On January 27, 2016, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) issued amendments to its Cuban Assets Control Regulations (CACR) to further ease U.S. sanctions against Cuba. At the same time, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) changed its export license review policy to more favorably consider license applications for exports or reexports of certain U.S. goods to Cuba.
These amendments jointly build on the first set of amendments easing sanctions issued in January 2015, as discussed here. Cumulatively, these changes represent significant relief from the decades-long U.S. sanctions against Cuba. Numerous restrictions remain in effect, however, and U.S. companies weighing business opportunities in Cuba should consult with counsel before proceeding.
OFAC Amendments to CACR
The recent CACR amendments remove certain payment and financing restrictions for most authorized exports and reexports to Cuba, and now allow certain travel-related and other transactions to further facilitate travel to Cuba. The amendments also authorize additional transactions related to professional meetings and other events.
- Export-Related Transactions
Until last year, the United States maintained an almost complete trade embargo with Cuba. The January 2015 changes to the sanctions permitted exports and reexports to Cuba of items for certain specified uses:
- building materials, equipment and tools for certain private sector construction projects;
- tools, equipment, supplies and instruments for private sector entrepreneurs; and
- tools and equipment for private sector agricultural activity.
Before this week’s amendments, however, U.S. companies were only allowed to accept cash payments for such exports or reexports and U.S. financial institutions were not permitted to provide financing related to any of these transactions. Those CACR restrictions are now lifted for exports and reexports for authorized construction projects and private sector entrepreneurs, but remain in place for most exports and reexports to the Cuban agricultural sector.
- Travel-Related Transactions
Prior to last year’s amendments, the CACR restricted travel by U.S. persons to only a few narrow categories, like educational purposes and academic research. The January 2015 OFAC amendments opened the door somewhat by allowing travel for several additional purposes. Consistent with those changes, OFAC’s amendments to the CACR this week authorize U.S. persons to enter into arrangements, including with Cuban nationals, for blocked space, code-sharing, and leasing to facilitate the provision of air carrier services. Also, travel-related and other transactions that are “directly incident to the facilitation of the temporary sojourn of aircraft and vessels…” are now permitted.
- Transactions Related to Professional Meetings and Other Events
The CACR amendments now permit travel-related and other transactions:
- directly incident to the export, import, or transmission of informational materials, including professional media and artistic productions in Cuba;
- to organize professional meetings or conferences in Cuba; or
- to organize public performances, clinics, workshops, athletic and other competitions, and exhibitions in Cuba.
Further, the CACR now allows transactions related to “the creation, dissemination, or artistic or substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments.”
OFAC also removed CACR provisions requiring, for certain events, that:
- all U.S. profits from the event be donated to an independent nongovernmental organization or a U.S.-based charity; and
- workshops and clinics be organized and run, at least in part, by an authorized U.S. traveler.
BIS Changes to Export License Review Policy
With its policy change this week, BIS now has a “general policy of approval” for export license applications for an expanded array of goods. BIS’s new general policy of approval includes:
- items that are necessary to ensure the safety of civil aviation and safe operations of commercial aircraft engaged in international air transportation;
- telecommunications items;
- commodities and software to human rights organizations and other nongovernmental organizations;
- commodities and software to U.S. news bureaus in Cuba; and
- agricultural items.
For each category, whether BIS will grant an export license depends on the nature of the item and its specific intended use in Cuba.