The White House announced on September 14, during the state visit to Washington by Myanmar’s State Counsellor and de facto leader, Aung San Suu Kyi, that the United States will terminate the national emergency with respect to Myanmar and revoke the Executive Orders that impose trade and investment restrictions on Myanmar.  A new OFAC FAQ confirms the White House statement.  Although all current sanctions remain in place until this policy is implemented, and some of the details about how it will be implemented remain to be determined, we expect that this will lead to the lifting of the major remaining US trade and investment sanctions on Myanmar.  Some restrictions related to Myanmar, however, are expected to remain in place. 

Specifically, the 111 individuals and entities currently designated under the “[BURMA]” tag on the Specially Designated Nationals and Blocked Persons (SDN) list are expected to be delisted, although those sanctioned for other reasons (e.g., for activity involving North Korea or narcotics) are expected to remain SDNs under those distinct authorities.  The major private enterprises on the SDN list would also be removed.  Furthermore, it is anticipated that the ban on certain new investments and financial services involving the Myanmar military, as well as the ban on the importation into the United States of rubies and jadeite – and jewelry containing them – will be lifted.  

According to the White House statement, Aung San Suu Kyi “asked that the United States lift remaining sanctions on Myanmar to encourage this investment and in recognition of the steps Myanmar has taken toward democratization. . . . The president expressed his commitment to helping Myanmar achieve inclusive economic growth, both through continued assistance and by changes to US policy designed to encourage responsible investment in Myanmar. . . . Recognizing the progress toward democratic transition that Myanmar has achieved, including through the election of a civilian-led government, and in an effort to support inclusive economic growth, the United States will terminate the National Emergency with respect to Myanmar and will revoke the Executive Order-based framework of the Burma sanctions program.”  The announcement also states that the United States will restore Generalized System of Preferences (GSP) trade benefits to Myanmar, which has the potential to reduce tariffs significantly on goods imported from Myanmar.  In addition, the two governments alluded to the possibility of beginning negotiations toward a Bilateral Investment Treaty (BIT), which would build on their 2013 Trade and Investment Framework Agreement.

The declaration that the United States “will terminate the National Emergency with respect to Myanmar and will revoke the Executive Order-based framework of the Burma sanctions program” means that the major remaining US trade and investment sanctions against Myanmar should be lifted once the president issues the necessary executive order.  OFAC’s FAQ states that, “at that time, the sanctions imposed under OFAC’s Burmese Sanctions Regulations will no longer be in effect.”

While many US sanctions on Myanmar had already been gradually lifted over the past four years, there remain several very significant restrictions.  In particular, manyof the country’s leading businesses are listed as SDNs.  US persons are prohibited from dealing with SDNs or any entity owned 50% or more by SDNs, which has deterred much business activity in Myanmar due to the challenge of conducting effective due diligence there and the pervasive presence of SDNs in the economy.  Many international banks in particular have been hesitant about becoming involved in transactions in which the parties are not able to rule out the possible involvement of SDNs, which is often very difficult to do.  There are also detailed reporting requirements for certain investments by US persons in Myanmar, which have had a chilling effect.  Furthermore, there are restrictions on certain types of financial transactions and other activity involving the Myanmar military and other armed groups.  Again, given the wide reach of these groups’ tentacles throughout the local economy, these restrictions served as a major deterrent to prospective investors. 

These sanctions are expected to be lifted in the near future pursuant to the president’s joint statement with Aung San Suu Kyi, once the president issues the required executive order.  White House Press Secretary Josh Earnest said the president’s action “should be completed in [the] coming days.”  The president has the independent authority to waive or remove the major trade and investment sanctions on Myanmar, without the need to rely on congressional action.  However, other restrictions may require congressional action or certifications to Congress regarding progress on human rights, democracy, counternarcotics, and other areas.  President Obama did not specifically state that he would issue these required certifications and waivers related to restrictions that are not administered under the OFAC sanctions regime, and the reaction on Capitol Hill to this announcement may shape, to an extent, how far the president goes in removing these remaining restrictions. 

Specifically, the 2008 JADE Act mandates a visa ban on certain Myanmar military officials, along with “any other Burmese persons who provide substantial economic and political support” for the military.  That latter category could include some of the individuals currently listed as SDNs.  The president does have the power to waive this statutory mandate, as he has already done with the financial sanctions provisions of the JADE Act, but the White House statement did not specify that he would in fact issue such a waiver, and it is likely that the visa ban will remain in place, at least in some form.  Other non-OFAC restrictions that may remain in place include a US arms embargo and stringent export controls on dual-use items, along with limitations on US development assistance, military-to-military cooperation, and multilateral development bank financing.   

In conjunction with Aung San Suu Kyi’s visit, Senate Foreign Relations Committee Ranking Member Ben Cardin (D-MD) and Senate Armed Services Committee Chairman John McCain (R-AZ) introduced the Burma Strategy Act of 2016 (S. 3313), which would provide US aid in support of Myanmar’s ongoing political and economic transition while continuing to shine a light on human rights and democracy issues.  This bipartisan bill would authorize limited military-to-military engagement, create the Burma-America Development Fund to incentivize private sector investment, authorize bilateral economic assistance for civil society growth, call for the international financial community to support transparency and anti-corruption projects in Myanmar, and provide guidance to the Executive Branch regarding the lifting of sanctions while promoting democratic development and ethnic reconciliation.  Even in light of the relatively balanced tone of this bill, some congressional Republicans continue to express concerns about the human rights situation in Myanmar.  For example, after meeting with Aung San Suu Kyi, Senate Foreign Relations Committee Chairman Bob Corker (R-TN) stated that he was “somewhat appalled” by what he perceived as her “dismissive reaction” to Myanmar’s track record on human trafficking and forced labor (a priority issue for the Chairman).

While certain members of Congress will likely continue to focus on Myanmar and call for continued oversight of the Obama Administration’s actions on sanctions relief, the president does appear to have the necessary authority to carry out the changes he has announced.  Aung San Suu Kyi is expected to continue meeting with congressional leaders and others over the coming days, and the outcome of those meetings may provide additional insight about the future course of this sanctions program and US-Myanmar relations more broadly.