On January 26, 2016, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced new amendments to the Cuban Assets Control Regulations (“CACR”) (31 C.F.R. Part 515) and Export Administration Regulations (“EAR”) (15 C.F.R. Parts 730-774). These amendments further implement the new direction toward Cuba that President Obama laid out in December 2014.
The amendments to the CACR and EAR remove existing restrictions on payment and financing terms for certain authorized exports and reexports to Cuba, as well as establish a case-by-case licensing policy for exports and reexports of items to meet the needs of the Cuban people, including to Cuban state-owned enterprises. However, the removal of the existing restrictions does not apply to agricultural commodities and items (as those payment terms are mandated by statute), thus making financing for agricultural commodities and items more restricted than other authorized exports. Additionally, the amendments further facilitate travel to Cuba for authorized purposes by allowing blocked space, code-sharing, and leasing arrangements with Cuban airlines; authorizing additional travel-related transactions directly incident to the temporary sojourn of aircraft and vessels; and authorizing additional transactions related to professional meetings and other events, disaster preparedness and response projects, and information and informational materials, including transactions pertaining to professional media or artistic productions in Cuba.
The key elements of the changes in the revised CACR and EAR include the following:
- BIS established a general policy of approval for exports and reexports to Cuba pertaining to the following:
- telecommunication items that would improve communications to, from and among the Cuban people;
- commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba;
- commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public;
- certain agricultural items that are outside the scope of “agricultural commodities” such as insecticides; pesticides; and herbicides; and
- items necessary to ensure the safety of civil aviation and safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises.
- BIS also established a case-by-case licensing policy for exports and reexports 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.
- OFAC expanded an existing general license to authorize certain additional travel-related transactions that are directly incident to the conduct of 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.
- Air Carrier Services
- OFAC authorized the entry into blocked space, code-sharing, and leasing arrangements to facilitate the provision of carrier services by air, including the entry into such arrangements with a Cuban national.
- Certain personnel who are operating or servicing vessels or aircraft are authorized to engage in travel-related and other transactions in Cuba to facilitate the temporary sojourn of aircraft and vessels as authorized by the Department of Commerce in connection of authorized travelers between the United States and Cuba.
- OFAC authorized travel-related and other transactions directly incident to professional media or artistic productions of information or informational materials for export, import, 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.
- OFAC also expanded an existing general license to authorize transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of such informational materials, including employment of Cuban nationals and remittance of royalties or other payments.
- OFAC authorized by general license travel-related and other transactions to organize professional meetings or conferences in Cuba. (The previous general license authorized only attendance at such meetings or conferences.)
- OFAC authorized by general license travel-related and other transactions to organize amateur and semi-professional internationals sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC also removed requirements that U.S. profits from certain events must be donated to certain organizations and that certain events be run at least in party by U.S. travelers.
- OFAC expanded the list of authorized humanitarian projects to include disaster preparedness and response.
- Restrictions on payment and financing terms for authorized exports and reexports, except for agricultural commodities and agricultural items, are removed, and U.S. depository institutions are authorized to provide financing, including issuance of letters of credit for such exports and reexports.
- Examples of permissible payment and financing terms for authorized non-agricultural exports and reexports include payment of cash in advance; sales on an open account; and financing by third-country financial institutions or U.S. financial institutions.