Recently, on April 9, 2021, the US Commerce Department’s Bureau of Industry and Security (BIS) adopted new restrictions targeting Burma by applying Export Administration Regulations’(EAR’s) military-intelligence end-use and end-user controls. These controls were first issued in January 2021 and became effective in March 2021.
The original rule adopted in January 2021 imposed new end-use and end-user requirements, and new controls on support activities by US persons with respect to military intelligence end-uses and end-users in China, Russia, Venezuela or any country in groups E:1 and E:2 (Cuba, Iran, North Korea and Syria). The January 2021 rules require that US persons must receive authorization from BIS to transfer any items subject to EAR when the items are intended for military intelligence uses or jurisdiction.
In February, 2021, President Biden issued a new Executive Order 14014, Blocking Property with respect to the Situation in Burma, authorizing sanctions on certain Burmese parties in response to the military coup. Under the Executive Order, the Treasury Department’s Office of Foreign Asset Control designated fifteen parties connected to the military apparatus responsible for the coup. The new sanctions do not prohibit dealings with the Burma government, or financial services and investments in Burma. The focus of the OFAC sanctions is Burma’s defense and security sectors.
Additionally, in February 2021, BIS issued a notification that it will apply a presumption of denial for license applications for the export and re-export of items to the Burma military and security services. BIS also suspended certain license exceptions that were previously available to Burma.
In March 2021, pursuant to Executive Order 14014, OFAC designated two individuals and two entities connected to the Burmese military, including Thon Hlaing, a leader of the Burma Police Force, the 33rd Light Infantry Division of the Burmese Army; the 77th Light Infantry Division of the Burmese Army; Lt. Gen. Aung Soe, Burmese Military Special Operations commander.
Later in March 2021, OFAC designated Myanmar Economic Corporation Limited (MEC) and Myanmar Economic Holdings Public Company Limited (MEHL), two military conglomerates. These conglomerates play a significant role in the Burma economy. The conglomerates are involved in trading, natural resources, tourism, alcohol, cigarettes and consumer goods. BIS added MEC and MEHL restricting exports, reexports and in-country transfers to MEC and MEHL.
OFAC’s SDN designations prohibit any transaction involving a US Person, which includes US organized entities, US citizens, US permanent resident aliens and persons physically located in the United States. In addition, under OFAC’s 50 percent rule, the prohibition extends to any entities that are owned, directly or indirectly, owned 50 percent or more by MEC or MEHL.
OFAC also issued four general licenses authorizing transactions that would otherwise be prohibited under Executive Order 14014, including wind-down license transactions involving MEC and MEHL. The four General Licenses include:
General License 1: authorizes transactions and activities otherwise prohibited by Executive Order 14014 that are for the conduct of the official business of the US government;
General License 2: authorizes transactions and activities otherwise prohibited by Executive Order 14014 that are for the conduct of official business of the United Nations, the International Centre for Settlement of Investment Disputes, International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies, the Association of Southeast Asian Nations, and several other organizations, including a number of development banks;
General License 3: authorizes transactions and activities otherwise prohibited by Executive Order 14014 that are ordinarily incident and necessary to activities in support of a range of humanitarian, democracy building, educational, non-commercial development, and environmental and natural resource protection activities in Burma. The authorized transactions include the processing and transfer of funds, the payment of taxes, fees, and import duties, and the purchase or receipt of permits, licenses, or public utility services; and
General License 4: : authorizes transactions and activities otherwise prohibited by Executive Order 14014 that are ordinarily incident and necessary to the wind-down of transactions involving MEC, MEHL, or any entity in which MEC or MEHL directly or indirectly owns a 50% or greater interest, through June 22, 2021.
