U.S. Restrictions on Travel to and Trade With Cuba Return

Effective November 9, 2017, new regulations took effect limiting U.S. travel and trade with Cuba. 

Decades ago, the United States imposed a commercial embargo on Cuba. The embargo existed in one form or another until 2015, when the United States eased some of its restrictions on trade and travel. Then, on June 16, 2017, President Trump signed the National Security Presidential Memorandum (NSPM) on Strengthening the Policy of the United States Toward Cuba. In accordance with the NSPM, the U.S. Department of State has now published a list of restricted entities associated with Cuba. The list names entities with which direct financial transactions will “generally be prohibited” under the Cuban Assets Control Regulations. The entities on the list are those that are “under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.” Numerous hotels and tourism agencies, as well as retail shops popular with tourists, are included on the list. As a result, U.S. citizens will again have to travel as part of a group that is accompanied by a group representative and licensed by the U.S. Department of the Treasury.

The new restrictions will not impact certain existing transactions. Contracts that were in place and travel arrangements that were made prior to the new rule taking effect may move forward.

This post was written by Natalie L. McEwan of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.,© 2017
For more Antitrust Law legal analysis, go to The National Law Review 

U.S. Implements President Trump’s Cuba Policy

On Nov. 8, 2017, the U.S. Government announced new regulations in furtherance of the Trump Administration’s policy regarding Cuba.

In June 2017, President Trump published his National Security Presidential Memorandum “Strengthening the Policy of the United States Toward Cuba” (NSPM), which announced modification of U.S. policy with respect to Cuba to target the Cuban military, intelligence, and security agencies.  In the NSPM, President Trump emphasized the need to promote the flow of economic benefits to the Cuban people, rather than to its military.  The NSPM further directed the Commerce, State, and Treasury Departments to take various actions implementing the new policy.

Accordingly, regulations were released this week by the U.S. Department of State, Department of Treasury’s Office of Foreign Assets Control (OFAC), and Department of Commerce’s Bureau of Industry and Security (BIS) to implement the NSPM, and clarify the limitations imposed on U.S. persons wishing to travel to or do business in Cuba.

This post was written by Sonali Dohale, Kara M. BombachYosbel A. Ibarra & Carl A. Fornaris of Greenberg Traurig, LLP. All rights reserved.,©2017
For more Antitrust legal analysis, go to The National Law Review 

EU Adopts New Sanctions on North Korea

On 16 October, the Foreign Affairs Council adopted new EU autonomous measures reinforcing the sanctions on North Korea imposed by the UN Security Council, effective immediately. They include a total ban on EU investment in North Korea across all sectors, whereas previously the ban related to certain sectors, such as the arms industry and chemical industries. Also, there is a total ban on the sale of refined petroleum products and crude oil. The amount of personal remittances to North Korea has been lowered from €15,000 to €5,000 in light of suspicions that they are being used in support of nuclear and ballistic missile programmes. In addition, three persons and six entities were added to the list of those subject to an asset freeze and travel restrictions.

This post was written by International Trade Practice at Squire Patton Boggs of Squire Patton Boggs (US) LLP., © Copyright 2017
For more Antitrust Law legal analysis, go to The National Law Review

Brexit: Limiting the Damage

It is one of the ironies of history that the EU as it is today, starting with the single market, was largely made in Britain, the achievement, above all, of former prime minister Margaret Thatcher and her right-hand man in Brussels, the then Commissioner (Lord) Arthur Cockfield. The single market has long been viewed by observers in countries with less of a free market tradition as a typically British liberal invention. And yet it is this market, as well as the EU itself, that another Conservative government is now seeking to leave.

Britain has also left its stamp on key EU initiatives from regional policy to development assistance and fisheries. The EU’s interest in a common foreign and security policy originally stemmed from Britain. The EU’s comparatively transparent and accountable administrative rules date from the reforms introduced by former British Labour Party leader Neil Kinnock when he was Vice-President of the European Commission from 1999 to 2004. Thus, representatives of Britain’s two major parties have helped to make the EU what it is today.

If British prime ministers had explained to public opinion earlier the extent of their country’s influence on the EU, something that other Europeans never doubted, the referendum of 23 June 2016 might never have occurred.

