Business Aviation Operations to Myanmar (Burma) – U.S. Sanctioned Countries Series

> | October 25, 2012 | 0 Comments
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Business Aviation Operations to Myanmar (Burma) - U.S. Sanctioned Countries Series

This business aviation blog post is part of a series on operating to U.S. sanctioned countries.

The country referred to by the United States and several other countries as “Burma” (but officially known as the “Union of Myanmar” since 1989) has been subject to a wide range of economic sanctions due to the policies of the Burmese government.

While not as comprehensive as the sanctions imposed on other countries, the United States’ sanctions on Burma have included a prohibition on financial services with Burma and a prohibition on new investment in Burma. In addition, a large number of entities and individuals in Burma have been added to the Specially Designated Nationals (SDN) list, a restricted party list maintained by the Treasury Department’s Office of Foreign Assets Control (OFAC).

In May 2012, the U.S. government announced that it would ease the financial and investment sanctions on Burma in response to the various reforms that have taken place in that country. On July 11, 2012, the U.S. temporarily suspended the financial and investment sanctions on Burma by issuing the following two general licenses:

(1) General License 16: the exportation and re-exportation of financial services to Burma; and
(2) General License 17: new investment in Burma, subject to certain reporting requirements.

In announcing the issuance of the general licenses suspending sanctions on Burma, the U.S. Departments of State and Treasury indicated that “that the participation of U.S. businesses in the Burmese economy will set a model for responsible investment and business operations, as well as encourage further change, promote economic development and contribute to the welfare of the Burmese people.” Despite the changes made to the U.S. sanctions on Burma, exports and re-exports to Burma are still subject to the export controls administered by the Commerce Department’s Bureau of Industry and Security (BIS).

Shortly after the OFAC general licenses were issued, some of America’s largest companies announced plans that they would resume operations in Burma.

Despite the easing of sanctions on Burma, conducting business aviation flight operations to and from Burma presents a number of challenges, due to limited infrastructure and large number of restricted parties and banks in Burma. Because of the expected increase in business travel to Burma, it is important for business aircraft operators to understand the scope of the remaining restrictions on Burma and to confirm that your 3rd-party provider is properly licensed to assist with operations to Burma and that credit can be established for all services, including the purchase of aviation fuel.

1. Current scope of U.S. sanctions on Burma and impact on flight operations

Specifically, OFAC’s Burma General License Number 16 authorizes the exportation and re-exportation of financial services to Burma, subject to certain limitations, including the extension of credit involving transactions with Burma. Significantly, General License 16 does not authorize the exportation of financial services to any person blocked under the Burma sanctions program (i.e., included on OFAC’s SDN list). Transfers of funds to or from accounts in Burmese banks that have been blocked are authorized, but only if the transactions do not involve U.S. banks.

Burma General License No. 17 authorizes new investment in Burma, subject to certain limitations and reporting requirements. For example, Burma General License 17 does not authorize new investment with the Burmese Ministry of Defense, state or non-state armed groups (which include the military) or any person or entity included on OFAC’s SDN list. Any U.S. person (both individuals and entities) engaging in new investment in Burma pursuant to General License 17 whose aggregate new investment exceeds $500,000 must file an annual report with the U.S. Department of State.

Because the Burmese economy (including the financial, aviation and petroleum sectors) is predominantly state-controlled, conducting flight operations to and from Burma will still present a number of challenges for the foreseeable future. For example, although credit will now be available to purchase aviation fuel and other trip support services for on-the-ground operations in Burma, because many banks in Burma are included on OFAC’s SDN list, payments for such goods and services will still have to be conducted by third-country banks.

In addition, because of the large number of Burmese entities and persons included on OFAC’s SDN list and the other restricted party lists maintained by the U.S. and other countries, it is extremely important to screen all companies and individuals against these restricted entities lists. Such restrictions are targeted towards specific entities and individuals that have been sanctioned for illegal acts such as export violations, international acts of terrorism, narcotics and weapons trafficking or money laundering. Your 3rd-party provider can assist operators in pre-screening potential business partners, including ground handling companies and other service providers in Burma.

11/08/12: Updated by author

Unlike the situation with U.S. sanctions on Cuba, travel by U.S. persons to and from Burma is permissible, although imports of most Burmese-origin goods are prohibited.

Unlike those of other countries, the U.S. Federal Aviation Administration (FAA) has not yet issued any special federal aviation regulations (SFAR) for flight operations involving Burma; therefore, no FAA approval is currently required to conduct flight operations to or from Burma. However, operators are advised to check the FAA restrictions and Notices to Airmen (NOTAMs) for the latest information.

Further information on the current scope of U.S. sanctions on Burma can be found on OFAC’s website.

2. Impact of U.S. sanctions on overflights of Burma and emergency landing permits

Because of the long-standing prohibition on financial services involving Burma, the payment for overflight permits, navigation fees and emergency landing permits has been restricted to only those U.S. 3rd-party service providers that have obtained licenses from OFAC to make such payments.

As a result of the large number of Burmese banks that remain on the SDN list, and the prohibition of U.S. banks from involvement in such transactions, making such payments is still more complex than in most other countries.

