On November 16, 2012, the Obama Administration announced that the U.S. would begin to allow imports from Burma (Myanmar), ending a decade-old ban on Burmese imports. The decision, published in a joint announcement by the U.S. Departments of State and Treasury, is aimed at supporting and encouraging ongoing democratic reforms by the Burmese government and followed a number of steps taken by the Obama Administration earlier this year to ease restrictions on certain U.S. investment and financial services in Burma. (For more information on the easing of restrictions on investment and financial services, visit an earlier Executive Alert from July 13, 2012.) The announcement also came just days ahead of President Obama's historic visit to Burma, the first ever by a U.S. president.
Secretary of State Hillary Clinton announced in September of this year that the U.S. intended to begin easing restrictions on imports of Burmese goods "in response to the substantial and significant reforms that have taken place in that country over the past year." The Departments of Treasury and State stated that easing the U.S. import ban is intended to "support the Burmese government's ongoing reform efforts and to encourage further change, as well as to offer new opportunities for Burmese and American businesses." Top Burmese government leaders, including long-time democracy movement leader Aung San Suu Kyi, have repeatedly urged Washington to lift the import ban in order to help Burma's struggling economy.
The Treasury Department's Office of Foreign Assets Control (OFAC) and the State Department issued a new general license (General License 18) to ease the import ban, which has been in place since 2003. Under General License 18, imports of Burmese-origin articles into the U.S. are now permitted, with a few exceptions. General License 18 does not authorize U.S. imports of Burmese-origin jadeite or rubies, or articles of jewelry containing those gems, and does not authorize transactions with any person blocked under the Burma sanctions program. Importing articles of jadeite or rubies mined or extracted from Burma were prohibited under the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008 (JADE Act), which was aimed at addressing brutal working conditions in Burma's mining industry, and the involvement of drug traffickers within that industry. The prohibitions in the JADE Act are not affected by General License 18 and continue in full force and effect.
In addition, U.S. companies and persons are still prohibited from engaging in transactions with Burmese individuals and entities on the Treasury Department's Specially Designated Persons (SDN) list, as well as any entity in which such an entity owns, directly or indirectly, a 50 percent or greater interest. In its announcement, the Obama Administration stated that while the U.S. is committed to supporting political and economic reforms in Burma, it remains concerned about corruption, remaining political prisoners, Burma's continued military ties to North Korea, and ethnic conflict within Burmese territory. The Administration also said it intends to use the SDN list to exclude those in Burma who continue to oppose democratic reforms from participating in increased investment from, and trade with, the United States. In September 2012, OFAC removed Burma President Thein Sein and Burma's Lower House of Parliament Speaker Thura Shwe Mann from the SDN list, citing their efforts on behalf of democratic reform. However, it should be noted that the Treasury Department still considers Burma to be a country of money laundering concern, and U.S. financial institutions are still barred from maintaining correspondent accounts for Burmese banks.
Burma exports totaled an estimated $8.2 billion in 2011, with Thailand, China, India and Japan being the largest export markets for Burmese goods in 2011. Burma's leading export commodities typically consist of natural gas, wood products, pulses, beans, fish, rice, clothing, jade and other gems. With the exceptions of articles of jadeite and rubies, U.S. companies are now allowed to source such items from Burma.
The joint announcement by the Departments of Treasury and State
If you have any questions about the material presented in this Alert, please contact Melvin S. Schwechter ( mschwechter@bakerlaw.com or 202.861.1559); J. Garrett Cornelison ( gcornelison@bakerlaw.com or 713.646.1361); or your regular BakerHostetler contact.
Authorship Credit: J. Garrett Cornelison and Jennifer Smith
