U.S. to "Suspend" Sanctions on Burma
This afternoon Secretary of State Clinton announced that the U.S. is “suspending” the existing financial and investment sanctions on Burma (Myanmar).
However, the details on how the existing sanctions will be suspended are still being worked out and the existing Burmese Sanctions Regulations (31 CFR. Part 537) (BSRs) administered by the Treasury Department's Office of Foreign Assets Control (OFAC) will remain in effect until further notice.
It appears likely that OFAC will issue a general license that will amend the BSRs to enable U.S. companies to enter into contracts relating to the "economic development of resources in Burma" and other investment activities. In addition, the general license will also authorize financial institutions and other parties to provide financial services to Burma.
In today's announcement, Secretary Clinton indicated that U.S. companies doing business in Burma will be expected to implement certain Corporate Social Responsibility measures and U.S. companies will be expected, but not required to "to conduct due diligence to avoid any problems, including human rights abuses . . . create a grievance process that will be accessible to local communities; to demonstrate appropriate treatment of employees, respect for the environment; to be a good corporate citizen; and to promote equitable, sustainable development that will benefit the people."
Senior Administration officials today also reminded U.S. companies of the extensive corruption in Burma. Given the Burmese Government's extensive role in the company's business sector, particularly in the oil and gas sector, U.S. companies will have to take additional steps to ensure compliance with the U.S. Foreign Corrupt Practices Act.
Existing U.S. Sanctions on Burma
The current U.S. sanctions on Burma are unique and are far less restrictive than the broad sanctions imposed by the U.S. Government on Cuba, Iran, North Sudan, Syria and North Korea. Unlike the other broad-based U.S. sanctions programs, the BSRs generally do not prohibit U.S. companies or U.S. citizens from exporting goods classified as EAR99 to Burma and receiving payment for such goods.
The BSRs currently prohibit U.S. persons and companies from engaging in the following activities involving Burma:
1. Exportation of Financial Services to Burma - No U.S. company or U.S. citizen, wherever located, can make any payment, directly or indirectly, to Burma.
2. New Investment in Burma - No U.S. person or company can enter into any contracts with the Government of Burma or nongovernmental entities in Burma for the "economic development of resources in Burma". The phrase "economic development of resources located in Burma" is defined to mean, among other things, activities pursuant to a contract that involves the development or exploitation of natural resources in Burma, such as contracts conferring rights to explore for, develop, extract or refine petroleum or natural gas in Burma. A "nongovernmental entity in Burma" include most types of business organizations that exist for engaging in economic development of resources in Burma.
3. Facilitation of Prohibited Transactions in Burma - U.S. companies and U.S. citizens are prohibited from approving, aiding or supporting a foreign person’s investment in Burma, if the foreign person’s activity would constitute prohibited new investment if engaged in by a U.S. person. This prohibition does not apply to contracts involving the sale of goods, services or technology to Burma or for use in Burma.
4. Prohibited Importation of Burmese Origin Goods - Most goods of Burmese origin are prohibited from being imported into the U.S.
Existing Export Controls on Burma
U.S. exports of commercial goods to Burma will remain subject to export control requirements administered by the Commerce Department's Bureau of Industry and Security (BIS). Currently, exports of goods, technology and software on the Commerce Control List (i.e., not classified as EAR99) typically require a BIS export license.
Burma has been subject to a U.S. arms embargo since 1993 and therefore no "defense articles" or "defense services" subject to the jurisdiction of the International Traffic in Arms Regulations can be exported to Burma. Today's announcement will not have any impact on this aspect of U.S. law.