Worldwide: Relaxation Of Sanctions On Burma - An Opportunity?

SUMMARY

Summary of sanctions in place in Burma:

• EU: Ban on arms exports to, and investment in, Burma. Visa restrictions and asset freezes targeting key officials, ban on exports of gems, timber and metals.
• US: Arms embargo, bans on investment and financial services, as well as a ban on most Burmese imports.

Steps to ease sanctions:

• UK: Asset freeze on nearly 500 people and restrictions on key industries suspended.
• EU: Ban on certain ministers and officials suspended in January. Sanctions relaxed further in April.
• US: "Targeted" lifting of investment and financial services bans begun. Visa ban to be relaxed to help officials travel to US. Sanctions on people and institutions that oppose reform maintained. Ban on technical assistance was waived in February.

EU AND UK SANCTIONS

Current sanctions:

Sanctions have been imposed on Burma by the European Union to coerce the military regime into entering into a genuine process of national reconciliation and to respect human rights and democracy. The measures in place can be summarised as:

• arms embargo;
• assets freeze and visa ban on named individuals and entities associated with the ruling military regime;
• investment ban on named enterprises owned / controlled by the regime;
• suspension of most humanitarian aid and development programmes;
• ban on high level bilateral military / government visits; and
• ban on imports, exports and investment in Burmese timber, high value metals and precious stones .

Lifted sanctions:

The European Union agreed on 23 April 2012 to suspend its sanctions against Burma for one year, retaining only its embargo on arms sales. At the annual review travel ban on some civilian leaders of Myanmar was lifted for a year, a decision was taken to keep all the diplomatic channels open and a ban on EU officials visiting the country was also lifted. However, an embargo on arms and equipment that can be used for internal repression will remain in place.

The decision will be reviewed in October, and is expected to lift sanctions targeting more than 800 companies in the logging, timber and mining sectors to allow investment in about 50 companies close to the government, and to end visa restrictions and travel bans affecting nearly 500 people.

What is prohibited by sanctions?

US SANCTIONS

Current sanctions:

The United States imposes sanctions on Burma by a variety of means, including certain laws and presidential executive orders (E.O.s) specifically targeting Burma, as well as laws that impose sanctions on countries for unacceptable behavior related to functional issues of importance to the U.S. government, such as nuclear proliferation or human trafficking. The Burma-specific laws and E.O.s were issued between 1990 and 2008, often in response to actions on the part of Burma's ruling military junta, the State Peace and Development Council (SPDC), that were considered sufficiently egregious to warrant the imposition of sanctions. The result is a web of overlapping sanctions subject to differing restrictions, waiver provisions, expiration conditions, and reporting requirements. The measures in place can be summarised as:

• asset freeze;
• visa ban;
• restrictions on financial services;
• general import restrictions;
• specific import restrictions;
• investment ban; and
• bilateral and multilateral assistance ban (e.g. any loan, financial or technical assistance).

U.S. sanctions targeted solely at Burma are specified in five federal laws, a series of presidential executive orders, and certain presidential determinations.

To carry out and execute the authority conveyed by the IEEPA, the President must declare a national emergency by invoking the NEA. Invocations of the IEEPA are subject to annual renewal requirements. Section 301 of U.S.C. Title 3, Chapter 35 allows the President to delegate authority (under certain conditions) to other government officials to carry out responsibilities on behalf of the President. In most cases, this has been either the Secretary of State or the Treasury Secretary. President Obama gave official notice to Congress on May 16, 2011, that he was continuing for another year (May 21, 2011-May 20, 2012) the international emergency with respect to Burma, and renewing the provisions of E.O. 13047, E.O. 13310, E.O. 13448, and E.O. 13464, which are still in force.

The implementation of the Burma-specific sanctions instituted by the preceding laws and E.O.s, and that have been delegated to the Treasury Secretary, is governed by Part 537 of Title 31 of the Code of Federal Regulations (CFR). These Burmese sanction regulations cover the import ban, the prohibition of the provision of financial services, and the prohibition of new investments in Burma. Other portions of the CFR cover some portions of Burmese-specific sanctions.

Lifted sanctions:

On 17 April 2012, the US Department of the Treasury, Office of Foreign Assets Control (OFAC) issued a new General License No. 14-C to the Burmese Sanctions Regulations (BSR) authorising US persons to export financial services in support of humanitarian, religious, and other not-for-profit activities in Burma. General License No. 14-C replaces and supersedes the earlier General License No. 14-B in its entirety.

New General License No. 14-C allows US entities to pursue a broad range of non-profit projects in Burma by authorising the exportation and reexportation of financial services in support of the following activities not otherwise authorised under the BSR:

• projects to meet basic human needs, such as disaster relief, health and hygiene and assistance to victims of conflict or internally displaced persons;
• democracy building and good governance projects, for example rule of law, government accountability, public policy advice and civil society development projects;
• educational activities, such as literacy programs, vocational and technical schooling, foreign language instruction and educational reform;
• sporting activities, including the promotion of exercise and health and the construction and maintenance of sports facilities;
• non-commercial development projects "directly benefiting the Burmese people", such as maternal health, animal husbandry, environmental programming, sustainable agriculture, preventing infectious disease and constructing and maintaining schools, libraries, medical clinics, hospitals and other non-commercial infrastructure projects; and
• religious activities, for example religious education and training, establishment of congregations and the improvement of houses of worship, schools and orphanages.

General License 14-C removes the limitation in the previous general license prohibiting the export of financial services in support of humanitarian or religious activities from being provided directly or indirectly to the Burmese Government.

The exportation or reexportation of financial services to or for the benefit of any person blocked under Executive Order 13448 (Oct. 18, 2007) or Executive Order 13464 (Apr. 30, 2008) remains prohibited.

While General License 14-C eases restrictions on the export of financial services, it does not affect the BSR's continued prohibition of "new investment" in Burma at 31 C.F.R. 537.204. Among other things, this provision bans US persons from entering into or supervising contracts or participating in royalties or profits relating to the economic development of "resources" in Burma.

Although the definition of "new investment" associated with the prohibition excludes not-for-profit educational, health or other humanitarian programs or activities, 31 C.F.R. Section 537.302, there may be certain projects, such as microloan programs or sustainable agriculture enterprises, for which the export of financial services is now authorised, which yet still may raise concerns under the continued ban on "new investment." Accordingly, caution is warranted in cases where financial services may involve non-commercial development projects potentially implicating "new investment" concerns. Secretary Clinton's announcement, however, included new investment as an area for further relaxation. Accordingly, there may soon be new opportunities for these activities as well.

Despite the new General License, a significant range of activities in Burma remains prohibited for US persons in addition to new investment. The BSR, among other things, ban imports of Burmese-origin products and services and block the property of senior Government officials and other persons and entities deemed to have engaged in public corruption, perpetrated human rights violations, or impeded the democracy movement in Burma, as well as entities owned or controlled by blocked entities. The Burmese sanctions also prohibit the facilitation by US persons of foreign persons' transactions or investment in Burma, if such activities would be prohibited for US persons. Accordingly, US persons interested in engaging in the country should exercise caution before undertaking any particular transactions.

What is prohibited by sanctions?

ANNEX

TIMELINE: REFORMS IN BURMA

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