What’s at stake with Obama’s decision on whether to renew sanctions for Myanmar

(From KWR Special Report)

By David Mortlock

Washington (KWR) May 5, 2016 – On May 20, 2016, the national emergency that underpins the remaining U.S. sanctions on Myanmar will expire unless renewed by President Obama. The International Emergency Economic Powers Act (“IEEPA”) provides most of the legal authority for U.S. sanctions for Myanmar. The statute grants the President broad authority to regulate transactions subject to U.S. jurisdiction. However, the President must first trigger those authorities by declaring a national emergency with respect to “any unusual and extraordinary threat…to the national security, foreign policy, or economy of the United States.”

Yangon City in Myanmar

Yangon City in Myanmar

Three presidents have renewed the national emergency 17 times already, suggesting that the 18th would be a fairly routine step to maintain the existing measures. President Clinton declared such a threat for Myanmar in 1997 and determined that the government of Myanmar had committed large-scale repression of the democratic opposition in Myanmar and that the actions and policies of the government of Myanmar constituted an unusual and extraordinary threat. Presidents Bush and Obama subsequently expanded the scope of that national emergency based on the developing situation in Myanmar.

However, allowing the national emergency to lapse would be much more than a symbolic action. The last twelve months were no routine year in Myanmar. In light of the landmark elections last November and the rise to power of Aung Sun Suu Kyi’s National League for Democracy (“NLD”), many in Myanmar are speculating whether President Obama will renew the emergency, thereby maintaining the sanctions.

Obama

Obama

If President Obama were to allow the national emergency to lapse in mid-May, the sanctions that rest on that national emergency and imposed pursuant to those Executive Orders would expire. While that may seem appropriate given the great strides Myanmar has made toward democracy and an open society in the last few years, the decision would have significant practical consequences for Myanmar, U.S. businesses, and the authority of this Administration as well as the next to shape Myanmar policy. If the national emergency is not renewed, the following restrictions and authorities will evaporate.

  • Reporting requirements for new investments

A centerpiece of the Administration’s initial efforts to ease sanctions on Myanmar in 2012 was the reporting requirements on new investments in the country. While the Administration did not outright lift the ban on new investments in Myanmar, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a general license to allow new investments so long as any U.S. person investing an aggregate of $500,000 in Myanmar file an annual report with the Department of State. The report must outline a range of policies and procedures with respect to the investment. This includes human rights, labor rights, land rights, community consultations and stakeholder engagement, environmental stewardship, anticorruption, arrangements with security service providers, risk and impact assessment and mitigation, payments to the government, investments with the Myanma Oil and Gas Enterprise (“MOGE”), and contact with the military or non-state armed groups. In addition, a U.S. person undertaking a new investment pursuant to an agreement with MOGE must notify the Department of State. Read more



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