A “Smooth and Sensible” Brexit

Be that as it may, Europeans on both sides of the English Channel are now grappling with the consequences of that vote. If reason and economic interest prevail, a “smooth and sensible” Brexit, as evoked by the British prime minister in Florence in September, might yet emerge.

This would involve a broad agreement, in 2017, on the principal aspects of the divorce settlement. This concerns mainly Britain’s financial commitments to the EU, the residence, professional and health rights of citizens living on both sides of the Channel after Brexit, and the need to maintain the Common Travel Area between Britain and Ireland and to avoid a hard border across the island of Ireland after Brexit. While Brussels, London and Dublin have affirmed their intention of achieving these goals, there are many practical and political issues to resolve.

If sufficient confidence and trust between EU and UK negotiators is established, it should also be possible to agree to the general terms of a future political and economic agreement between London and Brussels by the end of the year and to broach the question of transitional arrangements to smooth the way for government and business. The British government wishes to ensure that business need adjust to Brexit only once, hence the need for a smooth transition to a well-defined future relationship.

If good progress is made next year, the separation agreement and transitional arrangements could be drawn up by October 2018, allowing enough time for approval by EU and British institutions ahead of Britain’s exit from the EU at midnight between 29 and 30 October 2019. Little, except Britain’s lost vote in EU institutions, would then change for the next two to three years, as the UK continued to make payments to the EU budget, respect judgements of the European Court of Justice and accept the free movement of labour.

The breathing space would be used to negotiate, sign and ratify a two-part long-term agreement. The first part would cover trade and economic issues; it could take effect provisionally relatively quickly after agreement had been reached. The second part, though, would be a wide-ranging political agreement, involving security and even aspects of defence. Both sides have an interest in cooperation on armaments production and unconventional forms of conflict, as well as police and judicial affairs. This would involve the member states’ legal responsibilities and require ratification by all twenty-eight countries concerned. It might not come into effect before the mid-late 2020s.

This relatively benign sequence of events assumes that the British government is unified behind its negotiator, David Davies, and that the political situation in Britain and the EU remains generally stable. It also assumes that the EU can move beyond its rigid two-stage sequencing of the negotiations.

However, there may well be political upsets, involving a leadership competition in the Conservative Party and, perhaps, an early general election. The opposition Labour Party may come to power bringing a change in priorities but also differences of opinion in its own ranks. The British economy will be damaged by Brexit, according to leading economists, and public opinion is likely to react when this is widely felt.[1]Until now, the main impact has been a decline in sterling and rising inflation, raising the prospect of higher interest rates.

The “Cliff Edge” Scenario

Such uncertainties, as well as the divergent political agendas of London and Brussels, may make the smooth and sensible Brexit impossible to achieve during the limited time available. This opens the way to a second scenario, widely described in Britain as the cliff edge. Under this hypothesis, the December 2017 goal for achieving a breakthrough in the separation talks is missed. This further postpones discussion of transitional arrangements and a future long-term agreement.

Negotiations continue fitfully during 2018 but the two sides are too far apart to reach agreement by October 2018, which the EU chief negotiator, Michel Barnier, has designated as the effective deadline. If October passes without an overall agreement, it will probably be too late to secure the agreement of the European Parliament before 29 March 2019, when the two-year negotiating period initiated by the British government’s notification of withdrawal expires. Nonetheless, negotiations might well go down to the wire.

Unless all twenty-eight countries “stop the clock” at midnight, an old Brussels ruse, the UK would then leave the EU without an agreement. Business leaders have warned of the chaos this will bring. There will be an unmanageable fivefold increase in work at British, Irish and mainland European ports checking consignments, the suspension of air travel between the UK and the EU, pending the conclusion of a new air transport agreement, and other major disruptions.

Health, safety, veterinary and phytosanitary inspections, as well as the assessment of customs duties, would lead to long queues of lorries at ports on both sides of the channel. Neither side can build the necessary infrastructure and linked IT systems or recruit sufficient qualified staff in time to cope with dramatically increased requirements after a hard Brexit. Supply chains would be disrupted and many foreign-owned companies, which had not already relocated to remaining EU countries, would seek to do so rapidly.

The political and economic damage of going over the cliff edge would last for years and embitter the UK’s relations with the EU and third countries. Many would question the value of Britain’s WTO commitments in the absence of appropriate trading arrangements between Britain and the EU.

