Entity List additions
BIS added four entities to the Entity List, which became effective on 8 March 2021. The BIS notice included a savings clause authorizing any shipments of items that were en route aboard a carrier to a port of export or reexport on 8 March 2021, that would not have required a license prior to 8 March 2021.
As a result of these designations, a license is now required for exports, reexports, or in-country transfers of all items subject to the Export Administration Regulations (EAR) to the following listed entities, with a licensing policy of a presumption of denial:
- Ministry of Defence
- Ministry of Home Affairs
- Myanmar Economic Corporation
- Myanmar Economic Holdings Limited
Because both the Ministry of Defence and Myanmar Economic Corporation play a large role in Burma’s economy, exporters doing business with Burma need to assess whether these entities play a role in any ongoing business activities (including as end user, purchaser, or intermediate consignee), as such activities could trigger a BIS licensing requirement.
Additional restrictions
In addition to the Entity List designations, BIS removed Burma’s eligibility for a number of license exceptions; changed Burma’s country group, resulting in a less favorable licensing policy; and extended the application of “military end user” and “military end use” (MEU) rules to Burma. Like the Entity List designations, these rules also became effective on 8 March 2021, but contain a savings clause of longer duration, authorizing any shipments of items that were en route aboard a carrier to a port of export or reexport no later than 7 April 2021, that would not have required a license prior to 8 March 2021.
On 10 March 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) also designated two individuals and six entities to its Specifically Designated Nationals and Blocked Persons List (SDN List).
License exceptions and Country Group changes
BIS has removed Burma from Country Group B and has added it to Country Group D:1. As a result, license applications for exports and reexports to Burma involving items subject to the EAR are subject to a more restrictive license review policy, and the following License Exceptions are no longer available, in whole or in part:
Restrictions on certain microprocessors to “military end users” and “military end uses” under EAR § 744.17 are also now in effect, along with EAR § 744.7 restrictions on certain exports and reexports to vessels and aircraft located in Burma, and General Prohibition Three’s licensing requirements for reexports of foreign-produced direct products of certain U.S.-origin technology and software that is controlled for national security reasons, pursuant to EAR § 736.2(b)(3).
Military end user and end use rules
BIS’ new rule also expands the MEU rules of EAR § 744.21 to Burma, although BIS has not, at this time, added any Burmese entities to the list of MEUs in Supplement No. 7 to Part 744 of the EAR. As a result, exports of items set forth in Supplement No. 2 to Part 744 will require a license if destined for “military end users” or “military end uses” in Burma, even if the entities involved are not expressly designated in Supplement No. 7 to Part 744 of the EAR.
Next steps
While, the change to Burma’s country group and removal of certain license exceptions may have an impact on certain businesses engaged in exports of controlled goods, software, or technology to Burma, exporters who do business with Burma may see a more immediate impact from the BIS Entity List additions, and should review any pending or ongoing transactions to confirm that no BIS licensing requirements will be triggered by these activities. Hogan Lovells lawyers can assist you with assessing the potential impact of these restrictions on your company, and any advisable next steps.
