On December 17, 2014, President Barack Obama announced historic steps to re-establish U.S. diplomatic relations with Cuba and to relax existing sanctions in the areas of travel, remittances, and commercial sales, among others.
Key elements of the President’s new approach to U.S. policy with respect to Cuba include the following:
1. Facilitating an expansion of travel under general licenses for the 12 existing categories of travel to Cuba authorized by law:
- General licenses will be made available for all authorized travelers in the following existing categories: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.
- Travelers in the 12 categories of travel to Cuba authorized by law will be able to make arrangements through any service provider that complies with the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) regulations governing travel services to Cuba, and general licenses will authorize provision of such services.
2. Facilitating and increasing allowable remittances to Cuba by U.S. persons:
- Remittance levels will be raised from $500 to $2,000 per quarter for general donative remittances to Cuban nationals (except to certain listed officials of the government or the Communist party); and donative remittances for humanitarian projects, support for the Cuban people, and support for the development of private businesses in Cuba will no longer require a specific license.
- Remittance forwarders will no longer require a specific license.
3. Authorizing expanded commercial sales/exports from the United States of certain goods and services:
- Items that will be authorized for export include certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers.
4. Authorizing American citizens to import additional goods from Cuba:
- Licensed U.S. travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined. It is not clear at this point whether this authorization would extend to goods of Cuban origin imported from other countries (e.g., Mexico).
5. Facilitating authorized financial transactions between the United States and Cuba:
- U.S. institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions.
- The regulatory definition of the statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title”; this will provide more efficient financing of authorized trade with Cuba.
- U.S. credit and debit cards will be permitted for use by travelers to Cuba.
6. Initiating new efforts to increase Cubans’ access to communications and their ability to communicate freely:
- The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people in the United States and the rest of the world will be authorized. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.
- Telecommunications providers will be allowed to establish the necessary mechanisms, including infrastructure, in Cuba to provide commercial telecommunications and internet services, which will improve telecommunications between the United States and Cuba.
7. Updating the application of Cuba sanctions in third countries:
- U.S.-owned or -controlled entities in third countries will be generally licensed to provide services to, and engage in financial transactions with, Cuban individuals in third countries. In addition, general licenses will unblock the accounts at U.S. banks of Cuban nationals who have relocated outside of Cuba; permit U.S. persons to participate in third-country professional meetings and conferences related to Cuba; and allow foreign vessels to enter the United States after engaging in certain humanitarian trade with Cuba, among other measures.
OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations (31 C.F.R. Part 515). The Department of Commerce will implement the remainder of the changes via amendments to its Export Administration Regulations (15 C.F.R. Parts 730 et seq.). OFAC has already announced that it expects to issue its regulatory amendments in the coming weeks, while the Department of Commerce’s Bureau of Industry and Security (“BIS”) has yet to make any formal announcement. None of the announced changes will take effect until the new regulations are issued.
Lastly, it is important to remember that many of the central elements of the U.S. embargo against Cuba are now codified in legislation, including the Cuban Democracy Act of 1992 (22 U.S.C. §§ 6001-6010) and the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (22 U.S.C. §§ 6021-6091) (aka the “Helms-Burton Act”), and thus further action to thaw relations with Cuba will likely require congressional support. Specifically, the Helms-Burton Act requires that the “economic embargo of Cuba,” as in effect on March 1, 1996, must remain in effect until the President determines that a transition government or a democratically elected government is in power in Cuba. President Obama noted the need for congressional engagement in his address, which will likely be slow in coming.