Burma: Implementation of Sanctions

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Final rule.

SUMMARY:

In response to the Burmese military coup that overthrew the democratically-elected government of Myanmar (Burma), in this final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to apply more restrictive treatment to exports and reexports to, and transfers within, Burma of items subject to the EAR. This action advances the U.S. Government's efforts to reduce the availability of items to Burma's military and security services.

DATES:

This rule is effective March 8, 2021.

FOR FURTHER INFORMATION CONTACT:

Tracy Patts, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, U.S. Department of Commerce, by email at Foreign.Policy@bis.doc.gov, or by phone at 202-482-4252.

SUPPLEMENTARY INFORMATION:

Background

Burma Under the Export Administration Regulations

On February 10, 2021, President Biden signed Executive Order (E.O.) 14014, “Blocking Property With Respect to the Situation in Burma.” See 86 FR 9429 (Feb. 12, 2021). In E.O. 14104, the President declared a national emergency to address the threat posed to the United States by the situation in, and in relation to, Burma following a February 1, 2021 military coup, citing the military's overthrow of the country's democratically-elected government and arrest and detention of government leaders, human rights defenders, and journalists. See id. The United States had removed sanctions on Burma over the past decade based on progress toward democracy, and the reversal of that progress necessitated an immediate review of our sanction laws and authorities, followed by appropriate action. See President Biden's February 1, 2021 statement, available at https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/01/statement-by-president-joseph-r-biden-jr-on-the-situation-in-burma/ .

In response to the February 1, 2021 Burmese military coup, on February 18, 2021, BIS took action under the Export Administration Regulations, 15 CFR parts 730-774 (EAR), and published a Federal Register notice announcing a more restrictive review policy for applications involving exports and reexports of items requiring a license under the EAR that are destined for Burma's military and security services and suspended the availability of certain license exceptions for items destined for Burma. See 86 FR 10011 (Feb. 18, 2021). Taken together, the measures set forth in the February 18, 2021 Federal Register notice and this final rule are consistent with recent actions taken by the Department of the Treasury's Office of Foreign Assets Control under E.O. 14104. Specifically, this rule: 1) moves Burma from Country Group B to the more restrictive Country Group D:1; 2) adds Burma to the countries subject to the national security licensing policy for certain military end uses and end users, and to the `military end use' and `military end user' restrictions; and 3) moves Burma from Computer Tier 1 to the more restrictive Computer Tier 3 in the (Computers) (APP) license exception.

Burma Under the EAR Prior to the February 18, 2021 Notice

As a general matter, during a four-year period following BIS's placement of Burma in Country Group B in December 2016, BIS did not maintain special controls on Burma. See 81 FR 94962 (Dec. 27, 2016). Applications for items requiring a license for export or reexport to Burma were generally subject to case-by-case review consistent with the licensing policies set forth in Part 742 and other applicable parts of the EAR. For purposes of License Exception Computers (APP) (Section 740.7 of the EAR) in August 2017, Burma was placed in Computer Tier 1, a relatively less-restrictive placement. See 82 FR 38764, 8/15/17.

Prior to December 2016, BIS had imposed more significant restrictions on exports and reexports to Burma as part of a broad U.S. Government-wide embargo in effect for nearly two decades that had restricted trade with or involving Burma under a national emergency declared by President Bill Clinton pursuant to Executive Order 13047 of May 20, 1997, in response to repression by the then-governing regime in Burma. This emergency was extended and expanded by Presidents George W. Bush and Barack Obama, who together issued five additional Burma-related Executive Orders. Between October 2007 and December 2016, Burma was located in Country Group D:1, Supp. No. 1 to Part 740 of the EAR. It was located in Computer Tier 3, a relatively restrictive placement, for purposes of License Exception Computers (APP) until August 2017. See 82 FR 38764, 8/15/17. BIS also maintained license requirements in part 744 (then § 744.22) (see 72 FR 60248, October 24, 2007, as modified by 74 FR 770, January 8, 2009), for the export, reexport, or transfer (in country) of most items subject to the EAR, to persons listed in or designated pursuant to three of the Burma-related Executive Orders. Executive Order 13742 of October 7, 2016, terminated the national emergency declared in Executive Order 13047 and revoked that Executive Order and the other Burma-related Executive Orders.

