Less than a month after President Obama announced the relaxation of certain sanctions against Cuba, the U.S. Department of the Treasury, Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce, Bureau of Industry and Security ("BIS"), implemented new regulations that open the door to Cuba slightly wider, but do not come anywhere close to a reversal of the near-total embargo against Cuba. The OFAC regulations focus on the relaxation of restrictions on certain kinds of travel and financial transactions, while the new BIS regulations add to the types of products that may be exported to Cuba, including those for use in the private sector, consumer communications devices and items for environmental protection.
The changes made by OFAC relate primarily to travel and financial services and do the following:
- Change the requirements for previously-authorized types of travel to Cuba to remove the need for a specific license from OFAC to engage in them. Tourist travel is still strictly prohibited.
- Loosen the restrictions on certain travel related transactions, including allowing the use of credit/debit cards in Cuba and permitting the import of up to $400 worth of goods acquired in Cuba for personal use (including no more than $100 of alcohol or tobacco products).
- Remove some restrictions on transactions related to commercial telecommunications facilities, services incident to internet-based communications and certain communications items.
- Allow certain limited financial transactions with Cuban nationals in third countries
The overall prohibitions on doing business with Cuba and engaging in transaction or dealing in Cuban origin goods or anything that has been located in or transported from or through Cuba remain firmly in place. Moreover, these restrictions continue to apply not just to U.S. entities and individuals, but also to entities owned or controlled by them.
The new BIS regulations do the following:
1. Authorize the export and reexport to Cuba of certain items for the following uses:
- Building materials, equipment and tools for use by private sector related to privatelyowned buildings.
- Tools and equipment for private sector agricultural activity.
- Tools, equipment, supplies, and instruments for use by private sector entrepreneurs (e.g. auto mechanics, hairstylists, restaurateurs and barbers).
- Certain items for use in scientific, archaeological, cultural, ecological, educational, historic preservation, and sporting activities.
- Items intended to improve the free flow of information, such as those for telecommunications infrastructure.
2. Expand the types of consumer communications devices that may be lawfully exported to Cuba.
3. Allow for new minor exceptions for gift parcels.
4. Introduces a general policy of approval for export licenses for items for environmental protection.
Aside from these limited changes and the existing provisions that permit exports (either under license or license exception) of medicine, medical supplies and devices, and agricultural commodities, exports from the United States and reexports of most items to Cuba continue to be generally prohibited.
While the news of a change in diplomatic stance towards Cuba has been widely publicized, the practical effects are, in reality, quite narrow. Moreover, the extent to which the sanctions may be further relaxed is uncertain. Those hoping for a bonanza in the form of a new market for American goods just 90 miles from Key West may be waiting awhile.