Burma: Economic Sanctions

Burma: Economic Sanctions

Burma: Economic Sanctions
Larry A. Niksch
Specialist in Asian Affairs
Martin A. Weiss
Specialist in International Trade and Finance
August 3, 2009
Congressional Research Service
7-5700
www.crs.gov
RS22737
CRS Report for Congress
P
repared for Members and Committees of Congress

Burma: Economic Sanctions

Summary
On October 19, 2007, President George W. Bush issued Executive Order 13449. This followed a
September 25, 2007 statement by President Bush that sanctions against Burma, which have been
in place since 1997, would be tightened to specifically target leading Burmese officials and
impose additional financial and travel sanctions. This report provides background information on
existing economic sanctions against Burma and possible options to expand sanctions. It will be
updated as events warrant.
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Burma: Economic Sanctions

Contents
Future Options to Expand Sanctions............................................................................................ 8

Tables
Table 1. Summary of U.S. Economic Sanctions on Burma ........................................................... 5

Contacts
Author Contact Information ...................................................................................................... 10

Congressional Research Service

he following table provides summary information on existing Burma sanctions.
Table 1. Summary of U.S. Economic Sanctions on Burma
T
Statutory Action
Sanction
Exemption
Executive Order 13047, May
Prohibits new investment in Burma by U.S. persons and companies on
Companies with investments in Burma prior to May 21, 1997, and
20, 1997. Issued under
or after May 21, 1997. New investment is defined as a contract with
companies or persons with an investment agreement in place prior to
Section 570 of the Foreign
the Government of Burma or a non-governmental entity in Burma for
May 21, 1997. The exemption includes the U.S. corporation
Appropriations Act, 1997
the development of resources located in Burma, purchasing a share of
UNOCAL and its investment with the French corporation Total in
(P.L. 104-208)
ownership in a project, or entering into an agreement that provides for natural gas exploration and pipeline offshore and across Burma into
a participation in royalties, earnings, or profits from the economic
Thailand. It is estimated that the project provides $400 million to
development of resources located in Burma.
$647 million to the Burmese government annually. (Seekins, Donald
M. “Burma and U.S. Sanctions: Punishing an Authoritarian Regime.”
Asian Survey, May-June 2005. p. 452.)
P.L. 108-61, Burmese
Requires the President to ban the importation into the United States
The President may waive the prohibition on the import of any
Freedom and Democracy
of certain products of Burma, beginning 30 days after the date of
product from Burma if the President determines and notifies the
Act of 2003, July 28, 2003.
enactment. The import ban expires in one year unless renewed. The
appropriate congressional committees that to do so “is in the national
Extended by P.L. 108-272
President may impose a freeze on funds or assets in the United States
interest of the United States.”
and P.L. 109-39.
of the Burmese Government and individuals who hold senior positions
in that government. Requires the U.S. government to vote against the
extension of any financial assistance to Burma by international financial
institutions. Authorizes the President to deny visas and entry into the
United States to former and present leaders of the Burmese
government or the Union Solidarity Development Association (a pro-
government mass organization).
Executive Order 13310, July
Issued to implement P.L. 108-61. Blocks property and property
Transactions prior to May 21, 1997, between a U.S. person or
28, 2003.
interests of persons listed in the Annex to the Executive Order and
company and any entity in Burma, but such transactions with banks in
persons designated by the Treasury Department as being senior
Burma must be conducted through a non-U.S. bank. No prohibition
officials of the Government of Burma and the Union Solidarity and
on the export of goods and services other than financial services.
Development Association. Authorizes the Treasury to designate
Exemption for transfer of personal remittances of less than $300 to
individuals or entities that are owned or controlled by, or acting on
and from Burma for “an individual ordinarily resident in Burma,
behalf of any of those officials or groups. Bans the importation into the
provided that the funds are not being sent by, to or on behalf of a
United States of products of Burma and the export or re-export of
blocked party.” The U.S. Office of Foreign Assets Control can issue
financial services to Burma by U.S. persons. Prohibits a U.S. person or
licenses to non-government organizations to engage in humanitarian
company from approving, aiding, or supporting a foreign party’s
or religious activities in Burma.
investment in Burma. Prohibits U.S. persons from purchasing shares in
a third-country company if the company’s profits are predominantly
derived from the company’s development of resources in Burma.

