On December 17, 2014, President Obama announced that the United States would be setting a new course in U.S. relations with Cuba by easing some of the trade and travel restrictions which have been in place for over fifty (50) years. President Obama stated that the policy of isolating Cuba has failed to accomplish the long term objective of promoting the emergence of a democratic Cuba, stating that doing the same thing and expecting a different result is no good for the American or Cuban people. The main goal in lifting some of the restrictions is purported to focus on improving human rights, empowering democratic reforms, and promoting the independence of the Cuban people so that they do not need to rely so heavily on the Cuban state. As a result of President Obama’s announcement, on January 16, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) amended the Cuban Assets Control Regulations (31 CFR section 515) and the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) amended the Export Administrations Regulations (15 CFR sections 736, 740, 746, and 748) to implement the policy change by significantly loosening export and travel restrictions to Cuba.
The U.S. embargo against Cuba was first implemented by the U.S. Department of the Treasury and the U.S. Department of Commerce in 1963 through a series of regulations which prohibited U.S. persons from dealing in any property in which Cuba or a Cuban national had an interest, imposed a total freeze on Cuban assets and financial dealings with Cuba, and prohibited Americans from traveling to Cuba without a specific license permitting their travel for an approved purpose included in one of twelve (12) delineated categories of authorized travelers. All exports to Cuba also required a specific license, making it virtually impossible to provide goods to the country.
The amendments outlined by the U.S. Department of the Treasury and the U.S. Department of Commerce do not completely eliminate the embargo against Cuba, but rather serve to ease several restrictions that have been in place. Specifically, the amendments are meant to more easily facilitate travel to Cuba for authorized persons, raise the limit on remittances to Cuba, allows U.S. financial institutions to open correspondent accounts at Cuban financial institutions, and initiate new efforts to increase Cubans’ access to telecommunications equipment.
The greatest impact on individuals relates to the ability to more freely travel to Cuba without the requirement to obtain a specific license for each entry to Cuba. From now on, general licenses will be made available to authorized travelers in one of twelve (12) categories; (1) family visits; (2) official business of the US government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, worships, athletic and other competitions and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or education institutions; (11) exportation, importation, or transmission of information or informational materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines. Travel by tourists to Cuba is still restricted.
Under the former regulations, U.S. persons were only allowed to remit US $500.00 to assist Cuban nationals per quarter. With the new amendments in place, U.S. persons are now allowed to provide a remittance of US $2,000.00 on a quarterly basis for general donative remittances to Cuban nationals. Further, donative remittances for humanitarian projects, support for the Cuban people and support for the development of private businesses in Cuba will no longer require a specific license to move forward. Eliminating the requirements for a specific license to engage in these transactions are meant to help to empower the Cuban people to fight for democracy.
The new regulations will also have a substantial impact on American business dealings with Cuba. The BIS will now permit American companies to export telephones, computers, and internet technology to Cuba and send these supplies to private Cuban firms. The ability to export telecommunications equipment will likely have the greatest impact on the Cuban economy by providing additional ways to communication and trade with the world through the use of this new equipment. Though export licenses will generally still be required, a new exception to the export license requirement has been added to allow the exports of goods that generally support the Cuban people. Wide ranges of goods will likely fall into this category and allow for the export of a large amount of new goods to the Cuban people.
The new OFAC regulations also make significant changes to the shipping sector by creating new exceptions to the “180 day rule” set forth in 31 CFR section 515.207, which bars vessels from the U.S. for 180 days after calling Cuba to engage in the trade of goods or the purchase or provision of services. I have previously blogged on this restriction. The new regulation (31 CFR section 515.550) provides for the following exceptions from the vessel ban as follows; (i) shipment of cargoes exported under Commerce Department authorization including agricultural, medical, telecommunications, and other permitted goods; (ii) carriage of students, faculty, and staff that are authorized to travel to Cuba; and (iii) vessels engaged in the exportation or re-exportation to Cuba from a third country of most agricultural commodities, medicine, or medical devices. The Department of Commerce’s rules still do not allow vessels to depart the U.S. for Cuba without an export license. Although vessels that have traded in Cuba now will not have to wait 180 days before heading to the U.S., a vessel wanting to travel from the U.S. to Cuba is still going to need an export license to do so.
The steps taken by President Obama, the U.S. Department of the Treasury and the U.S. Department of Commerce are essential to help improve the lives of the Cuban people and in normalizing the relationship between the U.S. and Cuba, however, until the U.S. Congress takes formal action to fully normalize relations with Cuba many restrictions still remain in place. Before engaging in any activities with Cuba, individuals and business should give careful consideration to the new regulations to ensure compliance.
A copy of the White House Fact Sheet on these new policies is available at the following website:
White House Fact Sheet
A copy of the Amendments to Cuban Assets Control Regulations issued by the U.S. Department of the Treasury’s Office of Foreign Assets Controls is available at the following website:
OFAC Amendments
A copy of the Amendments to the Export Administration Regulations issued by the U.S. Department of Commerce is available at the following website:
BIS Amendments
For more information on these new regulations and how it may apply to specific facts and circumstances, please do not hesitate to contact me at mov@chaloslaw.com.
