On 14 October 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) again announced significant amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). This is the second round of amendments made to the Cuba sanctions regime, following earlier amendments made in March this year. The move further advances the policy goals announced by President Obama on 17 December 2014 concerning US-Cuba relations.
The recent amendments authorize certain scientific collaboration and humanitarian-related transactions and further ease sanctions on travel, commerce and trade.
Most interestingly, under the amended CACR, OFAC has added a general license that authorizes persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions currently prohibited by U.S. sanctions, on the condition that sanctions would be removed later. Transactions ordinarily incident to negotiating and entering into such contracts will also be authorized. This authorization opens the door for U.S. businesses to start exploring potential opportunities in Cuba before the sanctions have been completely removed.
The amendments also allow persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. Provision of service to Cuba and Cuban nationals relating to certain infrastructure that benefits the Cuban people by persons subject to U.S. jurisdiction is also authorized. Authorized travellers to Cuba who are subject to U.S. jurisdiction can now import Cuban-origin merchandise (including alcohol and tobacco products) without value limitations, while previously there was a value limitation of U.S. dollar 100 for alcohol and tobacco products.
The amendments also promote Cuban individuals and businesses' access to the U.S. Cuban-origin pharmaceuticals are now allowed to obtain U.S. Food and Drug Administration (FDA) approvals. Grants, scholarships and awards related to scientific research and religious activities to Cuba or Cuban nationals now are also permitted.
In the export control areas administered by BIS, changes are made to the EAR to authorize exports and reexports of certain consumer goods sold directly (online or through other means) to individuals in Cuba under a license exception.
Despite the significant changes that further ease sanctions on Cuba, the Cuba embargo remains in place and most transactions between, the U.S. or persons subject to U.S. jurisdiction (including foreign entities owned or controlled by a U.S. entity), and Cuba or Cuban nationals, continue to be prohibited. For business considering trade with and investment in Cuba, specific U.S. sanctions advice should be sought by those subject to U.S. jurisdiction. Herbert Smith Freehills has handled a wide range of matters related to the various U.S. sanctions programs and stands ready to assist businesses seeking sanctions compliance advice.