CRS-5

Statutory Action
Sanction
Exemption
Executive Order 13448,
Grants the Treasury Department expanded authority to designate for

October 19, 2007.
sanctions individuals responsible for human rights abuses as wel as
public corruption, and those who provide material and financial backing
to these individuals or to the government of Burma.
Section 489(a)(1) of the
Burma is listed by the Department of State as a “major illicit drug

Foreign Assistance Act of
producing country” and is subsequently barred from receiving some
1961, as amended.
U.S. foreign assistance.
Narcotics Control Trade Act Due to its designation as a major drug producing state, Burma is

(19 U.S.C. 2491-2495) and
subject to several trade sanctions including: (1) deny to any or al of
the Customs and Trade Act
the products of that country tariff treatment under the Generalized
of 1990 (P.L. 101-382).
System of Preferences, the Caribbean Basin Economic Recovery Act
[19 U.S.C. 2701 et seq.], or any other law providing preferential tariff
treatment; (2) apply to any or al of the dutiable products of that
country an additional duty at a rate not to exceed 50 percent ad
valorem or the specific rate equivalent; (3) apply to one or more duty-
free products of that country a duty at a rate not to exceed 50 percent
ad valorem; (4) take the steps described in subsection (d)(1) or (d)(2)
of this section, or both, to curtail air transportation between the
United States and that country; and/or withdraw the personnel and
resources of the United States from participation in any arrangement
with that country for the pre-clearance of customs by visitors between
the United States and that country.
Executive Order 13464,
Froze assets in the United States and prohibited U.S. firms from doing

April 30, 2008.
business with three Burmese companies: Myanmar Pearl Enterprise,
Myanmar Gem Enterprise, and Myanmar Timber Enterprise.
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Statutory Action
Sanction
Exemption
P.L. 110-286, Tom Lantos
Bans the import of jadeite and rubies mined in Burma and jewelry

Burmese JADE Act of 2008,
containing jadeite or rubies made in Burma. Exporters of jadeite,
July 29, 2008
rubies, and jewelry from other countries to the United States must act
to prohibit inclusion of articles from Burma; must maintain full records

of non-Burmese articles and controls from mine to final finishing to

export. Governments must establish “dissuasive penalties” against
persons who violate laws and regulations against trade in Burmese-
origin articles. The President shall appoint a Special Representative and
Policy Coordinator for Burma. The State Department shal submit to
Congress reports on countries and entities that supply arms and
intelligence aid to the Burmese government; and countries and foreign
banks that hold assets of senior Burmese officials. The Act expresses
the “sense of Congress” that the investors in the Yadana natural gas
project (including the U.S. firm, Chevron) should “consider voluntary
divestment over time” if the Burmese government fails to reform
politically; and the investors should publicly disclose their role in the
investment and the amount of financial support to the Burmese
government generated by the Yadana project.
P.L. 111-42
Renewed P.L. 108-61, The Burmese Freedom and Democracy Act of

2003.
Source: Compiled by the Congressional Research Service.
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Burma: Economic Sanctions

Future Options to Expand Sanctions
In response to the Burmese government’s suppression of demonstrations at the end of September
2007, the Bush Administration published a large number of names of persons and companies
connected with the Burmese government, imposed bans on their travel to the United States, and
froze their financial assets in the United States. Existing sanctions against Burma may be viewed
as adequate and as necessitating no further action. However, Members of the 111th Congress may
seek to exercise additional options. P.L. 110-286, the Tom Lantos Block Burmese JADE Act of
2008 struck provisions in the House version of the bill that would have prohibited “United States
persons” from entering into economic-financial transactions, paying taxes, or performing “any
contract” with Burmese government institutions or individuals under U.S. sanctions. The
prohibition of the payment of taxes specifically included the payments of taxes to the Burmese
government by the Yadana natural gas project, in which the U.S. corporation, Chevron, is a major
partner. These stricken provisions were replaced in the final bill by a “sense of Congress”
statement that Chevron and the other foreign investors should consider voluntary disinvestment
from the project. Other options to expand sanctions include the following.
Impose provisions of the USA PATRIOT Act on third country banks and financial
institutions that do business with Burmese banks and individuals associated with the
Government of Burma: Under Section 311 of the USA PATRIOT Act, Special Measures for
Jurisdictions, Financial Institutions, or International Transactions of Primary Money Laundering
Concern, the Secretary of the Treasury is authorized to impose any of five certain regulatory
restrictions, known as “special measures.”1 These can be used upon finding that a foreign
jurisdiction, financial institution, or certain transactions or accounts is “of primary money
laundering concern.” Prior to making such a finding, the Treasury Secretary must consult with the
Secretary of State and the Attorney General and consider certain factors relating to the foreign
jurisdiction or the particular institution targeted. Among the factors to be considered are:
involvement with organized crime or terrorists, bank secrecy laws and regulations, the existence
of a mutual legal assistance treaty with the United States, and level of official corruption.
Of the five types of special measures, four of the five impose information-gathering and record-
keeping requirements on U.S. financial institutions dealing either directly with the jurisdiction
designated as one of primary money laundering concern, or dealing with those having direct
dealings with the designated jurisdiction. Under the fifth special measure, a U.S. financial
institution may be prohibited from opening or maintaining in the United States a correspondent or
payable-through account2 for a foreign financial institution if the account involves the designee.
On November 18, 2003, the Secretary of the Treasury designated Burma as a jurisdiction of
primary money laundering concern and applied a “special measure” under Section 311 of the
USA PATRIOT Act. The special measure prohibits covered U.S. financial institutions from
establishing, maintaining, administering, or managing in the United States any correspondent or
payable-through account for, or on behalf of, a Burmese banking institution. Covered U.S.

