- President Obama issued a Presidential Policy Directive to continue efforts to relax Cuba trade sanctions and further normalize U.S.-Cuba relations.
- OFAC announced further amendments to the CACR that allow U.S. persons to participate in additional health, trade and commerce, civil aviation safety, travel and humanitarian-related activities.
- BIS announced revisions to certain license exceptions.
- Both agencies narrowed definitions of prohibited “officials of the Government of Cuba” and “members of the Cuban Communist Party.”
- All revisions are effective immediately.
On October 14, 2017, President Obama issued a Presidential Policy Directive (PPD) to further normalize relations between the United States and Cuba. The PPD:
- Describes the U.S. vision for normalization with Cuba and how this policy aligns with U.S. national security interests;
- Assesses progress toward normalization;
- Describes the current and future strategic landscape;
- Describes priority objectives for normalization; and
- Directs actions required to implement this PPD.
The president reiterated the U.S. government’s commitment to continue high-level and technical engagement in areas of mutual interest, including agriculture, the economy and small businesses, transportation, science and technology, environment, climate, health, law enforcement, migration, national security, disaster preparedness and response, and counterterrorism. In the PPD, President Obama argues that the embargo against Cuba is outdated and should be lifted, which can only be done by congressional action. While the embargo remains in place, the president will continue to pursue policies that enable authorized U.S. private sector engagement with Cuba’s emerging private sector and with state-owned enterprises that provide goods and services to the Cuban people.
Consistent with this approach, President Obama announced that the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) will implement further regulatory changes to build “on the progress made over the last two years, to continue to facilitate more interaction between the Cuban and American people, including through travel and commercial opportunities, and more access to information.” The changes are intended to:
- Expand opportunities for scientific collaboration by authorizing certain transactions related to Cuban-origin pharmaceuticals and joint medical research;
- Improve living conditions for Cubans by expanding existing authorizations for grants and humanitarian-related services;
- Increase people-to-people contact in Cuba by facilitating authorized travel and commerce;
- Facilitate safe travel between the United States and Cuba by authorizing civil aviation safety-related services; and
- Bolster trade and commercial opportunities by expanding and streamlining authorizations relating to trade and commerce.
Amendments to the Cuban Assets Control Regulations (CACR), 31 C.F.R. Part 515, were issued on October 17, 2016 to further relax regulations affecting health, trade and commerce, civil aviation safety, travel and related transactions, humanitarian-related activities and certain other activities, as set forth below:
- Joint medical research. Persons subject to U.S. jurisdiction are now authorized to engage in joint medical research projects (both commercial and non-commercial) with Cuban nationals.
- Cuban-origin pharmaceuticals. OFAC now allows transactions incident to obtaining approval from the U.S. Food and Drug Administration of Cuban-origin pharmaceuticals. The general license includes discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities and the importation into the United States of Cuban-origin pharmaceuticals. This general license, however, does not apply to sample quantities of Cuban-origin commodities imported into the United States for research purposes.
Trade & Commerce
- Transactions incident to exports and reexports to Cuba. Section 515.533(a) of the CACR authorizes transactions ordinarily incident to certain exportations of items from the United States to Cuba, as well as certain reexportations of items to Cuba from a third country, provided that the exportations or reexportations are authorized by BIS. OFAC has now removed references to “100% U.S.-origin items” in this section for clarity and to minimize the circumstances under which persons authorized by BIS to export or reexport items to Cuba are required to obtain a specific license from OFAC. This general license does not, however, authorize any transaction between a U.S.-owned or ‑controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba. Such transactions must still be specifically licensed.
- Importation of certain items previously exported or reexported to Cuba and servicing and repair of such items. OFAC has added a new general license authorizing the importation into the United States or a third country of items previously exported or reexported to Cuba pursuant to authorization by BIS or by U.S.-owned or ‑controlled foreign firms. This authorization will allow recipients of authorized exports or reexports to Cuba to return the items to the United States or a third country, including for service and repair. The exportation or reexportation of serviced, repaired or replacement items to Cuba, however, must be separately authorized by OFAC in addition to any BIS authorization that may be required.
- Certain vessel transactions. The CACR previously prohibited foreign vessels that call on Cuban ports from entering U.S. ports for the purpose of loading or unloading freight for 180 days from the date they depart Cuba, absent OFAC authorization. OFAC has amended relevant sections of the CACR to add an additional license exception to waive this restriction for any vessel if the items carried onboard are subject to the Export Administration Regulations (EAR), are designated as EAR99 or would be controlled on the Commerce Control List (CCL) only for anti-terrorism reasons.
