Attorneys
Related Practices
International Law Advisory - Burma Sanctions
July 29, 2003Burmese Sanctions Legislation and Executive Order
Yesterday, President Bush signed an Executive Order (attached) imposing economic sanctions against Burma. The President also signed the Burmese Freedom Democracy Act of 2003 (discussed in our previous advisory of June 22, 2003). Both the order and legislation are effective today. Collectively, the order and legislation impose an import ban on Burmese products, freeze the assets of designated individuals and entities in Burma, and prohibit the export of financial services to Burma from the United States.
Executive Order No. 13310
The President’s Executive Order, No. 13310 imposes two principal export restrictions. First, it blocks all property and interests in property of persons set forth in the annex to the executive order, and authorizes the Treasury Department to block the assets of any person deemed to be a "senior official of the Government of Burma, the State Peace and Development Council of Burma [the ruling party in Burma], the Union Solidarity and Development Association of Burma, or any successor entity to any of the foregoing," or any entity "owned or controlled by, or acting or purporting to act for or on behalf of" those entities. This blocking provision is applicable to property or interests in property that are within the United States in the possession or control of "US persons." As with prior sanctions regimes, "US persons" is defined to include companies or business entities organized under the laws of the Untied States (and any foreign branches thereof), any US citizen or lawful permanent resident wherever located and for whomever employed, and any person within the United States. The term does not include foreign subsidiaries of US companies.
The Treasury Department, Office of Foreign Assets Control (OFAC) will update and issue a more comprehensive list of entities covered under the regulations. We expect that, as with previous sanctions regimes involving the blocking of assets, the executive order will be construed to prohibit all transactions with the parties set forth in the Treasury list. In other words, the language of the Executive Order used the standard phraseology that OFAC has interpreted to prohibit transactions, contracts, and any other business dealings with the designated persons. Your compliance office should be sure to monitor the OFAC web site for the actual implementing regulations and any additional designations.
Second, the Executive Order prohibits the export or re-export to Burma of any "financial services" from the United States or by a United States person (wherever located), or any "approval, financing, facilitation, or guarantee by a United States person" of such a transaction by a foreign entity. The order does not define "financial services," but such services may include activities such as the issuance of letters of credit and other forms of trade financing, and the provision of insurance. The order therefore would appear to preclude any business transaction with a Burmese national (including a private party), that would involve US financial services. There is a question whether US trade transactions that involve foreign financial institutions would be in any way constrained by the anti-facilitation provision of section 2(b) of the Order. The Executive Order contains a grandfathering clause, however, authorizing activities incident to transactions that are taken pursuant to agreements with the Government of Burma or a non-governmental entity in Burma executed prior to May 21, 1997 (the date of Executive Order 13047, prohibiting new investment in Burma).
Burmese Freedom Democracy Act of 2003
The Burmese Freedom Democracy Act of 2003 (the "Act") is complimentary to the restrictions contained in President Bush’s executive order, but also contains additional restrictions not set forth in the executive order. Specifically, the Act:
- prohibits importation of any article that is a product of Burma, including imports from certain Burmese entities, such as the SPDC, any ministry of the SPDC; any member of the SPDC or their immediate family members; any known Burmese narcotics trafficker or their immediate family members; the Union of Myanmar Economics Holdings Incorporated (UMEHI) or any company in which it has a fiduciary interest; the Myanmar Economic Corporation (MEC) or any company in which it has a fiduciary interest; and the Union Solidarity and Development Association (USDA), beginning 30 days after enactment of the law;
- requires the President within 60 days of enactment of the law to direct any US financial institution to report its holding of funds or assets belonging to the Burmese government, its senior officials, or its political arm, to OFAC;
- authorizes the President to freeze those funds or assets through a sanctions regime;
- codifies existing US policy to oppose and vote against any new loans to Burma from international financial institutions;
- extends a ban on entry visas to former and present leaders of the regime; 6. encourages the Secretary of State to highlight the regime’s poor human rights record and to encourage other states to restrict financial resources; and
- authorizes the President to use all available resources to assist Burmese democracy activists dedicated to non-violent opposition to the military regime.
The Act does not explicitly prohibit exports to Burma; however, the President’s Executive Order, combined with any subsequent regulations issued by OFAC, may operate to restrict exports depending on how those transactions are financed and with whom they are conducted.
The Act requires the sanctions to remain in place until the President certifies to Congress that Burma has met certain conditions, which include: (1) progress made toward ending human rights violations; (2) progress made toward implementing a democratic government; and (3) successful efforts to adhere to its obligations under international counter-narcotics agreements. If the conditions are met, the Act permits the President to terminate the sanctions upon the request of a democratic government in Burma. The Act sunsets after one year unless renewed by Congress.
The final version of the legislation differs in a few respects from S. 1215, the initial bill that the Senate passed last month. As passed, the Act does not include a provisions that would have (1) permitted the President to waive sanctions found to violate international obligations implemented by the World Trade Organization, and (2) required the US embassy in Burma to provide nonmilitary controlled media outlets access to information. Furthermore, the Act as passed provides that Congress may renew the Act for no more than three years.