Notwithstanding the EAR changes made following the October 2016 termination of the embargo, Burma continued to be located in Country Group D:3 (countries raising proliferation concerns related to chemical and biological weapons) and Country Group D:5 (U.S. arms-embargoed countries), consistent with § 126.1 of the International Traffic in Arms Regulations, 22 CFR parts 120-130.

Burma Under the EAR: February 18, 2021 Notice

On February 1, 2021, the Burmese military overthrew the democratically-elected government of Burma and detained President Win Myint and State Counsellor Aung San Suu Kyi and other parliamentarians affiliated with the National League for Democracy.

In response to this coup, as noted above, BIS issued a Federal Register notice effective February 18, 2021, adopting a more restrictive license application review policy of a presumption of denial for items subject to the EAR that require a license for export and reexport and that are destined for Burma's Ministry of Defense, Ministry of Home Affairs, armed forces, or security services. BIS also suspended the use of four license exceptions set forth in part 740 of the EAR that would otherwise have generally been available to Burma as a result of its Country Group B placement: 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).

Changes Made by This Rule

This rule strengthens export controls on Burma consistent with the policy concerns described in BIS's February 18, 2021 notice. The actions in this rule support the United States Government's efforts to promote an immediate return to democracy in Burma, to underscore to Burma's security forces there must not be violence against civilians, and to stand in solidarity with the people of Burma, who continue to voice their desire for democracy, peace, and rule of law. In particular, this rule enhances the U.S. Government's efforts to ensure that items subject to the EAR are not available to Burma's military and security services. These measures also address the foreign policy and national security concerns that formed the basis for the issuance of E.O. 14104 of February 10, 2021.

Country Group D:1

The rule removes Burma from EAR Country Group B in supplement no. 1 to part 740 (Country Groups) and moves it into the more restrictive Country Group D:1. This action makes certain license exceptions or portions of license exceptions unavailable for Burma, or imposes conditions on the use of such license exceptions, including as follows:

• Shipments of Limited Value (LVS) (§ 740.3). This license exception is no longer available for Burma due to Burma's removal from Country Group B.
• Shipments to Group B Countries (GBS) (§ 740.4). This license exception is no longer available for Burma due to Burma's removal from Country Group B.
• Technology and Software under Restriction (TSR) (§ 740.6). This license exception is no longer available for Burma due to Burma's removal from Country Group B.
• Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) (§ 740.9). Paragraph (b) (Exports of items temporarily in the United States) of this license exception places restrictions on shipments of national security (NS) controlled items to D:1 countries, and thus the provisions in paragraph (b) that would authorize exports of NS-controlled items to Country Group B (but not Country Group D:1) are no longer available for shipments destined to Burma.
• Servicing and Replacement Parts and Equipment (RPL) (§ 740.10). This license exception authorizes certain items to be returned to Country Group B (see (a)(4) (Reexports), and (b)(3)(ii)(C) (return of defective or unacceptable equipment)). These two paragraphs are no longer available for the return of such items to Burma due to Burma's removal from Country Group B.
• Aircraft, Vessels, and Spacecraft (AVS) (§ 740.15). Paragraph (b) of this license exception authorizes exports and reexports of certain equipment and spare parts for permanent use upon a vessel or aircraft, except for vessels registered in a D:1 country or aircraft registered in, owned or controlled by, or under charter or lease to a country included in Country Group D:1, or a national of any of these countries. With the publication of this rule, Burma is a D:1 country, and restrictions in this paragraph are applied to exports for vessels registered in Burma, or aircraft registered in, owned or controlled by, or under charter or lease to Burma or a Burmese national. Paragraph (c) of this license exception authorizes certain exports to U.S. or Canadian vessels, planes and airline installations or agents except for exports to D:1 countries and for aircraft located in, or owned, operated or controlled by, or leased or chartered to a D:1 country. Burma is now subject to all D:1-related specified restrictions set forth in paragraph (c) of § 740.15.
• Additional Permissive Reexports (APR) (§ 740.16(j)). Paragraph (j) of this license exception authorizes certain reexports of nuclear non-proliferation controlled items except when also controlled for NS reasons when destined to a D:1 country. Burma is now a D:1 country and will thus no longer be eligible for reexports of NS-controlled items under this provision.
• Encryption commodities, technology, and software (ENC) (§ 740.17). Paragraph (b)(2)(iv)(B) of this license exception places restrictions on certain encryption technology exports to users in D:1 countries. These restrictions shall apply to users in Burma now, due to Burma's placement in Country Group D:1.