1 For more information on Title III of the USA PATRIOT Act, see CRS Report RL31208, International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001, Title III of P.L. 107-56 (USA PATRIOT Act), by M.
Maureen Murphy.
2 A payable-through account is an account established at a U.S. financial institution that extends check-writing
privileges to the customers of other, often foreign, financial institutions.
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Burma: Economic Sanctions

financial institutions also are similarly prohibited with regard to any correspondent or payable-
through account in the United States for any foreign bank if the account is used by the foreign
bank to provide banking services to a Burmese banking institution. However, the special measure
applied to Burmese banks does not prohibit U.S. financial institutions from maintaining
correspondent accounts otherwise prohibited by this rule if such accounts are permitted to be
maintained pursuant to Executive Order 13310 and the Burma-related activity of those accounts
is solely for the purposing of conducting exempted activity. This is in contrast to the Treasury
Department’s imposition of Section 311 on Banco Delta Asia in the Chinese territory of Macau
for money laundering for North Korea. Section 311 measures have arguably had their largest
success in this designation of Macau-based Banco Delta Asia in September 2005 and the full
imposition of Section 311 in March 2007. The North Korean government had used Banco Delta
for the majority of its international transactions. Reportedly, following the U.S. proposed
designation, over two dozen financial institutions ceased their transactions with North Korea.3
Most importantly, China froze North Korean accounts in the Macau branch of the Bank of China
and reportedly cracked down on North Korean efforts to circulate counterfeit U.S. dollars in
China near the North Korean border.4
Reports of third country banks that do business with Burmese banks or individuals connected to
the Burmese government (including drug traffickers) are sparse. Past reports have cited banks in
Thailand, Singapore, and China. Burmese accounts in Chinese banks were confirmed in January
2006 when the Bank of China ordered Chinese banks to terminate all U.S. dollar business with
the Myanmar Foreign Trade Bank and the Myanmar Investment and Commercial Bank.5

3 “Press reports indicate that some two dozen financial institutions across the globe have voluntarily cut back or
terminated their business with North Korea, notably including institutions in China, Japan, Vietnam, Mongolia, and
Singapore. The result of these voluntary actions is that it is becoming very difficult for the Kim Jong-Il regime to
benefit from its criminal conduct.” Testimony of Daniel Glaser, Deputy Assistant Secretary for Terrorist Financing and
Financial Crimes, U.S. Department of the Treasury before the Senate Committee on Banking, Housing, and Urban
Affairs. September 12, 2006.
4 Ibid.
5 Turnell, Sean. Burma’s Economic Prospects. Testimony before the Subcommittee on East Asian and Pacific Affairs,
Senate Foreign Relations Committee, March 29, 2006. Sweeney, John. “How Junta protects Mr. Heroin.” The Observer
(London, internet version), April 8, 2001. Casanier, Francois. “A Narco-dictatorship in progress.” BurmaNet News,
June 13, 1996.
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Author Contact Information

Larry A. Niksch
Martin A. Weiss
Specialist in Asian Affairs
Specialist in International Trade and Finance
lniksch@crs.loc.gov, 7-7680
mweiss@crs.loc.gov, 7-5407

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