On January 27, 2016, the U.S. government continued its efforts to ease trade restrictions on Cuba through amendments to the regulations administered by the U.S. Department of the Treasury, Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce, Bureau of Industry and Security ("BIS"). Although the amendments represent further implementation of President Barack Obama’s December 2014 announcement of a shift in policy toward Cuba, the U.S. embargo on Cuba, which generally prohibits U.S. companies (as well as their non-U.S. subsidiaries) from engaging in business with Cuba, remains in place. Below is a brief discussion of some of the more notable changes to the Cuba sanctions program resulting from the most recent amendments.
Financing. The amendments remove financing restrictions for most types of authorized exports and reexports to Cuba. As a result, U.S. financial institutions are now authorized to finance such transactions, with the exception of exports and reexports of agricultural commodities and items to Cuba. Permissible payment and financing terms include payment of cash in advance, sales on an open account, and financing by third-country or U.S. financial institutions, including letters of credit. Limitations on payment and financing terms for agricultural commodities and items remain in place.
Exports. As a result of the amendments, BIS will now generally approve the following types of license applications.
- Telecommunications. Exports and reexports of telecommunications items that would improve communications to, from, or among the Cuban people;
- Strengthening Civil Society. Exports and reexports of commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society;
- News Bureaus. Exports and reexports of commodities and software to U.S. news bureaus in Cuba whose primary purpose is to gather and disseminate news to the general public;
- Agricultural Items. Exports and reexports of certain agricultural items, including insecticides, pesticides, and herbicides, as well as those not eligible for a license exception;
- Aviation Safety. Exports and reexports of items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export and reexport of such aircraft leased to state-owned enterprises; and
- Environmental Protection. Exports and reexports of items necessary for the environmental protection of U.S. and international air quality, waters, or coastlines (including items related to renewable energy or energy efficiency).
In addition, BIS has established a case-by-case licensing review policy for exports and reexports of items to meet the needs of the Cuban people, including those made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people. Eligible exports and reexports 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 and public transportation;
- wholesale and retail distribution for domestic consumption by the Cuban people; and
- construction of facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people.
However, BIS’s general policy of denial still applies to exports and reexports of items for use by state-owned enterprises, agencies, or other organizations of the Cuban government that primarily generate revenue for the state, including those in the tourism industry and those engaged in the extraction or production of minerals or other raw materials. Also, applications to export or reexport items to the Cuban military, police, intelligence, and security services generally will be denied.
The amendments also authorize travel-related and other transactions directly incident to market research, commercial marketing, sales or contract negotiation, accompanied delivery, installation, leasing, or servicing in Cuba of items consistent with BIS’s new licensing policy. Any individual traveling for these purposes must maintain a full-time schedule without excess recreation or free-time.
Carrier Services. To further facilitate travel to Cuba for authorized purposes, the amendments authorize entry into blocked space, code-sharing, and leasing arrangements with Cuban airlines and Cuban nationals. The amendments also authorize travel-related and other transactions incident to the facilitation of the temporary sojourn of aircraft and vessels as authorized by BIS for travel between the United States and Cuba, including by certain personnel required for normal operation and service on board a vessel or aircraft or to provide services to a vessel in port or aircraft on the ground.
Travel. The amendments also expand authorizations in existing travel categories to facilitate travel to Cuba for additional purposes, including the following:
- Information and Informational Materials. The amendments authorize travel-related and other transactions incident to professional media or artistic productions of information and 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 regularly employed in, or who have demonstrated professional experience in, a field relevant to such professional media or in artistic productions. Also, the amendments expand an existing general license to authorize transactions incident to the creation, dissemination, and artistic or other substantive alteration or enhancement of informational materials.
- Professional Meetings. The amendments authorize travel-related and other transactions incident to the organization of professional meetings and conferences in Cuba. The existing general license only authorized attendance at professional meetings and conferences in Cuba.
- Public Performances, Clinics, Workshops, Athletic, and Other Competitions and Exhibitions. The amendments authorize travel-related and other transactions incident to the organization of amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. The amendments also removed the requirements as to certain events that all U.S. profits be donated to an independent nongovernmental organization in Cuba or a U.S.-based charity and that workshops and clinics be organized and run by the authorized traveler.
- Humanitarian Projects. The amendments added disaster response and preparedness to the list of authorized humanitarian projects.
Any individual traveling for these purposes must maintain a full-time schedule without excess recreation or free time.