Export Control Advisory - Executive Order Imposes Additional Sanctions on Burma

On May 1, 2008, President Bush issued Executive Order 13464 imposing additional economic sanctions against Burma.  The Executive Order blocks the property and interests in property that come within the possession of US persons or the jurisdiction of the United States of additional designated entities and persons, and prohibits all transactions involving these persons.  The Order also supplements the existing criteria for designating property and interests in property to be blocked, as set forth in Executive Order 13310 and Executive Order 13448. 

The Executive Order blocks the property and interests in property within the jurisdiction of the United States, or in the possession or control of United States persons, of the following:

1.  Three listed state-owned companies:

• Myanmar Gem Enterprise (a.k.a. Myanma Gem Enterprise; MGE)
• Myanmar Timber Enterprise (a.k.a Myanma Timber Enterprise; MTE)
• Myanmar Pearl Enterprise (a.k.a. Myanma Pearl Enterprise; MPE)
  

2. Any person determined by the Secretary of the Treasury, after consultation with the Secretary of State:

(i) to be owned or controlled by, directly or indirectly, the Government of Burma or officials of the Government of Burma;

(ii) to have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of:

• the Government of Burma, the State Peace and Development Council of Burma, or the Union Solidarity and Development Association of Burma,
• any successor entity to any of the foregoing,
• any senior official of any of the foregoing, or
• any person whose property and interests in property are blocked pursuant to Executive Order 13310, Executive Order 13448, or this order; or

(iii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to Executive Order 13310, Executive Order 13448, or this order.

The Executive Order also prohibits any conspiracy to violate these prohibitions and any transaction that evades or avoids or attempts to violate these prohibitions. 

According to recent OFAC guidance, these blocking provisions also apply to property and interests in property of entities in which a blocked entity owns greater than a 50 percent interest.  Therefore, U.S. persons may not transact with any entity that is owned (by greater than 50 percent interest) by any entity that is blocked by this or previous orders or by an OFAC designation.  Such controlled entities will be covered by the Burma sanctions even though they may not be individually designated as such by OFAC.

This order is the latest step in a series of related actions by the US government, dating back to the 1990s, to encourage democratic change in Burma.  In a statement issued along with the signing of this Order, President Bush noted that he is imposing these additional sanctions in advance of the May 10, 2008 referendum vote in Burma, which is expected to be neither free nor fair.  In this statement, the President renewed calls for a democratic transition in Burma and pledged to maintain pressure on Burma’s leaders and those that support the regime.

This development indicates that the US Government is focusing closely on Burma ahead of next week’s referendum vote.  The new property blocking provisions may be strictly enforced, and the US Government is likely to designate additional persons that have supported the Burmese regime and others that are owned or controlled by blocked entities.  Accordingly, we suggest that companies having any direct or indirect activities in Burma review and update their compliance measures.

Should you have any questions about the Burma sanctions or any other export control issues, please contact Ed Krauland at 202.429.8083 or Michael Gershberg at 202.429.6208.