Interview with David Mortlock, Chair, Government Relations Group, Willkie, Farr & Gallagher, Washington

Interview by Keith W. Rabin

David Mortlock is Chair of Willkie's Government Relations Group in Washington, DC. He advises clients on international trade and government regulation of cross-border transactions, and compliance with U.S. regulations based on foreign policy and national security. David is formerly the Director for International Economic Affairs at the White House National Security Council, in which capacity he advised the President and his National Security Advisor on sanctions, corruption and other international finance and trade issues. He helped lead the interagency process to develop and implement sanctions on Russia as well as changes of sanctions for Iran, Cuba, Syria and Burma. He also developed and coordinated implementation of the U.S. international anticorruption strategy. David also worked at the U.S. Department of State, where he focused on sanctions policy as Deputy Coordinator for Sanctions Policy; Special Assistant to the Under Secretary for Economic Growth, Energy and the Environment; and Attorney-Advisor for Sanctions and Terror Finance. In these roles, he oversaw the creation and implementation of sanctions for Iran, Burma, North Korea and Syria; oversaw economic policy for the Middle East and North Africa; and provided legal guidance for the terrorism finance program.

Hello David, good to speak again, before we begin can you tell us about your background, how you came to focus on sanctions, and your work with Myanmar?

Thanks for the invitation, Keith. It's a pleasure to be speaking with you and KWR readers.

I was involved in implementing and then lifting the sanctions on Myanmar while at the State Department and then the White House. I held a number of positions, including Attorney-Adviser for Sanctions and Terror Finance and Deputy Coordinator for Sanctions Policy at State and then Director for International Economic Affairs at the National Security Council. These roles put me at the center of U.S. sanctions policy, including for Myanmar. The easing of sanctions on Myanmar has been a fascinating process, beginning with the general licenses for new investment and imports, the reporting requirements, and the delisting criteria for Specially Designated Nationals ("SDNs"). I even had the opportunity to meet with a number of SDNs in Yangon to explain how sanctions could be removed.

Source: sagaingfault.info

President Obama lifted economic sanctions on Myanmar on October 7th, some of which have been in place for almost two decades. For those who have not been closely following this issue, can you tell us why sanctions were imposed, their effect on Myanmar and US and foreign businesses, and what led to the decision to reverse these measures?

In response to the Myanmar government's large-scale repression of the democratic opposition, President Clinton first imposed sanctions on Myanmar in 1997, and President Bush gradually expanded the restrictions. Prior to 2012, U.S. persons were prohibited from making new investments in Burma, importing goods of Burmese origin, or engaging in any transaction in which an SDN or their companies had any interest.

Beginning in 2012, after the Burmese government released Aung San Suu Kyi from house arrest and instituted a number of political reforms, Treasury's Office of Foreign Assets Control ("OFAC") issued a number of general licenses that gradually liberalized permissible U.S. trade with Myanmar. However, U.S. companies still found it difficult to do business in Myanmar, primarily because numerous prominent businessmen and the military's business wings remained on the SDN list. These SDNs controlled a significant portion of the Burmese economy, which remained largely off-limits to U.S. companies. Furthermore, U.S. persons were subject to mandatory reporting requirements for new investments in Myanmar over $500,000 and could not import rubies and jadeite of U.S. origin.

Source: KWR International

So where does this leave us now? Can you explain the extent of the measures that have been reversed and what restrictions remain in place?

All of the limitations I describe above are now lifted as of October 7th. U.S. persons may now do business with those Myanmar businessmen removed from the SDN list and their companies, engage with the military, and import goods from Myanmar. However, Myanmar remains subject to an arms embargo, and companies operating in Myanmar should remain cautious about anti-bribery and anti-money laundering regulations. Nonetheless, the vast majority of business in Myanmar is now permitted for U.S. persons.

While it seemed clear there would be a progressive relaxation over time, many people were surprised at the scope and scale of this action. Can you give any insight into why a gradual approach was abandoned after so many years of slow incremental movement and we have now seen almost a complete reversal of these measures?

The Administration eased sanctions gradually over the course of the last four years as the Myanmar government made incremental progress towards an open society and fair elections. The success of Aung San Sui Kyi's NLD party in the 2015 election, peaceful transition earlier this year, and her elevation as de facto leader of the country, was clearly a watershed moment. It would have been hard to resist the request of the democratically-elected leader of the country to lift the sanctions, and I expect the Administration was happy to put an exclamation point on its efforts to support the country's incredible transition over the last few years.

Source: KWR International

Further, we have seen far less criticism of the rollback from Congress, NGO's and others who had been proponents than might have been expected. Any thoughts on why this was the case?

All of those fighting for democratic reform in Myanmar have seen the same dramatic transition since 2012. While there is still much to do in Myanmar to support ethnic reconciliation, further constitutional changes and economic reform, sanctions were no longer the right tool to pressure a friendly and democratically-elected government.

View of Yangon Harbor Source: KWR International

So now that President Obama has taken these actions, does the reversal take effect immediately? What effect do you think it will have on US and other businesses moving forward in respect to both those already operating in, or those considering entry into, Myanmar?

The sanctions are removed immediately, with the President's lifting of the national emergency on October 7th. Companies already operating in Myanmar will see their compliance costs go down, and companies who haven't yet explored the market are likely to give the country a second look. Companies still face some challenges in doing business in Myanmar, including corruption and money-laundering risks. Nonetheless, the sanctions remove a good deal of the stigma and complexity of doing business in the country.

Source: KWR International

More specifically, can you talk about the effect of these developments on banking and financial services? How about other industries?

Banking and financial relationships with Myanmar will continue to grow, but will continue to grow slowly. While U.S. banks have been authorized by general license to enter into correspondent relationships with certain banks in Myanmar, none have chosen to do so. One reason has been the presence of SDNs and their companies, but another reason has been the lack of internationally-accepted standards for anti-money laundering and regulation. Myanmar remained on the Financial Action Task Force ("FATF") "blacklist" until June of this year.

Indeed, for the financial industry, the upgrade by FATF may be an even more significant event, and the more important reason to take a look at expanding contacts in Myanmar, than the lifting of sanctions.

Launch Ceremony of Yangon Stock Exchange Source: Auerbach Grayson

Over the years there has been a small cottage industry of advisors, attorneys and former government officials who have been focused on these sanctions and to support individuals seeking to get their names off the Specially-Designated Nationals (SDN) list. Now that this work has largely been done how does the nature of their practice and work change?

I expect companies will need expertise now more than ever to navigate the accessible, but relatively opaque economy in Myanmar, and to make connections with the individuals and companies who have been off limits to U.S. companies for many years. Companies also will need help ensuring they remain compliant with anti-bribery and anti-money laundering requirements as they expand into the country. And for those of us focused on sanctions around the world, companies continue to implement policies and procedures to comply with the remaining two dozen sanctions programs that impact business outside the United States.

Thank you David for your time and attention. Before we conclude is there anything else you would like to note to our readers?

Thanks for the opportunity to speak with you and your readers. I look forward to speaking in the future as Myanmar continues its fascinating transition.

Entrance to Shwedagon Pagoda Source: KWR International

This interview is part of an ongoing series highlighting Asia-related business, trade and investment opportunities and issues.

For more information, please visit http://www.kwrintl.com