The restrictions on the export, reexport, and transfer (in-country) of certain microprocessors to military end uses and end users in Country Group D:1, pursuant to § 744.17 (Restrictions on certain exports, reexports, and transfers (in-country) of microprocessors and associated “software” and “technology” for `military end uses' and to `military end users'), apply to transactions to Burma now that it is in Country Group D:1 as a result of this rule. Furthermore, the restrictions in § 744.7 (Restrictions on certain exports to and for the use of certain foreign vessels or aircraft) on certain exports and reexports to vessels and aircraft located in ports in a D:1 country now apply to exports and reexports to Burma, and restrictions in that section that apply to aircraft located in, or owned, operated or controlled by, or leased or chartered to, Country Group D:1 or a national of such country, now apply to aircraft located in, or owned, operated or controlled by, or leased or chartered to Burma or a Burmese national. Finally, the addition of Burma to Country Group D:1 expands the applicability of § 736.2(b)(3), General Prohibition Three, by imposing licensing requirements for reexports of foreign-produced direct products of certain U.S.-origin technology and software to Burma.

Burma remains in Country Groups D:3 (countries raising proliferation concerns related to chemical and biological weapons) and D:5 (U.S. arms-embargoed countries). See supplement no. 1 to part 740 of the EAR.

Licensing Policy

As noted below, this rule adds Burma to the countries subject to the military end use and end user controls, and associated licensing policies, in § 744.21. This rule also adds Burma to the list of countries subject to the licensing policy in § 742.4(b)(7) (NS-controlled items) of the EAR. The license review policy for NS-controlled items in § 742.4(b)(7) applies to transactions with the other countries included in § 744.21, and now applies to Burma as well.

Section 744.21

This rule adds Burma to the countries subject to the `military end use' and `military end user' (MEU) restrictions in § 744.21 of the EAR. In addition to the license requirements for items specified on the Commerce Control List (CCL), § 744.21 prohibits the export, reexport, or transfer (in-country) without a license of items subject to the EAR that are listed in supplement no. 2 to part 744—List of Items Subject to the Military End Use or End User License Requirement of § 744.21—to the People's Republic of China (China), the Russian Federation, or Venezuela, and with the publication of this rule, Burma, in certain circumstances. Such exports, reexports, or transfers (in-country) require a license if, at the time of the export, reexport, or transfer (in-country), the exporter, reexporter, or transferor (in-country) has “knowledge,” as defined in § 772.1 of the EAR that the item is intended, entirely or in part, for a `military end use,' or `military end user,' in Burma, China, the Russian Federation, or Venezuela. Applications submitted for the export or reexport to Burma, or transfer within Burma, of an item in supplement no. 2 to part 744 under this section will be reviewed with a presumption of denial.

This rule also adds a reference to Burma in supplement no. 7 to part 744—`Military End User' List but does not add any entities located in Burma to the list of Military End Users (MEU List) at this time. The MEU List notifies the public that certain entities are subject to the military end-user prohibitions in § 744.21 of the EAR. BIS may add entities located in Burma to the MEU List in the future.