This then is a sketch of the cliff edge. Those who admire Britain for its pragmatism, fairness and common sense find it hard to believe that such a scenario might become reality. Surely, they say, Britain and the EU are involved in preliminary skirmishing of the type that precedes any negotiation. They are sure to come to their senses as the decisive deadlines approach. Nothing is less than certain.

A Tale of “Downside” Risks

The outcome may well diverge from either the optimistic or the pessimistic scenarios delineated above. However, the risks are mainly “downside” as the economists put it. British negotiators have not yet grasped the fundamentally asymmetric nature of negotiations between twenty-seven countries backed by European institutions on the one side and a single country seeking to leave the club on the other. It would be better for government, business and the public, if this reality were more widely recognized, leading to realistic negotiating targets. Indeed, Brexit is not really a negotiation at all in the usual sense. It is rather an effort by the leaving country to secure some exceptions from the club’s rules at the time of its departure. This is much akin to the efforts of a candidate (joining) country to achieve some, temporary, transitional exceptions to the EU’s rules.

The Brexit talks are essentially an exercise in damage limitation, mainly through transitional arrangements. When the divorce and transitional arrangements have been agreed, Britain and the EU can concentrate on negotiating a long-term partnership which will be in their mutual interest.

This post was written by Michael Leigh of Covington & Burling LLP., © 2017
For more Global legal analysis, go to The National Law Review

US Attorney General Jefferson Sessions Issues New Guidance On Transgender Employees

Yesterday, U.S. Attorney General Jefferson Sessions issued new guidance reversing the federal government’s former position that gender identity is protected under Title VII.

In a memo sent to the heads of all federal agencies and the U.S. attorneys, the attorney general stated that as a matter of law, “Title VII does not prohibit discrimination based on gender identity per se.” The memorandum further stated the DOJ will take the position in all pending and future matters that Title VII does not protect against discrimination on the basis of gender identity or transgender status.

Sessions’ memo explains Title VII expressly prohibits discrimination on the basis of sex but makes no reference to gender, and that courts have interpreted “sex” to mean biologically male or female. Sessions concluded employers may differentiate on the basis of sex in employment practices, so long as the practices do not expose members of one sex to disadvantageous terms or conditions of employment to which the other sex is not exposed. The memo highlighted sex-specific bathrooms as such an example. Sessions explained while Title VII prohibits “sex-stereotypes,” insofar as that sort of sex-based consideration causes disparate treatment between men and women, Title VII is not properly construed to proscribe employment practices that take into account the sex of employees, but do not impose different burdens on similarly situated members of each sex.

This guidance reverses and withdraws previous guidance by Attorney General Eric Holder in a December 15, 2014 memorandum in which Holder stated Title VII prohibits employers from using “sex-based considerations,” such as gender identity, in employment decisions. Sessions’ memo also runs contrary to the current position of the U.S. Equal Employment Opportunity Commission, which treats discrimination against an employee on the basis of gender identity, including transgender status and sexual orientation, as violations of Title VII.

Currently, there is a split of authority in the courts on whether sex discrimination under Title VII includes discrimination on the basis of gender identity and sex stereotyping, and thus prohibits discrimination against transgender individuals. The U.S. Supreme Court will likely have to resolve the issue in the future, but may issue some relevant guidance this term in the Gloucester County School Board v. G.G. case (involving issues of a school district’s obligations to a transgender student).

While it is now the position of the Department of Justice that Title VII protections do not extend to transgender individuals, employers should still be careful to avoid discrimination on the basis of gender identity, as the law is still unsettled. As Attorney General Sessions’ memorandum notes, there are still federal statutes that prohibit discrimination against transgender persons, and states and localities may have additional protections. Moreover, the EEOC could still bring suit against employers who engage in transgender discrimination.

This post was written by Allison L. Goico & Hayley Geiler of Dinsmore & Shohl LLP. All rights reserved., © 2017
For more Labor & Employment legal analysis, go to The National Law Review

President Trump Shifts the U.S. Policy Towards Cuba

As we have previously reported on the growing fear that the Trump Administration would roll back President Barack Obama’s plan to normalize relations with Cuba. Then-candidate Donald Trump was calling President Obama’s deals with Cuba “one-sided” and beneficial “only [to] the Castro regime.” Last week Friday, at an event at the Manuel Artime Theater in Miami, President Trump officially announced his Administration’s new public policy towards Cuba and fulfilled a campaign promise.

