By: Scott Maberry and Cheryl Palmeri

The U.S. government has taken another in a series of steps relaxing the sanctions it imposes against Myanmar, a country the Obama Administration still refers to by its pre-coup name, Burma. On April 17, 2012, the U.S. Department of the Treasury, Office of Foreign Assets Control issued General License No. 14-C (General License), authorizing certain financial transactions in support of humanitarian, religious, and other not-for-profit activities in Myanmar. This General License – which permits transactions previously prohibited under U.S. sanctions laws – is the U.S. government’s most recent move to scale back its restrictions on trade with Myanmar.

As we recently reported, dialogue between the two nations renewed in late 2011 when U.S. Secretary of State Hillary Clinton visited Myanmar after its government released some political prisoners and lifted a ban on the main opposition party, the National League for Democracy (NLD).

Following her visit, Secretary Clinton outlined the Administration’s conditions for removal of U.S. sanctions that have restricted U.S. financial investment in Myanmar since 1997, as follows: further opening of Myanmar’s political process; establishment of the rule of law; the release of remaining political prisoners; an end to the repression of minority ethnic groups; and a severance of Myanmar’s “illicit ties to North Korea.”

As has been widely reported in the press, Myanmar has made some strides toward accomplishing these objectives in 2012.  In January, the government declared a cease-fire with the ethnic group Karen National Union and released more than 650 detainees, including many high-profile political activists and a former prime minister.  And the NLD, including its General Secretary, Aung San Suu Kyi, was permitted to participate in parliamentary elections in early April.  The group won 43 of the 45 available seats, defeating candidates from President Thein Sein’s ruling Union Solidarity and Development Party.

For its part, the United States has agreed to exchange ambassadors with Myanmar for the first time in more than 20 years.  And with the new OFAC General License, the United States has demonstrated its commitment to the gradual expansion of relations with the southeast Asian nation.

The United States is not alone in relaxing sanctions.  Canada has repealed most of its economic sanctions against Myanmar and finalized the regulatory process to formally remove Myanmar from its list of countries to which the Governor in Council deems it necessary to control the export or transfer of any goods and technology.  Separately, the European Union has announced that it will suspend trade restrictions on Myanmar for one year, although an arms embargo will remain in place.  Japan plans to forgive $3.7 billion of Myanmar’s debt and resume development loans.  And Australia has lifted travel and financial restrictions on hundreds of members of Myanmar’s establishment.

Coupled with Myanmar’s recent introduction of a unified exchange rate for its currency, these developments have led to a growing recognition of the possibility that Myanmar may become a more substantial destination for foreign investment.

But the road to political change in Myanmar has not always been smooth.  On April 23, 2012, Aung San Suu Kyi and other elected members of the NLD refused to take their oaths of office. The NLD, which ran on a platform of constitutional reform, seeks to change the oath’s wording to require parliamentarians to “respect” – rather than “safeguard” – the constitution.  The party opposes the constitution in its current form, because it reserves one-quarter of parliamentary seats for unelected military officials and, the NLD asserts, fails adequately to safeguard rights.

As Myanmar grapples with this and other challenges to its political transformation, U.S. businesses are wise to pay attention.  For the first time in years, U.S. companies may realistically contemplate doing business in Myanmar, an opportunity that will fully materialize only once Myanmar is able to reintegrate itself into the international community and convince the United States to lift economic sanctions.  We are closely monitoring the situation in Myanmar and will continue to provide updates.