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U.S. Suspends Economic Sanctions Against Burma7月 13, 2012
Implementing a policy decision announced last May 17 by Secretary of State Clinton, on July 11 the Treasury Department’s Office of Foreign Assets Control issued two general licenses under the Burma Sanctions Regulations (31 C.F.R. Part 537) (BSR) that generally permit most new U.S. business to proceed in Burma. At the same time, President Obama issued a new executive order that builds on existing sanctions by blocking property held by persons who are identified as undermining the democratic reform process in Burma.
While these actions open the door to U.S. companies interested in entering the Burmese market, the BSR have not been terminated, and continue to govern transactions by U.S. persons involving Burma in important respects. U.S. persons may not engage in transactions involving Burma’s armed forces, Ministry of Defense, and various sanctioned persons. Property that was previously blocked under the BSR remains blocked. Prohibitions against importing Burmese-origin products mandated by the Burmese Freedom and Democracy Act of 2003 remain in effect, and the Congress appears poised to extend those import sanctions beyond their currently-scheduled expiration date of July 26. Importantly, far-reaching reporting requirements will apply with respect to certain new investments.
New General Licenses
The BSR prohibit U.S. persons  from exporting financial services to Burma and from engaging in new investments in that country without authorization. The new general licenses suspend these prohibitions, with the exceptions noted below.
- General License No. 16 [available here] authorizes the exportation or re-exportation of financial services to Burma from the United States or by U.S. persons, wherever located. GL No. 16 supersedes two earlier general licenses, GL No. 14-C and GL No. 15, which had previously authorized certain financial transactions involving non-commercial activities.
- General License No. 17 [available here] authorizes new investment in Burma by U.S. persons. It also imposes new reporting requirements for certain such investments.
Neither GL No. 16 nor GL No. 17 authorize transactions with the Burmese Ministry of Defense, including the Office of Procurement; any state or non-state-owned group; or any entity in which any such entity owns a 50 percent or greater interest. In addition, transactions continue to be barred with Burmese Specially Designated Nationals.
New Reporting Requirements
GL No. 17 imposes extensive reporting requirements on U.S. persons with respect to certain new investments. These reports must be made to the Department of State, which has published the text of proposed information requirements [available here]. The Department announced that it will solicit public comments on the proposal.
The proposed mandate would ─
- Require reporting to the State Department of any new investment involving the Myanma Oil and Gas Enterprise within 60 days of the investment.
- Require an annual report to the State Department by any investor having aggregate new investments in Burma exceeding $500,000.
For persons subject to the annual reporting requirement, the burden will be extensive and accompanied by heavy public scrutiny. Reports will be made public, with limited exceptions.
Specifically, covered investors must submit an annual public report that includes detailed information disclosing:
- The submitter’s operations in Burma, including the number of employees.
- The submitter’s policies, procedures, and actions with respect to: operational impacts on human rights, worker rights, and the environment; anti-corruption; community and stakeholder engagement; and grievance procedures and hearings for the benefit of employees and local communities. In addition, submitters must provide information regarding “global corporate social responsibility policies, including those related to human rights, sustainability, worker reports, anti-corruption, and/or the environment.”
- Any arrangements the submitter has with security service providers.
- Property acquisitions, whether by purchase or lease.
- Payments to each Burmese national, sub-national, and other government administrative entities.
Further, the State Department will require the following information, though submitters may choose not to include it in the public report:
- Specific information regarding “meetings or other communications with the armed forces of Burma or other armed groups that were material to the submitter’s investments in Burma.”
- A summary of the submitter’s risk assessments and mitigation steps taken after any due diligence conducted regarding human rights, worker rights, and/or environmental issues.
The Department’s proposed regulation makes clear that virtually all of the information provided by submitters is presumptively public. A submitter may redact specific information based on the narrow business confidentiality grounds provided in Exemption 4 of the Freedom of Information Act (FOIA), but the Department is not bound to honor such claims, and any such redaction may be challenged by a requestor who is denied disclosure. The information that a submitter is allowed to provide the Department in confidence similarly is subject to disclosure in response to a FOIA request. 
As stated by the Department, “the purpose of the public report is to promote greater transparency and encourage civil society to partner with our companies toward responsible investment.” While GL No. 17 and the proposed reporting rule stop short of requiring U.S. investors either to adopt or to follow any particular business practice policies and procedures, the clear expectation of the these actions is that investors will do so. The proposed rule pointedly directs attention to various United Nations and OECD Guidelines for business practices as the expected standards against which reporting entities will be measured. The limited scope for withholding proprietary business information ensures that those covered by the annual reporting requirements will be subject to close public policing as well as to examination by U.S. Government officials.
New Executive Order
Consistent with the exception in General Licenses 16 and 17 for transactions involving the Burmese armed forces and related entities, President Obama’s new executive order on Burma expands existing sanctions authority enabling an asset freeze concerning designated persons [available here]. Specifically, the Treasury Department, in consultation with the State Department, will block the property of “individuals or entities that threaten the peace, security, or stability of Burma, including those who undermine or obstruct the political reform process or the peace process with ethnic minorities, those who are responsible for or complicit in the commission of human rights abuses in Burma, and those who conduct certain arms trade with North Korea.”
“U.S. persons” include U.S. citizens, permanent resident aliens, entities organized under U.S. law, and any person in the United States.
 In this regard, “President Obama and Attorney General Holder have directed agencies to apply a presumption of openness in responding to FOIA requests. The Attorney General specifically called on agencies not to withhold information just because it technically falls within an exemption and he also encouraged agencies to make discretionary releases of records.” http://www.foia.gov/about.html Consistent with these directives, “[i]t is the Department of State’s policy to release information to the maximum extent possible.” U.S. Department of State Information Access Guide, p.9.
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