Cuban FlagPresident Trump’s speech culminated in the issuance of a National Security Presidential Memorandum and an accompanying White House Fact Sheet on the U.S. Policy toward Cuba.  In sum, President Trump’s directive:

(a)  Ends economic practices that “benefit the Cuban government” by prohibiting most economic activities with the Cuban military conglomerate, Grupo de Administración Empresarial (“GAESA”). This change is most likely to affect the hotel and tourism industry sectors, since these are the industries said to be largely controlled by GAESA. A list of companies that will be on the “blacklist” will be issued by the State Department at a later date.

(b)   Adheres “to the statutory ban on tourism to Cuba,” by amending regulations related to educational travel (i.e., by ending individual people-to-people travel) and enforcing the strict record keeping requirements related to travel to Cuba.

(c)   Opposes any efforts in the United Nations or other international forums to lift the embargo on Cuba.

(d)   Supports the expansion of internet services and free press in Cuba by convening a task force that will work with non-governmental organizations and private sector entities to examine the challenges and opportunities in those areas.

(e)  Keeps in place the Obama Administration’s elimination of the “Wet Foot, Dry Foot” policy.

(f)  Ensures that engagement with Cuba in general is advancing the interests of the United States.

As explained in the new FAQs issued by the U.S. Department of the Treasury, the policy changes will not go into effect until the Treasury Department and the U.S. Department of Commerce have finalized their new regulations. Importantly, the new Cuba policy changes will not have retro-active effect. Those travel arrangements and commercial engagements that were in place prior to the issuance of the upcoming regulations will not be affected.

Al Cardenas, who heads the Latin America practice group at Squire Patton Boggs and previously served as the former Chairman of American Conservative Union and former Chairman of the Florida GOP, explains:  “Despite the emotional setting and rightful remembrance of the struggles of the Cuban people found in President Trump’s speech, which was focused on a Cuban exile audience, President Trump’s executive action preserves many of the changes made during President Obama’s Administration (some of which were outlined in President Obama’s 2014 Speech). For example, the respective embassies in Washington and Havana will remain open, the U.S. licenses issued to airlines and cruise line companies have been kept, efforts to expand direct telecommunications and internet access will continue, and the additional categories for travel to Cuba for the most part remain in place. While one-step back is the prohibition on U.S. travelers from staying at government-owed facilities, this should be a boon to the family-owned B&B’s and other rentals on the island. It remains to be seen whether there will be a significant drop off in tourist travel to the island.”

Viewed as a whole, President Trump is tightening some areas where improved economic relations with the United States could have benefitted some auspices of the Cuban Government.

This post was written by Beatriz E. Jaramillo and  Stacy A. Swanson of Squire Patton Boggs (US) LLP.

President Trump Announces Withdrawal from Paris Agreement on Climate Change

President Trump announced on Thursday his intention to initiate a formal withdrawal of the United States from the Paris Agreement, a global agreement designed to address climate change by reducing greenhouse gas (“GHG”) emissions. The President indicated that the United States would move forward with the pull-out and possibly attempt to re-negotiate the agreement in order to get “terms that are fair to the United States.”  President Trump frequently discussed pulling out of the Paris Agreement while on the campaign trail, citing concerns regarding its potential impact on the American economy, particularly the energy sector.

While the President’s intentions are clear, the path forward is less obvious. The U.S. cannot immediately exit the Paris Agreement and several nations, including Germany, France, and Italy, announced in a joint statement that “that the Paris Agreement cannot be renegotiated.”  In addition to announcing withdrawal from the Paris Agreement, President Trump also indicated that the U.S. would immediately halt the remaining $2 billion of the $3 billion in aid to developing countries pledged by President Obama as a part of the Green Climate Fund, which also is a component of the UNFCCC.

