model as the United States pressed for changes in other terrorist-supporting nations, such as Iran and North Korea.

Congress theoretically had 45 days to protest the Determination. As no objections were raised, Secretary of State Rice officially rescinded Libya’s designation as a sponsor of state terrorism on June 30, 2006 (as published in the Federal Register on July 13, 2006). By so doing, Libya became the first nation to shed its terrorist designation without undergoing a change of government or a merger with a neighboring country. Secretary Rice’s action also clears the way for Libya to be removed from the remaining restrictions under the EAR and the ITAR.

This article is presented for informational purposes only and is not intended to constitute legal advice.