On December 17, 2014, President Obama announced the beginning of major reforms regarding the relationship between the United States and Cuba. In a statement made from the White House, President Obama announced that the country would end its “outdated approach” to Cuba and begin to normalize relations between the two countries. The White House concurrently released a Fact Sheet on the new course for Cuba.
The policy changes announced include:
- Re-establishment of diplomatic relations
- Easing restrictions on U.S. persons traveling to Cuba
- Increasing the levels of permitted remittances from the U.S. to Cuban nationals
- Allowing authorized U.S. travelers to import up to $400 worth of Cuban goods
- Authorizing greater commercial sales and exports of certain goods and services
- Facilitating authorized financial transactions
- Beginning new efforts to improve access to communications by Cuban nationals
- Permitting U.S. entities to provide services and transactions to Cuban nationals in third countries
A brief description of selected policy initiatives follows:
The U.S. government will issue general licenses for U.S. travelers to visit Cuba for certain purposes including, among others, family visits, official business on behalf of the United States or foreign governments, attendance at professional meetings, educational and religious activities, and humanitarian projects. Ordinary tourism to Cuba will still remain prohibited.
Remittance to Cuban Nationals
The maximum dollar amount of remittances to Cuban nationals will be increased to $2,000 every three months, up from $500 per quarter. Additionally, specific licenses will no longer be required for donations to humanitarian projects, support for the development of private Cuban businesses, or for remittance forwarders.
Import of Goods from Cuba
U.S. travelers to Cuba will be allowed to import $400 worth of goods from Cuba, including up to a combined limit of $100 worth of tobacco products and alcohol.
Commercial Sales and Exports of Certain Goods and Services
The U.S. government may issue general licenses for certain export transactions that could have been previously authorized by specific licenses under existing regulations and guidelines. In addition, the United States will authorize the export of certain types of building materials to Cuba for use in construction of private residences; export of goods for use by private Cuban entrepreneurs; and export of agricultural equipment for small farmers. The specific types of goods and the process to receive export authorization has not yet been defined.
Third Country Transactions with Cuban Nationals
The United States will issue general licenses for U.S. owned or controlled entities in third countries to provide services to Cuban nationals in third countries, as well as to engage in financial transactions with Cuban nationals in third countries. The United States will also allow foreign vessels to enter the United States after engaging in certain types of humanitarian trade with Cuba.
Implementation Time Frame
According to the Fact Sheet, implementation of the announced policy is expected to begin within the next several weeks and months. While the White House announcement marks a major step toward normalization of U.S. - Cuba relations, this should not be seen as a lifting of the U.S. embargo. Many facets of the embargo are codified in U.S. law and will require Congressional action to revise or overturn. Cuba is a hot button issue in U.S. politics and there is likely to be lengthy debate on the further easing of sanctions, particularly as the United States prepares for a presidential election in 2016.
In addition, the Fact Sheet noted that the changes announced on December 17 would be effectuated via amendment of existing Treasury Department and Commerce Department regulations. As the Treasury Department’s Office of Foreign Asset Control (OFAC) made clear, “None of the announced changes takes effect until the new regulations are issued.”
The OFAC amendments are expected to be issued in the coming weeks, but for the time being, all U.S. sanctions regulations remain in effect. We will continue to monitor developments regarding these policy changes and will provide further guidance as the details are announced.