Certain U.S.-based 3rd-party service providers have been authorized by OFAC to arrange and pay the Burmese Department of Civil Aviation for permits authorizing the overflight of and emergency landing in Burma by U.S.-registered and non-U.S.-registered aircraft.

Operators should check with their 3rd-party provider to make sure they have the appropriate authorizations in place to make payments for overflights and emergency landing permits.

3. Current scope of U.S. export controls on Burma

While there is no requirement to obtain a “temporary sojourn” license from BIS for N-registered aircraft to travel to or land in Burma, a license or license exception may be required to export, re-export or transfer controlled U.S.-origin goods, software and technology to Burma, such as certain navigation and communications equipment. In addition, a license is required to export, re-export or transfer goods, software and technology to entities and persons who are included on OFAC’s SDN list.

More information on U.S. export control requirements can be found on BIS’s website.

4. Scope of trip support services in Burma offered by U.S.-based 3rd-party providers

As a result of the recent changes in U.S. policy on Burma, U.S.-based 3rd-party providers can now provide a wide-range of trip support services to U.S.-based operators conducting flight operations to and from Burma, including:

  • Preparing itinerary and changes, crew/passenger manifest, advanced passenger information system (APIS) and master crew list (MCL).
  • Preparing and filing flight plans with Burma’s Civil Aviation Authority.
  • Providing weather and other flight-related information.
  • Handling local transactions and arrangements, including paying for landing fees, aircraft parking, airport slots and navigational fees.
  • Arranging aviation fuel, in-flight catering, ground handling, hotels and ground transportation.
  • Making arrangements to organize and pay for ground services, ground handling, in-flight catering, transportation, aircraft parking, refueling, landing fees, customs, hotels and necessary credit arrangements.

5. Restrictions on payments and credit arrangements

Because it will take time for U.S. banks and European banks to set up operations in Burma, making payments for services in Burma – including using credit cards, obtaining cash and paying for aviation fuel – will likely remain a challenge. Because 3rd-party providers are now authorized to engage in credit transaction in Burma, operators should check with their3rd-party provider to discuss arranging credit for all required services.

6. Other considerations involving flight operations to and from Burma

Prior to conducting operations to and from Burma, operators should check to make sure that their aircraft lease agreements, insurance certificates and company standard operating procedures (SOPs), operations specifications and internal security directives authorize operations (both overflight and/or landing) to Burma. Non-U.S. operators should check with their local governments to ensure there are not any restrictions on operating to Burma. When landing in Burma, consider contingency plans, in the event that the geopolitical situation changes at the last minute. Always have a “Plan B” ready, in case you experience a technical issue and must have replacement parts brought in, as certain spare parts may require an export license issued by BIS to be exported to Burma.

In addition, it is good idea to have a satellite phone available so you can communicate with your operations department and 3rd-party provider without having to rely on local cell phone service. Depending on the credit arrangements that are available, you may need to carry cash to pay for some services. As previously noted, it is important to think about other contingency plans, in the event that the aircraft encounters any maintenance issues while on the ground in Burma.

Conclusion

The easing of sanctions on Burma by the U.S. and other countries will likely lead to a great deal of interest and business opportunities in Burma. As a result, there should be a corresponding increase in business aviation travel to Burma. Nevertheless, because of the large number of blocked entities in Burma and other on-the-ground issues, conducting flight operations to and from Burma will still present a number of challenges for U.S.- and non-U.S.-based operators. In addition, because the sanctions on Burma were not eliminated, but temporarily suspended, it is always possible for the U.S. to re-impose the sanctions at some point in the future. As a result, working with an experienced 3rd-party provider and advance preparation are extremely important. Your 3rd-party provider can assist operators in providing the most up-to-date information and other guidance in order to make the trip to Burma as smooth as possible.

Questions?

If you have any questions about this article, contact me at bobbybutler@univ-wea.com.

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About

Bobby D. Butler, Jr. is Senior Vice President, Global Partnership Management. Previously he served as Vice President, Chief Compliance Officer and Director of Internal Audit of Universal. Bobby has extensive experience with compliance and international business issues and is a regular speaker on subjects such as the Foreign Corrupt Practices Act (“FCPA”), global anti-bribery, export controls, economic sanctions, anti-boycott, anti-trust and the like. Bobby is the former Chairman of the Board of International Compliance Professionals Association (ICPA) and a member of the Houston District Export Council. In addition, he holds membership positions with the Ethics and Compliance Officers Association, the Society of Corporate Compliance and Ethics, the Greater Houston Business Ethics Roundtable and the American Bar Association. He is adjunct faculty with the University of Houston and Houston Community College. In addition, he serves on the advisory boards for University of Houston’s Supply Chain and Logistics Technology Degree Program and Houston Community College’s Business Curriculum and Export Academy. Bobby is a certified Compliance and Ethics Professional and holds a Masters in Business Administration – International Business with honors from Our Lady of the Lake University, San Antonio, Texas. In addition, he holds a BA in Political Science from Loyola University, New Orleans, LA and completed a fellowship from Loyola’s Institute of Politics. Bobby can be reached at bobbybutler@univ-wea.com.

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