As previously reported, President Obama issued a press release on April 13, 2009, indicating the Administration’s intent to ease certain aspects of the US-Cuba trade sanctions regime in order to improve telecommunications connections between Cuba and the United States, and to make it easier for US persons to visit family members in Cuba and send money to them. On September 3, the Department of Treasury, Office of Foreign Assets Control (“OFAC”) and the Department of Commerce, Bureau of Industry and Security (“BIS”) amended the Cuba Assets Control Regulations (“CACR”) and the Export Administration Regulations (“EAR”) to implement aspects of the President’s new Cuba policy.
The changes will be of assistance to persons wishing to travel to visit Cuba for certain purposes, and for telecommunications service providers. The changes of note are, in summary, as follows:
Exports of Telecommunications-Related Goods and Services
OFAC and BIS have substantially revised the CACR and EAR to ease restrictions on the provision of telecommunications goods and services to Cuba:
- OFAC has amended Section 515.542(b) of the CACR to authorize all transactions, including but not limited to payments, incident to the provision of telecommunications services between the United States and Cuba, the provision of satellite radio or satellite television services to Cuba, or the entry into and performance under roaming service agreements with telecommunications services providers in Cuba, by a telecommunications services provider that is a person subject to US jurisdiction.
- New Section 515.542(c) of the CACR authorizes US persons to enter into, and make payments under, contracts with non-Cuban telecommunications services providers, or particular individuals in Cuba, for services provided to particular individuals in Cuba, such as a contract for cellular telephone service for a phone owned and used by a particular individual in Cuba, provided that the individual is not a prohibited official of the Government of Cuba or a prohibited member of the Cuban Communist Party (as defined elsewhere in the CACR). The authorization in new paragraph (c) includes, but is not limited to, payment for activation, installation, usage (monthly, pre-paid, intermittent, or other), roaming, maintenance, and termination fees.
- A new general license has been added in paragraph (d)(1) of section 515.542 that authorizes transactions incident to the establishment of facilities to provide telecommunications services linking the United States and Cuba, including but not limited to fiberoptic cable and satellite telecommunications facilities. Paragraph (d)(2) provides a case-by-case review with respect to transactions incident to the establishment of facilities to provide telecommunications services linking third countries and Cuba, provided that such facilities are necessary to provide efficient and adequate telecommunications services between the United States and Cuba.
- BIS has implemented a new EAR license exception, Consumer Communications Devices (“CCD”) (in Section 740.19 of the EAR) to authorize the export or reexport to Cuba of donated consumer communications devices that are necessary to provide efficient and adequate telecommunications services between the United States and Cuba. The license exception includes a wide range of commercial communications devices, such as mobile phones, standard personal computers, and related software products.
- Finally, for telecommunications items not eligible for a license exception, BIS has revised its Cuba licensing policy, in Part 746 of the EAR, to provide for a case-by-case review for all license applications for exports or reexports of items that are necessary to provide efficient and adequate telecommunications links, including satellite radio and satellite television, between the United States and Cuba. BIS has clarified in the rule that this includes exports of products intended for links through third countries, where such links are necessary to ensure adequate connections between Cuba and the United States.
Travel to Cuba and Remittances
- OFAC has amended Section 515.561 of the CACR to implement a general license issued on March 11, which permit U.S. persons to travel once annually to Cuba to visit “close relatives,” subject to certain limitations on expenditures. With the new regulation, OFAC has removed the once annual limitation, so US persons can visit close relatives in Cuba as often as they desire.
- The OFAC amendments also ease restrictions on remittances to family members in Cuba, and introduces a new general license (in Section 515.572(a)(3)) to authorize depositary institutions to act as forwarders for remittances.
- OFAC also has amended the CACR to increase the per diem of allowable living expenses for U.S. persons who visit Cuba. US persons previously were subject to a $50 per diem, but now are permitted to spend up to the “maximum per diem rate,’’ as established by the Department of State for Havana, Cuba, in effect at the time travel to Cuba takes place (see http://aoprals.state.gov for the applicable figures).
- OFAC has also amended the CACR to permit travel-related transactions associated with the authorized telecommunications transactions discussed above.
- BIS has amended License Exception GFT, in Section 740.12 of the EAR, to expand the range of items that can be included in gift parcels to Cuba. Notably, the list now includes the export to Cuba of computers and other communications-related devices controlled under Export Control Classification Numbers (“ECCN”) 4A994, 4D994, 5A991, 5A992, 5D991, and 5D992 (provided those exports meet other prerequisites of the GFT license exception, such as that the export must be to an individual and must be free of charge).
The September 3 changes represent a significant easing of Cuba sanctions but in a targeted manner, focusing on travel, remittance, and communications-related transactions in furtherance of the President’s policy of facilitating family- and humanitarian-related transactions with Cuba, as well as improving the ability of nationals in Cuba to communicate with foreign countries and have access to a wider variety of information. While these changes represent a clear loosening of the strict limitations on business dealings with Cuba in the telecommunications sector, certain aspects of the regulations could present compliance challenges in the implementation of telecom business activities. For instance, the regulations retain broad restriction on dealing with members of the Communist Party and senior government leadership, and include reporting requirements associated with travel and business activities and restrictions as to how payments can be made and received in providing telecom service.
Furthermore, it remains unclear whether these changes represent only the beginning of an easing of economic sanctions against Cuba in other sectors. A more comprehensive liberalization of the trade restrictions will no doubt depend on how the existing Cuban regime responds to the Administration's initiative and addresses certain key issues, such as individual rights, political freedom, and outstanding claims for previously expropriated property.