[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR537.408]



[Page 177-178]

 

                  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.

    (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



[[Page 178]]



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.