President Obama announced on December 17, 2014 that the United States and Cuba will open talks seeking to restore full diplomatic relations, and that the United States will be taking a number of steps to ease restrictions in certain areas of trade with Cuba described in more detail below. The announcement comes after 18 months of secret talks between the United States and Cuba hosted by Canada and facilitated by Pope Francis.

The announcement was made possible after Cuba released Alan Gross, an American contractor held in a Cuban prison for the past five years. Mr. Gross was serving a 15-year sentence for bringing Internet services to Cuba. Cuba and the United States also agreed to swap spies held in respective prisons, including an American who has been held in a Cuban prison for two decades.

In a televised statement on December 17, President Obama announced his intention to normalize diplomatic relations with Cuba for the first time in more than 50 years and (re-)open a U.S. embassy in Havana. The President described plans to increase cooperation with Cuba on health, security, countering narcotrafficking and terrorism and has instructed Secretary of State Kerry to review Cuba’s designation as a “state sponsor of terrorism.”

Restrictions Eased

The Obama Administration is expected to ease restrictions to increase commerce between Cuba and the United States in a few key areas, though the exact nature of the specific activities covered by the announcement will not be known until implementing regulations are issued by the U.S. Treasury and Commerce Departments:

  • Travel to Cuba:
    • Under current regulations, U.S. persons can travel to Cuba under a general license (meaning no prior authorization is required) if they fall under one of twelve categories of authorized travel activities, including travel for certain journalistic or educational activities or in support of authorized sales of food, medicine, medical devices and telecommunications products, among other categories.
    • The U.S. Government will be easing travel restrictions for U.S. travellers falling into these categories, primarily by:
      • Implementing a general license permitting any U.S. travel service provider that complies with applicable regulations to arrange travel to Cuba – currently, only U.S. companies specifically registered as “Authorized Travel Service providers” are authorized to make such arrangements;
      • Permitting U.S. travellers to use U.S. credit and debit cards while in Cuba; and
      • Permitting authorized U.S. travellers to import up to $400 worth of goods from Cuba (up to $100 of which can consist of alcohol and tobacco products).
    • Notably, U.S. persons still will be prohibited from general tourist travel to Cuba – legislative action would be required to remove this prohibition.  
  • Exports of Goods and Services to Cuba: 
    • The U.S. Government also will be expanding commercial sales and export opportunities involving certain goods and services from the United States to Cuba, including certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers.
    • Restrictions related to the sale and export of certain telecommunications infrastructure, devices, software and services to Cuba also will be eased.
    • U.S. financial institutions also are expected to be permitted to establish correspondent accounts with Cuban financial institutions to facilitate the processing of authorized transactions.  
  • Remittances to Cuba by US Persons:
    • Permitted levels of remittances to Cuba by U.S. persons will be raised from $500 to $2,000 per quarter, subject to certain exceptions.
    • Donation remittances for humanitarian projects, support for the Cuban people, and support for the development of private businesses in Cuba will no longer require a specific license.
    • U.S. remittance forwarders will no longer require a specific license to make authorized remittances to Cuba.  
  • Application of Cuba Sanctions in Third Countries:
    • U.S.-owned or -controlled entities in third countries will be permitted to provide services to, and engage in financial transactions with, Cuban individuals in third countries (which previously required prior authorization from the U.S. Government).
    • Accounts held at U.S. banks by Cuban nationals who have relocated outside of Cuba will be unblocked.
    • U.S. persons also will be permitted to participate in third-country professional meetings and conferences related to Cuba.

As noted above, implementing regulations for the announcement will provide additional detail. The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) and U.S. Department of Commerce’s Bureau of Industry and Security (BIS) are expected to issue new rules and licenses. OFAC issued preliminary guidance stating that it expects “to issue its regulatory amendments in the coming weeks” and added that the “[n]one of the announced changes takes effect until the new regulations are issued.”

US Embargo Remains in Place – Requires Congressional Action

The rapprochement between the two countries represents the most significant change in decades in U.S. policy regarding Cuba. At the same time, the United States maintains comprehensive economic sanctions against Cuba in the form of an embargo. Virtually all commercial dealings with Cuba will remain prohibited until and unless the U.S. Congress acts to lift the embargo.

Reactions from Congress demonstrate the uphill battle ahead for the Obama Administration with respect to both the announcement and any plans to lift the Cuban embargo. Republican leadership sharply criticized the President. House Speaker John Boehner (R-OH) released a statement noting, “[r]elations with the Castro regime should not be revisited, let alone normalized, until the Cuban people enjoy freedom – and not one second sooner.” Incoming Senate Majority Leader Mitch McConnell deferred to Senator Marco Rubio’s (R-FL) statements. Senator Rubio told reporters, "I don't care if the polls say 99 percent of people in Florida want to lift the embargo. I would still be for [keeping] it . . . My goal is freedom and democracy in Cuba, and the embargo gives us leverage." Senator Lindsey Graham (R-SC) tweeted that he would “do all in [his] power” to block funds used to open an embassy in Cuba. Representative Ileana Ros-Lehtinen (R-FL) did not comment on the embargo, but expressed outrage with the Obama Administration, characterizing the announcement today as “misguided” and promised to investigate whether the administration violated any U.S. laws.

President Obama also received criticism from his own party. Senator Robert Menendez (D-NJ) stated “President Obama's actions have vindicated the brutal behavior of the Cuban government.”

Other Members of Congress adopted a more measured tone. Incoming Senate Foreign Relations Committee Chair Bob Corker (R-TN) released a statement noting, “[w]e will be closely examining the implications of these major policy changes in the next Congress.”

At the same time, there is bipartisan support for the President’s announcement. Three members of Congress accompanied Mr. Gross on his return flight from Cuba: Senators Patrick Leahy (D-VT) and Jeff Flake (R-AZ), and Representative Chris Van Hollen (D-MD). Upon landing, Sen. Leahy lauded the President’s move to re-establish diplomatic ties, stating the Administration had “wisely charted a new course.”