Letter to Congressional leaders reporting on Burma: December 9, 1997

Weekly Compilation of Presidential Documents, Dec 22, 1997

Dear Mr. Speaker: (Dear Mr. President:)

I hereby report to the Congress on developments concerning the national emergency with respect to Burma that I declared in Executive Order 13047 of May 20, 1997, pursuant to section 570 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act (the "Act") and the International Emergency Economic Powers Act (IEEPA). This report is submitted pursuant to section 204(c) of IEEPA, 50 U.S.C. 1703(c) and section 401(c) of the National Emergencies Act, 50 U.S.C. 1641(c). This report discusses only matters concerning the national emergency with respect to Burma that was declared in Executive Order 13047.

On May 20, 1997, I issued Executive Order 13047 (62 FR 28301, May 22, 1997), effective on May 21, 1997, to declare a national emergency with respect to Burma and to prohibit new investment in Burma by United States persons, except to the extent provided in regulations, orders, directives, or licenses that may be issued in conformity with section 570 of the Act. The order also prohibits any approval or other facilitation by a United States person, wherever located, of a transaction by a foreign person where the transaction would constitute new investment in Burma prohibited by the order if engaged in by a United States person or within the United States. This action was taken in response to the large-scale repression of the democratic opposition by the Government of Burma since September 30, 1996. A copy of the order was provided to the Congress on May 20, 1997.

By its terms, nothing in Executive Order 13047 is to be construed to prohibit the entry into, performance of, or financing of a contract to sell or purchase goods, services, or technology, except: (1) where the entry into such contract on or after May 21, 1997, is for the general supervision and guarantee of another person's performance of a contract for the economic development of resources located in Burma; or (2) where such contract provides for payment, in whole or in part, in (i) shares of ownership, including an equity interest, in the economic development of resources located in Burma; or (ii) participation in royalties, earnings, or profits in the economic development of resources located in Burma.

The prohibitions of Executive Order 13047 apply to United States persons, defined to include U.S. citizens and permanent resident aliens wherever they are located, entities organized under U.S. law (including their foreign branches), and entities and individuals actually located in the United States. The sanctions do not apply directly to foreign subsidiaries of U.S. firms, although foreign firms' activities may be affected by the restriction on United States persons' facilitation of a foreign person's investment transactions in Burma.

The term "new investment" means any of the following activities, if such an activity is undertaken pursuant to an agreement, or pursuant to the exercise of rights under such an agreement, that is entered into with the Government of Burma, or a nongovernmental entity in Burma, on or after May 21, 1997: (a) The entry into a contract that includes the economic development of resources located in Burma; (b) the entry into a contract providing for the general supervision and guarantee of another person's performance of a contract that includes the economic development of resources located in Burma; (c) the purchase of a share of ownership, including an equity interest, in the economic development of resources located in Burma; or (d) the entry into a contract providing for the participation in royalties, earnings, or profits in the economic development of resources located in Burma, without regard to the form of participation.

Since the issuance of Executive Order 13047 on May 20, 1997, the Department of the Treasury's Office of Foreign Assets Control (OFAC), acting under authority delegated by the Secretary of the Treasury, has implemented sanctions against Burma imposed by the order. During the current 6-month period, OFAC issued several determinations with respect to transactions provided for by agreements and/or rights pursuant to contracts entered into by United States persons prior to May 21, 1997. One license was granted authorizing a United States person's disinvestment in Burma, since this transaction necessarily facilitated a foreign person's investment in Burma.

On May 21, 1997, OFAC disseminated details of this program to the financial, securities, and international trade communities by both electronic and conventional media. This included posting notices on the Internet and on 10 computer bulletin boards and 2 fax-on-demand services, and providing the material to the U.S. Embassy in Rangoon for distribution to U.S. companies operating in Burma. In addition, in early July, OFAC sent notification letters to approximately 50 U.S. firms with operations in or ties to Burma informing them of the restrictions on new investment. The letters included copies of Executive Order 13047, provided clarification of several technical issues, and urged firms to contact OFAC if they had specific questions on the application of the Executive order to their particular circumstances.