On March 8, 2021, the US Commerce Department’s Bureau of Industry and Security (BIS) published amendments to the Export Administration Regulations (EAR) imposing new export control restrictions on Myanmar (Burma) and adding four entities to the Entity List, in response to a military coup in early February 2021.
The BIS announcements follow the imposition of sanctions on 12 individuals and three entities by the US Treasury Department’s Office of Foreign Assets Control (OFAC), pursuant to Executive Order 14041 of February 10, 2021.
In addition to designating major military-linked commercial entities to the Entity List, the new EAR amendments make Myanmar ineligible for certain license exceptions and add Myanmar to the list of countries subject to BIS’s military end use / military end user rule (the MEU Rule)—alongside China, Russia, and Venezuela.
For background on the US government’s previous Myanmar-related measures in response to the recent coup, including Executive Order (EO) 14014, see our blog post of February 12, 2021, “Biden Administration Announces Sanctions and Export Controls in Response to Myanmar Coup.”
Additions to the Entity List
BIS announced the addition of four Myanmar-based entities to the Entity List:
- Ministry of Defence;
- Ministry of Home Affairs;
- Myanmar Economic Corporation (MEC); and
- Myanmar Economic Holdings Limited (MEHL).
As a result, BIS now requires a license for exports, reexports, and in-country transfers of all items subject to the EAR to any of the four entities above. BIS will review applications for licenses with a presumption of denial, and the four entities are no longer eligible for any license exceptions under the EAR.
Both MEC and MEHL had been previously designated as Specially Designated Nationals (SDNs) under OFAC’s earlier Myanmar-related sanctions program, which was terminated in October 2016 following the country’s democratic reforms, but they were not included in OFAC’s recent SDN designations under EO 14014.
The Entity List restrictions only apply to the listed entities themselves, although BIS advises enhanced due diligence and possibly other compliance measures as well when dealing with a subsidiary or other affiliate of a listed entity. MEC and MEHL are broadly present in numerous sectors of Myanmar’s economy, adding compliance risk and burden to trade in items subject to the EAR (including “EAR99”) with Myanmar when dealing with an affiliated entity either MEC or MEHL.
Fewer License Exceptions and New License Conditions
On February 18, 2021, BIS issued a Federal Register notice announcing a policy of a presumption of denial when considering license applications for items subject to the EAR destined for the Myanmar Ministry of Defense, Ministry of Home Affairs, armed forces, or security services. Additionally, BIS suspended the availability of four license exceptions previously available for Myanmar:
- Shipments of Limited Value (LVS) (§ 740.3);
- Shipments to Group B Countries (GBS) (§ 740.4);
- Technology and Software under Restriction (TSR) (§ 740.6); and
- Computers (APP) (§ 740.7).
With respect to License Exception Computers (APP) (§ 740.7), the Federal Register notice notes that Myanmar has now been moved from Computer Tier 1 to Computer Tier 3.
Under the March 8, 2021 amendments, BIS moved Myanmar from Country Group B to Country Group D:1 under Supplement No. 1 to Part 740 of the EAR. Among other changes, the move to Country Group D:1 limits the availability of the following additional license exceptions for Myanmar:
- Temporary Imports, Exports, reexports, and Transfers (in-country) (TMP) (§ 740.9);
- Servicing and Replacement Parts and Equipment (RPL) (§ 740.10);
- Aircraft, Vessels, and Spacecraft (AVS) (§ 740.15);
- Additional Permissive Reexports (APR) (§ 740.16(j)); and
- Encryption commodities, technology, and software (ENC) (§ 740.17).
The move to Country Group D:1 imposes additional restrictions on certain microprocessors destined to military end uses and end users, under § 744.17, and certain exports and reexports to vessels and aircraft in ports in Myanmar, under § 744.7. The change also expands the jurisdiction of the EAR over certain non-US products when produced from US-origin technology or software (if controlled for “National Security” reasons under the EAR), under the “foreign-produced direct product” rule in General Prohibition Three of the EAR, at § 736.2(b).
Military End Use/User Rule
The March 8, 2021, amendments also added Myanmar to the list of countries subject to the MEU Rule at § 744.21. The MEU Rule previously applied only to China, Russia, and Venezuela. For more information about the MEU Rule, see our blog post of April 30, 2020.
Specifically, the amendments impose a license requirement on exports, reexports, or in-country transfers of items subject to the EAR to Myanmar, when there is knowledge that the item is intended, entirely or in part, for a military end use or military end user in Myanmar. BIS will review applications for licenses with a presumption of denial.