This rule also corrects a typo in the last sentence of the introductory text to supplement no. 7 to part 744. The correction removes the phrase `supplement no. 2 to part 744' from the last sentence of the introductory text and adds in its place the phrase `supplement no. 7 to part 744'. Supplement no. 7 to part 744 is the correct supplement reference in the context of this sentence. With this correction, the last sentence correctly states that “. . . license application procedure and license review policy for entities specified in supplement no. 7 to part 744 is specified in § 744.21(d) and (e).”

Computer Tier 3

This rule moves Burma from Computer Tier 1 to Computer Tier 3 under License Exception Computers (APP), § 740.7. This change limits the use of that license exception for exports and reexports to, or transfers (in-country) within, Burma. The placement of Burma in Country Group D:1 by this rule and movement of Burma into Computer Tier 3 supersedes the suspension of four License Exceptions announced as part of the February 18, 2021 notice, as the prior suspension was linked to Burma's placement at the time in Country Group B and in Computer Tier 1.

Export Control Reform Act of 2018

On August 13, 2018, President Donald J. Trump signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4801-4852) that provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

Rulemaking Requirements

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated to be a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866.

2. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

3. Pursuant to section 1762 of the Export Control Reform Act of 2018 (50 U.S.C. 4821), this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation, and delay in effective date.

4. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

5. Notwithstanding any other provision of law, no person may be required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves a collection currently approved by OMB under control number 0694-0088, Simplified Network Application Processing System. The collection includes, among other things, license applications, and carries a burden estimate of 42.5 minutes for a manual or electronic submission for a total burden estimate of 31,878 hours. BIS expects the burden hours associated with this collection to not significantly increase with the publication of this rule.

Savings Clause

Shipments of items that may no longer be made under No License Required (NLR) or license exception as a result of this action and were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on April 7, 2021, pursuant to actual orders for export to Burma, reexport to Burma, or transfer (in country) within Burma may proceed to their destination under the prior authorization.

List of Subjects

15 CFR Part 740

• Administrative practice and procedure
• Exports
• Reporting and recordkeeping requirements

15 CFR Part 742

• Exports
• Terrorism

15 CFR 744

• Exports
• Reporting and recordkeeping requirements
• Terrorism

Accordingly, parts 740, 742, and 744 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

PART 740—LICENSE EXCEPTIONS

1. The authority citation for part 740 continues to read as follows:

Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783.

2. Amend § 740.7 by

a. Removing “Burma,” from paragraph (c)(1); and

b. Adding “Burma” alphabetically in paragraph (d)(1).

Supplement No. 1 to Part 740—Country Groups

3. Supplement no. 1 to part 740 is amended by

a. In the Country Group B table, removing “Burma”; and

b. In the Country Group D table revising the entry for “Burma” to read as follows:

Supplement No. 1 to Part 740—Country Groups

Country Group D

PART 742—CONTROL POLICY—CCL BASED CONTROLS

4. The authority citation for part 742 continues to read as follows:

Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential Determination 2003-23, 68 FR 26459, 3 CFR, 2004 Comp., p. 320; Notice of November 12, 2019, 84 FR 61817 (November 13, 2019).

5. Section 742.4 is amended by revising paragraph (b) (7) to read as follows:

PART 744—CONTROL POLICY: END-USER AND END-USE BASED

6. The authority citation for part 744 continues to read as follows:

Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of September 18, 2020, 85 FR 59641 (September 22, 2020); Notice of November 12, 2020, 85 FR 72897 (November 13, 2020).

7. Section 744.21 is revised to read as follows:

Supplement No. 7 to Part 744 [Amended]

8. The Supplement No.7 to Part 744 table is amended by:

a. Removing from the last sentence of the introductory text the phrase `supplement no. 2 to part 744' and adding in its place the phrase “this supplement 7 to part 744”; and

b. In the table adding in alphabetical order an entry for “BURMA”.

The addition reads as follows: