Current United States sanctions against Myanmar
The U.S. Government has imposed a number of restrictions that affect the ability of “U.S. persons” to conduct business with, or engage in commercial transactions involving, Myanmar through a complex web of executive orders, federal laws and related regulations. The term “U.S. person” is defined to include any entity organized under U.S. law (including foreign branches of such U.S. entities), U.S. citizens and U.S. permanent residents (“green card” holders) wherever located, and any person physically in the United States. The U.S. sanctions may also be triggered if a financial transaction involves U.S. dollars because international funds transfers denominated in U.S. dollars generally have to clear the U.S. financial system, which means that a U.S. person (i.e., a U.S. bank) would be involved.
The major restrictions imposed by the U.S. Government against Myanmar include the prohibition of:
- any new investment in Myanmar by U.S. persons (the term “new investment” is broadly defined under the applicable U.S. sanctions regulations);
- any facilitation by U.S. persons of a new investment in Myanmar by non-U.S. persons;
- the export or re-export of financial services to Myanmar from the United States or by a U.S. person, including fund transfers (and other types of payments), insurance services, banking services, loans and other extensions of credit;
- imports into the United States of Myanmar-origin items;
- exports or re-exports of arms and other defence-related items to Myanmar;
- any dealings with, and freezing (blocking) the assets and other property interests of, Myanmar persons or entities who are designated by the U.S. Government as Specially Designated Nationals (“SDN”s) because they are deemed to be involved in human rights abuses, corruption, or providing support to the military; and
- any dealings with any entity that is owned (at 50% or higher interest) or otherwise controlled by an SDN, even if that entity itself is not included on the SDN list.
There is no general prohibition under U.S. law on the exportation of goods and services (other than financial services) to Myanmar when no SDN is involved in the transaction. As such, U.S. persons are not prohibited by the U.S. sanctions maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) on exporting U.S. or non-U.S. origin items to Myanmar provided that no SDN is involved in the transaction. Pursuant to a general license set forth in OFAC’s regulations, all transactions ordinarily incident to such exports also are authorized (e.g., provision of cargo insurance for such shipment of goods to Myanmar, payment of fees to unload the goods in Myanmar, or the processing of payments received from Myanmar), so long as no SDN is involved in the transaction. However, we note that U.S. export control laws and regulations may still prohibit the export or re-export of certain commercial U.S.-origin items to Myanmar (or certain foreign-made items containing more than 25% of controlled U.S.-origin content), depending on the nature and export control classification of the item at issue.
The European Union’s sanctions regime against Myanmar
The EU has imposed a wide variety of restrictive measures against Myanmar since 1996. Since early 2011, the EU has been lifting certain restrictive measures and further relaxation is expected after the 2012 by-election.
Targeted economic sanctions
The EU sanctions regime in respect of Myanmar is set out in a series of Common Positions, the first of which was adopted in 19962. Subsequently, they have been strengthened and extended on several occasions.
Measures have focused on individual sanctions, such as freezing of funds and economic resources as well as travel bans, and sanctions restricting trade, investment and services in respect to the following key industries:
- defence and military;
- extractive industries (metals and gems);
- forestry; and
- steel and iron.
The sanctions apply to any legal person, entity or body incorporated under the law of an EU Member State and its EU and non-EU branches, or any legal person, entity or body in respect of any business done in whole or in part within the EU. In addition, EU nationals whether residing abroad or within the EU, are also subject to the sanctions.
Easing of sanctions
As a result of the substantive political reform undertaken by the Government and Parliament in Myanmar, together with its commitment to economic and social development, the EU decided in February 2012 that the visa ban and asset freeze orders concerning certain key political figures should be suspended3. The EU is committed to a further easing of sanctions provided the path of positive reform continues. It is speculated that the EU will meet later this month to vote on sanctions, and that sanctions will be lifted in respect of most industries except defence.