On January 25, 2016, the US Treasury Department’s Office of Foreign Assets Control (OFAC) and the US Commerce Department’s Bureau of Industry and Security (BIS) announced new changes to existing US sanctions on Cuba, including OFAC’s Cuban Assets Control Regulations (CACR) and BIS’s Export Administration Regulations (EAR). These changes expand allowable financing for certain authorized exports, allow more flexibility in a number of sectors to export to Cuba, permit air carriers to serve customers in Cuba and further liberalize travel rules. These new regulatory changes may constitute the most that President Obama can do to liberalize trade and travel with Cuba in the absence of congressional legislation to lift the embargo in whole or in part.
Authorized Export Transactions
Amendments to the CACR and EAR to increase support for the Cuban people and facilitate authorized exports include the following:
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The CACR have been amended to remove financing restrictions for most types of authorized non-agricultural exports. (OFAC is required by statute to maintain the existing limitations on payment and financing terms for the export and reexport of agricultural commodities and agricultural items). Permissible payment and financing terms for authorized non-agricultural exports and reexports now include payment of cash in advance, sales on open account, and financing by third-country financial institutions or US financial institutions.
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OFAC expanded an existing general license to authorize certain additional travel-related transactions directly related to market research, commercial marketing, sales or contract negotiation, accompanied delivery, installation, leasing, or servicing in Cuba of items consistent with the export or reexport licensing policy of the Department of Commerce, provided that the traveler’s schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule.
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BIS now will generally approve license applications for exports and reexports of telecommunications items that would improve communications to, from, and among the Cuban people; certain agricultural items not eligible for a license exception, including insecticides, pesticides, and herbicides; and items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation.
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BIS ended its policy of denial and now will consider on a case-by-case basis license applications for exports and reexports of items to meet the needs of the Cuban people, including exports and reexports for such purposes made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people. Exports and reexports eligible for this licensing policy include items for: agricultural production; artistic endeavors (including the creation of public content, historic and cultural works and preservation); education; food processing; disaster preparedness, relief and response; public health and sanitation; residential construction and renovation; public transportation; and the construction of infrastructure that directly benefits the Cuban people (e.g., facilities for treating public water supplies and supplying energy to the general public).
Travel
OFAC has expanded several existing allowable travel categories to facilitate travel to Cuba, including the following:
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OFAC will authorize travel-related and other transactions directly incident to professional media or artistic productions of information or informational materials for exportation, importation, or transmission, including the filming or production of media programs (such as movies and television programs), music recordings, and the creation of artworks in Cuba by persons that are regularly employed in or have demonstrated professional experience in a field relevant to such professional media or artistic productions.
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OFAC is expanding the general license for travel-related and other transactions to organize professional meetings or conferences in Cuba. The existing general license authorized only attendance at such meetings or conferences.
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OFAC is authorizing by general license travel-related and other transactions to organize amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC is also removing requirements that US profits from certain events must be donated to certain organizations and that certain events be run at least in part by US travelers.
Conclusion
These changes to the regulations offer important changes and will allow for additional market opportunities for US businesses looking to enter the Cuba market. Still, the embargo is in place, and US companies should proceed with caution to ensure full compliance with all existing US and Cuban laws.
© 2016 McDermott Will & Emery
