The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued final rules amending the Export Administration Regulations (“EAR”) by implementing new export controls on Burma (Myanmar), and adding four entities linked to the recent coup to the Entity List. These final rules effective March 8, 2021 come less than a month after President Biden imposed sanctions blocking U.S. property and interests of Burmese military and government officials.
Burma Removed from Country Group B with Significant Repercussions
As of March 8, Burma is now in the more highly controlled Country Group D:1 (it was previously in Country Group B). Because of Burma’s move to Country Group D:1, transactions involving Burma are no longer eligible for the following License Exceptions under the EAR:
-Shipments of Limited Value (“LVS”);
-Shipments to Group B Countries (“GBS”); and
-Technology and Software under Restriction (“TSR”).
Additionally, the move to Country Group D:1 limits the availability of the following EAR License Exceptions for transactions involving Burma:
-Temporary Imports, Exports, Reexports, and Transfers (in-country) (“TMP”);
-Servicing and Replacement Parts and Equipment (“RPL”);
-Aircraft, Vessels, and Spacecraft (“AVS”);
-Additional Permissive Reexports (“APR”);
-Encryption Commodities, Technology, and Software (“ENC”); and
–(APP was suspended for use to Burma along with LVS, GBS, and TSR effective February 17, 2021, but with the March 8 final rule APP is now available again on a limited basis with Burma now placed in Computer Tier 3.)
Burma’s new Country Group D:1 status will also impose new restrictions on exports, reexports and in-country transfers to Burma involving microprocessors under EAR Section 744.17, export activities to certain foreign vessels and aircraft under EAR Section 744.7, and reexports to Burma of foreign-produced direct products of certain U.S.-origin technology and software under EAR Section 736.2.
MEU and National Security Restrictions Now Apply
Burma joins China, Russia, and Venezuela as one of four countries subject to BIS “military end-use” and “military end user” restrictions. Exports, reexports, and transfers (in-country) of specific items listed in Supplement No. 2 to 15 CFR Part 744 to Burma with “knowledge” that the items are intended for a “military end-use” or a “military end-user” will now require licensing from BIS and BIS will evaluate these license applications with a presumption of denial. The EAR’s definitions of “knowledge”, “military end-use” and “military end-user” are all quite broad and as a result, these new rules could potentially capture a large amount of transactions.
Additionally, items that are “subject to the EAR” and controlled for national security (NS) reasons will continue to require BIS licensing when exported, reexported or transferred (in-country) to Burma. However, BIS will now add an additional layer of review when reviewing those applications in order to determine whether the transactions present a risk of diversion to a “military end-user” or a “military end-use”. BIS will then apply a presumption of denial when it evaluates whether the subject transactions would materially contribute to Burma’s ability to develop, produce or operate weapons systems, subsystems and assemblies.
Four Entities Added to BIS Entity List
BIS announced on February 18 that “[e]ffective immediately, BIS will apply a presumption of denial for items subject to the EAR requiring a license for export or reexport when destined to Burma’s Ministry of Defense, Ministry of Home Affairs, armed forces, and security services.” Most recently, on March 8, BIS added four military or military-linked entities to the Entity List. Licenses are required for exports, reexports, or transfers in-country of all items “subject to the EAR” (including EAR99 items) to entities on the Entity List. The four newly designated entities are:
-Ministry of Defence, a.k.a. Ministry of Defense or MOD;
-Ministry of Home Affairs, a.k.a. MOHA;
-Myanmar Economic Corporation, a.k.a. MEC;
-Myanmar Economic Holdings Limited, a.k.a. MEHL, Myanma Economic Holdings Limited, Myanma Economic Holdings Public Company Limited, Myanmar Business Holdings Public Company Limited, Myanmar Economic Holdings Public Company Limited, UMEH, Union of Myanmar Economic Holdings Company Limited, Union of Myanmar Economic Holdings Limited.
The Federal Register notice clarifies no license exceptions are available for export activities to the four newly designated entities above. Anyone applying to BIS for a license to export to the named entities will face a presumption of denial review policy.
Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.
Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.
Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office.