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On May 14, 2012, the Council of the European Union issued Council Regulation No. 409/2012 (Regulation),
which temporarily suspends certain import, export, and investment
restrictions on Myanmar's timber and minerals industries.
It came into force on May 16 and is directly applicable in all
Member States. The Regulation implements and gives full legal
effect to European Council Decision 2012/225/CFSP,
issued April 26, 2012, which lift EU sanctions on Myanmar until
April 30, 2013 in response to the country's nascent political
reforms. In May 2012, opposition party members were seated in
Myanmar's parliament for the first time, following elections
deemed free and fair the previous month. Should the political
situation in Myanmar deteriorate, the EU may reinstate the
restrictions by declining to renew the suspension after April 30,
2013.
The new Decision and Regulation follow the partial relaxation of
sanctions on Myanmar by the United States. As discussed in
our previous
advisory, the US Department of the Treasury recently issued a
General License allowing US persons to export financial services in
support of humanitarian, religious, and other non-profit activities
in Myanmar. Other US sanctions on Myanmar remain in
force.
Permitted Activities
Until April 30, 2013 the new Regulation allows the following
import, export, and investment activities previously restricted by
EU sanctions regulations:
Import and Export Measures
Import and purchase of timber products, coal, certain metals,
and precious and semi-precious stones from Myanmar
Export of specified logging, mining, and milling
equipment to enterprises in Myanmar engaged in these sectors
Financing and financial assistance to such entities for the
sale, supply, transfer, or export of specified goods
Provision of technical assistance related to specified goods to
relevant enterprises
Investment Measures
Debt and equity participation in designated Myanmar entities
operating in the affected sectors, and specified entities owned by
the Government of Myanmar or associated designated persons
Acquisition of certificates of deposit, warrants, and
debentures of designated entities owned by the Government of
Myanmar or associated persons
Creation of joint ventures or other legal entities with
entities operating in the affected sectors, and specified entities
owned by the Government of Myanmar or associated designated
persons.
Asset Freezing
In addition, the Regulation unfreezes until April 30, 2013 all
funds and economic resources belonging to, owned by, or held by the
Government of Myanmar or associated designated persons. No
prior authorization by any relevant national authority of a Member
State is required to unfreeze the assets.
Travel Ban
Furthermore, the new Regulation lifts an EU travel ban on all
senior Myanmar military officials; all development, tourism,
military, and security officials who formulate, implement, or
benefit from policies that impede Myanmar's democratic
transition; and their families.
Continuing Prohibitions
The new Regulation and Decision does not suspend or alter
existing restrictions on the export of certain military equipment
"which might be used for internal repression," or related
technical assistance or brokering activities.
US Sanctions in Myanmar Remain In Effect
The EU Regulation and Decision open a substantial portion of
Myanmar's economy to business for EU persons, and the US has
recently relaxed its sanctions in a limited way related to
non-profit activities. However, US persons doing business in the EU
must remain mindful of applicable US sanctions. These still
prohibit US persons from providing financial services to Myanmar,
making investments in or related to the development of natural
resources in Myanmar, or facilitating or approving of foreign
persons' activities in or with Myanmar, if US sanctions would
preclude such activity by a US person. The US also continues
to designate numerous Myanmar persons and entities as Specially
Designated Nationals (SDNs). No US persons can conduct
transactions or dealings with such SDNs, and US persons must block
the property or interests of property of such SDNs.
On May 17, 2012, United States Secretary of State Hillary
Clinton acknowledged Myanmar's recent democratic reforms and
announced the US government's intent to suspend bans on US
investment in and export of financial services to Myanmar. To
date, the US Government has not taken concrete action with respect
to these statements.
The EU developments present new business opportunities for EU
companies, albeit on a currently temporary basis.
Nevertheless, some activities do remain restricted.
Accordingly, companies and persons seeking to do business in
Myanmar should seek counsel to ensure their activities do not
violate remaining EU or applicable US sanctions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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