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U.S. Government Continues to Ratchet Up Pressure Against Myanmar – The Latest Steps

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U.S. officials have continued to use a range of policy tools to apply pressure on the military leadership of Myanmar (also known as Burma) in response to the military coup in the country and escalating violence against peaceful protestors. These moves have continued to follow a step-by-step approach, with important export control and sanctions additions thus far in March 2021.

New Export Controls
On March 4, 2021, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced new export controls and Entity List additions for Myanmar.

First, BIS added Myanmar to the “military end user” and “military end use” restrictions under 15 CFR 744.21, which were previously in place for China, Russia, and Venezuela. This imposes a license requirement for exports, reexports, or transfers of items listed in Supplement No. 2 to Part 744 of the Export Administration Regulations (EAR) where there is knowledge that the item is intended for a military end use or a military end user in Myanmar. Given the pervasive role of the Tatmadaw in the Myanmar economy and government contracting, this restriction will present a due diligence and compliance challenge for companies exporting certain goods, software, or technology subject to the EAR.

Second, the following military-related organizations have been added to BIS’ Entity List subject to a license review policy of presumption of denial for all items subject to the EAR: (1) the Ministry of Defense; (2) the Ministry of Home Affairs; (3) the Myanmar Economic Corporation; and (4) the Myanmar Economic Holdings Limited. Accordingly, the export, reexport, or transfer (in-country) of items subject to the EAR to the above-listed parties is prohibited without a license.

In addition to the above changes, BIS moved Myanmar from Country Group B to the more restrictive Country Group D:1. This has the following effects:

  • License Exceptions Shipments of Limited Value (LVS), Shipments to Group B Countries (GBS), and Technology and Software under Restriction (TSR) are no longer available to Myanmar.
  • Paragraph (b) of License Exception Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP), which authorizes exports of national security (NS)-controlled items to Country Group B, is no longer available for shipments destined to Myanmar.
  • Certain paragraphs of License Exception Servicing and Replacement Parts and Equipment (RPL), which authorize the return of certain items to Country Group B, are no longer available for Myanmar.
  • Country Group D:1-related restrictions in License Exception Aircraft, Vessels, and Spacecraft (AVS) now apply to Myanmar.
  • Imposes a licensing requirement for certain foreign produced NS-controlled items that are the direct product of NS-controlled U.S.-origin technology or software or a plant or major plant component that is a direct product of NS-controlled U.S.-origin software or technology.
  • Myanmar is no longer eligible for reexports of NS-controlled items under paragraph (j) of License Exception Additional Permissive Reexports (APR).
  • The export, reexport, or transfer of technology for cryptanalytic items, non-standard cryptography, or any open cryptographic interface, to non-government end users in Myanmar is no longer eligible for License Exception Encryption Commodities, Technology, and Software (ENC).
  • Restrictions on the export, reexport, and transfer of certain microprocessors to military end uses and end users in Country Group D:1, pursuant to under 15 CFR17, now apply to Myanmar.

These restrictions were published in the Federal Register and became effective on March 8, 2021.

New U.S. Sanctions
On March 10, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Aung Pyae Sone and Khin Thiri Thet Mon, who are the two adult children of the commander-in-chief of Myanmar’s military forces, Min Aung Hlaing. OFAC also sanctioned six companies that are owned or controlled by the two adult children:

  • A & M Mahar Company Limited
  • Sky One Construction Company Limited
  • The Yangon Restaurant
  • The Yangon Gallery
  • Everfit Company Limited
  • Seventh Sense Company Limited

These actions were taken pursuant to Executive Order 14014, issued on February 10, 2021, which authorizes targeted sanctions against certain Burmese military and security officials as discussed in our prior blog post. As a result of the designations, the property and interests in property of these individual and entities must be blocked where U.S. jurisdiction applies, including entities in which they have an ownership interest of 50 percent or more. The designation also bans the individuals from entering the United States.

As the situation in Myanmar continues to evolve, there is a potential for U.S. sanctions to further expand.

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