Smart Summary of Changes
- Changes to sanctions against Cuba go into effect on October 17, 2016
- New general licenses open up greater opportunity in the areas of medical research and pharmaceuticals, infrastructure and transportation, and imports and exports.
- Other changes involve banking and education.
- Travelers to Cuba will now be able to bring back Cuban goods, including alcohol and tobacco.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce issued further amendments to the Cuba Sanctions Regulations on October 14, 2016. The new regulations become effective as of October 17, 2016, when published in the Federal Register.
These actions represent further steps by the Obama Administration to remove barriers to travel, trade, commerce and banking between the United States and Cuba. The Cuban embargo remains in place awaiting congressional action. Nevertheless, provided that the new President taking office in January 2017 does not reverse the Obama initiatives, American businesses will have expanded opportunities to seek trade and commerce with Cuba.
The highlights of the new regulations for businesses are:
Health Care + Pharmaceuticals
Cuban Origin Pharmaceuticals
A new general license will allow transactions incident to obtaining U.S. Food and Drug Administration (FDA) approval of Cuban-origin pharmaceuticals. An additional authorization will allow the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals. See § 515.547(b) and (c). The implication is that U.S. pharmaceutical companies will now be able to follow the normal FDA process when bring a Cuban drug to the U.S. that applies to drugs from foreign, non-embargoed countries without prior OFAC authorization.
Joint Medical Research
A new general license will now allow persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. This general license will apply to both non-commercial and commercial research. See § 515.547 (a). In conducting medical research in Cuba, the export to Cuba of goods and software to be used with such research may require separate authorization from the Department of Commerce.
Services Related to Infrastructure
A new OFAC general license authorizes Americans to provide Cuba with systems and assets used to provide goods and services produced or provided by public transportation, water management, waste management, non-nuclear electricity generation and electricity distribution, hospitals, public housing and primary and secondary schools. This also includes projects related to the environmental protection of U.S., Cuban and international air quality, waters and coastlines. The services provided must be consistent with the export policies of the Department of Commerce. See § 515.591.
Civil Aviation Safety-Related Services
A new general license authorizes civil aviation safety-related services to Cuba and Cuban nationals, wherever located, to ensure the safety of civil aviation and the safe operation of commercial aircraft. See § 515.572(a)(5).
A new general license to authorize Americans to enter into contracts with Cuba and Cuban nationals for transactions prohibited by the regulations, including negotiating and entering into such contracts, so long as their performance is contingent on OFAC (or other relevant agency) approval of the transactions or such authority is no longer being required. See § 515.534.
Exports of Consumer Goods for Personal Use
The Department of Commerce’s Bureau of Industry and Security (BIS) will now generally authorize exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use.
Import to U.S. of Items Previously Exported to Cuba
OFAC will allow the importation into the United States, or a third country, of items that were previously exported or re-exported to Cuba pursuant to a BIS or OFAC authorization. This authorization will also permit persons subject to U.S. jurisdiction to service and repair such items.
Financing + Banking
U.S. persons engaged in joint medical research or the clinical testing or commercialization of Cuban pharmaceuticals will be allowed to open bank accounts in Cuba to conduct such business. See § 515. 547 (d)(1) and (2). Also, pesticides and tractors authorized to export to Cuba are not subject to restrictions on payment terms of other agriculturally related products.
OFAC is expanding the authorization for grants, scholarships, and awards to Cuba or Cuban nationals to include grants, scholarships, and awards related to scientific research and religious activities. See § 515.590; 515.565 and .575.
Importation of Cuban Origin Goods for Personal Use
Authorized travelers to Cuba or third countries are now allowed to bring back as accompanied baggage Cuban origin goods without value limitations. This applies to alcohol and tobacco products. The goods must be for personal use and subject to normal duty and tax exemptions.
The new regulations also narrowed the list of prohibited Cuban government officials with which dealings are prohibited or subject to greater control to members of the Council of State, flag officers of the Cuban Armed Forces and members of the Politburo. See §§ 515.337; 515.338.