The Paris Agreement’s formal processes does not allow for a notice of withdrawal to be submitted until November 4, 2019, after which it will take one year for such notice to become effective. Assuming adherence to this process, the earliest the U.S. can formally withdraw from the Paris Agreement is November 5, 2020, one day after the next presidential election.  Because the Agreement’s only binding obligations are certain reporting requirements, the withdrawal is viewed by some as a symbolic gesture, since any federal GHG reduction measures resulting from the Paris Agreement would still need to be pursued through domestic legislation or regulatory action.  As a practical matter, irrespective of the Paris Agreement the administration can—and likely will—take steps to alter federal climate change policy.

Paris Agreement Background

The Paris Agreement builds on the United Nations Framework Convention on Climate Change (UNFCCC), a treaty signed by President George H. W. Bush and ratified by the United States Senate in 1992. The Paris Agreement was adopted in December 2015 as part of the twenty-first session of the Conference of the Parties (COP21) to the UNFCCC.  Following its initial adoption, President Obama ratified the Paris Agreement as an “executive agreement” on September 3, 2016.  The Paris Agreement was ultimately signed by 195 parties, ratified by 146 nations and the European Union, and entered into force on November 4, 2016.

The Paris Agreement directs signatory nations to develop voluntary GHG reduction measures, known as “Intended Nationally Determined Contributions,” which convert to “Nationally Determined Contributions” (NDCs) after a nation ratifies the Paris Agreement.  The Paris Agreement further provides for periodic updates to NDCs in order to continually “enhance” emission reductions targets.  The Paris Agreement’s only binding provisions are reporting obligations largely governed by the UNFCCC and “global stocktakes” that occur every five years.  These reporting measures were designed to help track total carbon emissions and progress towards meeting each NDC.  However, actual attainment of an NDC is voluntary and the Paris Agreement has no legally binding enforcement mechanism. The Paris Agreement also directs wealthier nations to help developing nations reduce GHG emissions and adapt to the impacts of climate change, but again these actions would be taken on a voluntary basis.

What happens next?

The UNFCCC made a formal statement in response to President Trump’s announcement that it “regrets” the decision of the United States to withdraw from the Paris Agreement, and that it remains open to discussion of the rules and modalities currently being negotiated for implementation of the Paris Agreement.  At the same time, the UNFCCC stated that the Paris Agreement has been “signed by 195 Parties and ratified by 146 countries plus the European Union [and] cannot be renegotiated based on the request of a single Party.”  Based on this statement and similar statements from France, Germany, Italy, and other nations, it appears that any near-term renegotiation of the Paris Agreement is unlikely.

Regardless of whether the United States is a party to the Paris Agreement, multinational corporations will still be subject to GHG reduction programs in other nations as those nations attempt to fulfill their NDCs. In addition, France and other nations have indicated the possibility of imposing a carbon tax on American imports from certain industries if the United States does formally withdraw from the Paris Agreement.

Under the Paris Agreement, the United States established its NDC as a goal of reducing GHG emissions 26-28 percent below 2005 levels, by 2025, and to make “best efforts” to reduce emissions by 28 percent. It is important to note that the U.S. is in the first sustained period where greenhouse gas emissions have decreased while economic growth has increased, largely the result of increased reliance on natural gas, improved vehicle fuel economy, state and regional GHG programs, and growth in renewable energy.  These factors are likely to persist even if the U.S. leaves the Paris Agreement.  And even in the absence of U.S. commitments under the Paris Agreement or additional federal action, U.S. GHG emissions are expected to decline by about 15-18 percent below 2005 levels by 2025.

The federal Clean Power Plan was one measure that was expected to further reduce U.S. GHG emissions. However, that program is subject to ongoing legal challenges and has been stayed by the U.S. Supreme Court.  There also are various lawsuits underway seeking to compel the federal government to take action on climate change. See e.g., Juliana v. United States, No. 6:15-cv-01517-TC (D. Or. Nov. 10, 2016).   Apart from litigation, the Trump Administration has indicated a willingness to modify the Clean Power Plan (should it be upheld) and reconsider other federal regulations and programs directed at GHG emissions and climate change, such as motor vehicle emissions standards.  These processes will take time to play out and, in combination with ongoing state-level programs, will ultimately determine the course of climate change policy in the United States for the remainder of the Trump Administration.

This post was written by Brook J. Detterman, Leah A. Dundon and Kristin H. Gladd of Beveridge & Diamond PC.