Background

On May 14, 2012, the Council of the European Union issued Council Regulation No. 409/2012 (Regulation), which temporarily suspends certain import, export, and investment restrictions on Myanmar's timber and minerals industries.  It came into force on May 16 and is directly applicable in all Member States.  The Regulation implements and gives full legal effect to European Council  Decision 2012/225/CFSP, issued April 26, 2012, which lift EU sanctions on Myanmar until April 30, 2013 in response to the country's nascent political reforms.  In May 2012, opposition party members were seated in Myanmar's parliament for the first time, following elections deemed free and fair the previous month.  Should the political situation in Myanmar deteriorate, the EU may reinstate the restrictions by declining to renew the suspension after April 30, 2013.

The new Decision and Regulation follow the partial relaxation of sanctions on Myanmar by the United States.  As discussed in our previous advisory, the US Department of the Treasury recently issued a General License allowing US persons to export financial services in support of humanitarian, religious, and other non-profit activities in Myanmar.  Other US sanctions on Myanmar remain in force.

Permitted Activities

Until April 30, 2013 the new Regulation allows the following import, export, and investment activities previously restricted by EU sanctions regulations:

Import and Export Measures

  • Import and purchase of timber products, coal, certain metals, and precious and semi-precious stones from Myanmar
  • Export of  specified logging, mining, and milling equipment to enterprises in Myanmar engaged in these sectors
  • Financing and financial assistance to such entities for the sale, supply, transfer, or export of specified goods
  • Provision of technical assistance related to specified goods to relevant enterprises

Investment Measures

  • Debt and equity participation in designated Myanmar entities operating in the affected sectors, and specified entities owned by the Government of Myanmar or associated designated persons
  • Acquisition of certificates of deposit, warrants, and debentures of designated entities owned by the Government of Myanmar or associated persons
  • Creation of joint ventures or other legal entities with entities operating in the affected sectors, and specified entities owned by the Government of Myanmar or associated designated persons.

Asset Freezing

In addition, the Regulation unfreezes until April 30, 2013 all funds and economic resources belonging to, owned by, or held by the Government of Myanmar or associated designated persons.  No prior authorization by any relevant national authority of a Member State is required to unfreeze the assets.

Travel Ban

Furthermore, the new Regulation lifts an EU travel ban on all senior Myanmar military officials; all development, tourism, military, and security officials who formulate, implement, or benefit from policies that impede Myanmar's democratic transition; and their families. 

Continuing Prohibitions

The new Regulation and Decision does not suspend or alter existing restrictions on the export of certain military equipment "which might be used for internal repression," or related technical assistance or brokering activities. 

US Sanctions in Myanmar Remain In Effect

The EU Regulation and Decision open a substantial portion of Myanmar's economy to business for EU persons, and the US has recently relaxed its sanctions in a limited way related to non-profit activities. However, US persons doing business in the EU must remain mindful of applicable US sanctions.  These still prohibit US persons from providing financial services to Myanmar, making investments in or related to the development of natural resources in Myanmar, or facilitating or approving of foreign persons' activities in or with Myanmar, if US sanctions would preclude such activity by a US person.  The US also continues to designate numerous Myanmar persons and entities as Specially Designated Nationals (SDNs).  No US persons can conduct transactions or dealings with such SDNs, and US persons must block the property or interests of property of such SDNs.

On May 17, 2012, United States Secretary of State Hillary Clinton acknowledged Myanmar's recent democratic reforms and announced the US government's intent to suspend bans on US investment in and export of financial services to Myanmar.  To date, the US Government has not taken concrete action with respect to these statements.

The EU developments present new business opportunities for EU companies, albeit on a currently temporary basis.  Nevertheless, some activities do remain restricted.  Accordingly, companies and persons seeking to do business in Myanmar should seek counsel to ensure their activities do not violate remaining EU or applicable US sanctions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.