On January 16, 2015, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a final rule amending the Cuban Assets Control Regulations to implement policy changes announced by President Obama a month earlier. The amendments eased travel to Cuba for authorized purposes, raise limits on certain remittances, allow U.S. financial institutions to open correspondent accounts in Cuba to facilitate the processing of authorized transactions, and allow a number of other activities related to, among other areas, telecommunications, financial services, trade, and shipping.
This month, on April 15, 2015, the President dropped Cuba from the list of state sponsors of terrorism which, to occur, must be preceded by a 45-day notice required under the three acts that provide the basis for the list: § 6(j)(4)(A)(i)-(iii) of the Export Administration Act of 1979; § 40(f)(1)(A)(i)-(iii) of the Arms Export Control Act; and § 620A(c)(1)(A)-(C) of the Foreign Assistance Act of 1961. That leaves only Syria, Sudan, and Iran in the club and one surmises that the annual state sponsor of terrorism bridge tournament will be placed on hiatus until a fourth designee has been named.
Not quite yet. The embargo remains in place and most transactions between the United States, or persons subject to U.S. jurisdiction, and Cuba are still prohibited. That said, the Department of Commerce has clarified that, for the purposes of 15 C.F.R. § 740.21, some trade with the Cuban private sector (private individuals and groups as enterprises for profit as well as non-profit organizations and charities) is now permissible.
Under a new license exception, U.S. persons may now sell the following to the Cuban private sector without obtaining a license:
- building materials, equipment, and tools for use in the construction or renovation of privately-owned buildings, including privately-owned residences, businesses, places of worship, and buildings for private sector social or recreational use;
- tools and equipment for agricultural activity; and
- tools, equipment, supplies, and instruments for use by entrepreneurs.
What’s crucial here is that the end user is the private sector and that all eligible items are designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism reasons. License exception SCP also permits the sale of certain items to Cuban government owned, operated or controlled companies and corporations for telecommunications infrastructure creation and upgrades. In addition, pursuant to license exception CCD, sales of consumer communications devices (mobile phones, computers and related hardware and software) to Cuban government owned, operated or controlled companies and corporations for resale to the Cuban people are permissible.
Cigars, Rum, etc.
With the easing of travel and spending restrictions, OFAC has been inundated with questions about what can be taken stateside. One question, for instance, was I’ve just sourced a box of Cohiba Behike 54 and some wonderful Cuban rum, how do I get it to Brooklyn? According to OFAC4 , those authorized to travel to Cuba may do all of the following:
- make credit and debit card transaction (note, however, that your bank is not compelled by OFAC to accept these transactions so you ought to check in advance of your trip);
- purchase alcohol and tobacco products for personal consumption while in Cuba;
- acquire in Cuba and import as accompanied baggage into the United States merchandise with a value not to exceed $400 per person; and
- return to the United States with up to $100 worth of alcohol and/or tobacco products acquired in Cuba in accompanied baggage, for personal use only.
For over half a century, our foreign policy toward Cuba seemed dictated by the fact that rapprochement wasn’t politically expedient, i.e. the Cuban-American voting bloc was critical to presidential election strategies in Florida, a perennial swing state. The isolation strategy appeared universally unpopular and largely fruitless given the Castro-regime’s continued existence. For 22 consecutive years, the UN General Assembly approved a resolution condemning the U.S. embargo. In 2013, 188 member countries backed the resolution whilst two—the United States and Israel—opposed5.
In a past life, I worked with Cuban refugees who came to the United States in the early 1990s. They were called balceros-Spanish for rafter. These men and women tried to make their way to the United States on makeshift rafts often with fatal consequences. This June, a U.S. carrier will commence weekly direct flights to Havana. If this doesn’t strike you as monumental, it should.