As part of the historic shift in U.S. policy toward Cuba announced on 17 December 2014, President Obama instructed the Secretary of State to launch a review of Cuba’s designation as a state sponsor of terrorism (SSOT), and to prepare a report within six months regarding Cuba’s support for international terrorism. The State Department has completed its review and reportedly has recommended that Cuba be removed from the list of SSOTs. The President’s decision on whether to proceed with removal of Cuba’s SSOT designation is expected to be announced soon.
Although the removal of Cuba from the SSOT list would be an important diplomatic step towards normalizing U.S. relations with Cuba, this action will not significantly ease the scope of U.S. economic sanctions and export controls applicable to Cuba. Rather, the key provisions of the U.S. embargo against Cuba, including virtually all of the restrictions on investment, trade, and financial transactions with Cuba will remain in place after the SSOT designation has been lifted. Those restrictions are mandated by separate federal statutes enacted by Congress and are not tied to the SSOT designation. That said, the removal of SSOT designation will result in the following:
- Eligibility for a wider range of exports of dual-use items on the Commerce Department’s Commerce Control List (after implementing amendments to the Export Administration Regulations), without the requirement to notify Congress in advance of the issuance of export licenses;
- Removal of restrictions on the provision of certain foreign assistance and humanitarian aid;
- Elimination of private right action for individuals to pursue claims against Cuba in federal courts;
- Elimination of certain disclosure requirements in connection with filings with the U.S. Securities and Exchange Commission (SEC) filings; and
- Relief from certain state laws prohibiting investments in companies doing business with SSOTs.
Additional details regarding these issues are provided in a Hogan Lovells legal analysis prepared at the request of the Cuba Study Group and issued on 9 April 2015. The analysis summarizes the legal restrictions resulting from the SSOT designation, the process for lifting the designation, and the impact that removing the designation would have on trade with Cuba.