- Contingent contracts. OFAC has added a new general license authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions prohibited by the CACR and to engage in transactions ordinarily incident to negotiating and entering into such contracts. The performance of such contracts – making deposits, receiving payments, providing certain services or goods, etc. – must be made contingent on OFAC authorizing the underlying transactions or authorization no longer being required. Further, if the transaction implicates another federal agency’s licensing requirements, then the contract must make obtaining the necessary license(s) from such agency or the removal of that licensing requirement an additional precondition of performance.
- Civil aviation safety-related services. OFAC added a new general license authorizing U.S. persons to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.
- Importation of Cuban merchandise. Under prior amendments relaxing U.S. restrictions on authorized travelers acquiring and importing Cuban merchandise into the United States as accompanied baggage, the merchandise had to be for personal use only and have a value of $400 or less (with no more than $100 of such merchandise consisting of alcohol or tobacco products). OFAC has now removed these dollar value limits, which means that the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use will apply. OFAC will continue to require that such merchandise be imported as accompanied baggage and for personal use. OFAC has made similar regulatory changes to foreign passengers’ baggage entering the United States so long as the alcohol and tobacco products are not in commercial quantity and not imported for resale.
- Professional research and professional meetings in Cuba. As previously revised, the CACR includes a general license authorizing U.S. persons to travel to Cuba to attend or organize professional meetings or conferences in Cuba. OFAC has further relaxed this provision by removing the restriction that the purpose of such meeting or conference not be for the promotion of tourism in Cuba. In addition, OFAC will now allow U.S. persons to make remittances to third-country nationals for travel by third-country nationals to, from and within Cuba, provided that such travel would be authorized by a general license if the traveler were a U.S. person.
- Additional grants, scholarships and awards. OFAC previously authorized the provision of grants, scholarships and awards related to educational and humanitarian activities in which Cuba or Cuban nationals have an interest (including as recipients). OFAC has expanded this to now authorize the provision of grants, scholarships and awards in two additional categories of activities: scientific research and religious activities.
- Services related to developing Cuban infrastructure. OFAC will now authorize U.S. persons to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining and enhancing Cuban infrastructure, consistent with BIS’s export or reexport licensing policy. “Infrastructure” in this case means systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.
- Amendments to definitions. OFAC has amended the definitions of “prohibited officials of the Government of Cuba” and “prohibited members of the Cuban Communist Party” to narrow them. Going forward, the term “prohibited officials of the Government of Cuba” means members of the Council of Ministers and flag officers of the Revolutionary Armed Forces, and “prohibited members of the Cuban Communist Party” means only members of the Politburo.
Revisions to the EAR regarding license exceptions for Cuba, 15 C.F.R. Parts 740 and 746, were issued on October 17, 2016 to amend certain license exceptions and definitions as set forth below:
- Under license exception “Aircraft, Vessels and Spacecraft (AVS),” BIS will now generally authorize air cargo transiting Cuba via aircraft on temporary sojourn to be eligible for this exception, complementing an existing general authorization for cargo transiting Cuba aboard vessels. Such cargo may not be removed from the aircraft for use in Cuba and may not be transferred to another aircraft while in Cuba.
- Under license exception “Support for the Cuban People (SCP),” BIS will generally authorize exports or reexports of eligible consumer goods that are sold online (i.e., on the Internet) or through other means directly to eligible individuals in Cuba for their personal use or their immediate family’s personal use. To be eligible, the items must be designated as EAR99 or controlled on the CCL only for anti-terrorism reasons.
- Amendments to definitions. BIS has also amended the definitions of “prohibited officials of the Government of Cuba” and “prohibited members of the Cuban Communist Party” to narrow them in the same manner as OFAC. Such officials and members remain prohibited from receiving gift parcels and humanitarian donations under the Gift Parcels (GFT) license exception and the Consumer Communications Devices (CCD) license exception; they also remain prohibited from receiving software and commodities that the private sector or other individuals may receive to improve the free flow of communications under the SCP license exception.
Both OFAC and BIS have made numerous other amendments to clarify these changes, added notes to certain regulations, and made additional technical and conforming changes to the CACR and EAR. This summary is offered as general guidance only; U.S. companies should seek the advice of their compliance officers, corporate counsel or outside counsel before engaging in any Cuba-related transactions or activities.