[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR537.408]

[Page 679-680]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
 
PART 537--BURMESE SANCTIONS REGULATIONS--Table of Contents
 
                       Subpart D--Interpretations
 
Sec. 537.408  Sale or purchase of goods, services or technology.

    (a) Section 537.204 exempts from any prohibition under this part the 
entry into, performance of, or financing of a contract to sell or 
purchase goods, services, or technology, except:
    (1) Where the entry into a contract on or after the effective date 
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.
    (b) Examples: The following examples are based upon the assumption 
that neither Sec. 537.204(a) nor Sec. 537.204(b) applies.
    (1) A U.S. person may market goods or services in Burma through a 
sales representative or sales agent, or through a U.S. person or 
subsidiary established and operating in Burma before May 21, 1997, or 
through any established foreign (including Burmese) distributorship. The 
U.S. person may not, however, establish and operate a new business, 
branch, office or showroom in Burma to market such goods or services or 
facilitate the establishment of a new foreign entity to do so. This 
would constitute the development of a commercial resource.

[[Page 680]]

    (2) A U.S. person may rent, lease or purchase space in existing 
buildings in connection with the continued operation of a business in 
operation prior to the effective date. It may change locations, modify 
and renovate existing space and upgrade machinery or equipment. Unless 
pursuant to a pre-effective date agreement or the exercise of specific 
rights under such agreement, however, the U.S. person may not expand its 
business operations by opening additional stores, branches, offices or 
showrooms beyond the number that were in existence immediately prior to 
May 21, 1997. The U.S. person may not construct a new commercial 
building to house its business as this would constitute the economic 
development of land and commercial resources in Burma.
    (3) A U.S. person involved in exempt activities may hire and train 
Burmese employees to carry out such activities. The employment of 
personnel in Burma under these circumstances is considered the purchase 
of employment services which is exempt from prohibition under 
Sec. 537.204. Any training incidental to the performance of the 
employee's services is likewise exempt. For example, a U.S. person 
engaged in the sale of copy machines may hire and train a Burmese 
employee to carry out activities pursuant to such sales, including 
office support personnel, personnel to provide after-sale service and 
maintenance in accordance with the terms of a purchase or lease 
agreement, sales representatives and supervisory personnel. A U.S. 
person may not, however, open a business after the effective date, the 
purpose of which is the sale of vocational skills training in the 
maintenance of copy machines, as this would constitute the economic 
development of human resources in Burma.
    (4) Contracts for the purchase or sale of services incident to the 
registration and renewal of patents, trademarks and copyrights are not 
prohibited by this part.
    (5) A U.S. bank is allowed to provide trade financing as a service 
either to the Government of Burma or to nongovernmental entities in 
Burma, but cannot provide them loans earmarked for economic development 
of resources in Burma if loan repayment is secured by the project. A 
U.S. bank can provide development project financing as a service, so 
long as the financing instruments are not convertible into equity, and 
do not provide for participation, including as collateral or security, 
in royalties, earnings, or profits in the economic development of 
resources located in Burma.