On June 16, 2017, the Trump Administration issued its National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba (the “Memorandum”). Pursuant to the Memorandum, the U.S. Department of the Treasury (“Treasury Department”) and the U.S. Department of Commerce (“Commerce Department”), in coordination with the U.S. Department of State (“State Department”) and the U.S. Department of Transportation (“Transportation Department”), have been ordered to amend their regulations in ways that will prohibit U.S. companies from engaging in transactions with a wide range of Cuban entities and that will restrict the ways in which U.S. citizens can travel to and stay in Cuba.
The stated purposes of the Memorandum are to “seek to promote a stable, prosperous, and free country for the Cuban people” and to “encourage the Cuban government to address abuses [against peaceful protesters, dissidents, political prisoners, religious worshippers, and those who try to engage in free speech and/or freedom of association]. In accordance with these objectives, the Memorandum states that it shall be U.S. policy to:
- end economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies or personnel at the expense of the Cuban people;
- ensure adherence to the statutory ban on tourism to Cuba;
- support the economic embargo of Cuba described in section 4(7) of the LIBERTAD Act of 1996;
- amplify the efforts to support the Cuban people through the expansion of Internet services, free press, free enterprise, free association, and lawful travel; and
- ensure that engagement between the United States and Cuba advances the interests of the United States and the Cuban people.
In addition, the Memorandum makes clear that the Trump Administration will not reinstate the “Wet Foot, Dry Foot” policy that had previously motivated many Cubans to travel dangerously and unlawfully to the United States.
In furtherance of the policy objective to channel economic activities away from the Cuban Government, the Memorandum mandates that the State Department identify the entities and sub-entities that are under control of, or act for on behalf of, the Cuban military, intelligence, or security services or personnel, including (but not limited to) Grupo de Administracion Empresarial S.A. (“GAESA”), its affiliates, subsidiaries, and successors, and that the State Department publish a list of those identified entities with which direct financial transactions would disproportionately benefit such entities at the expense of the Cuban people or Cuban private enterprise (the “List”).
Furthermore, the Memorandum requires that the Treasury Department amend its Cuban Assets Control Regulations (“CACR”) and that the Commerce Department amend its Export Administration Regulations (“EAR”) to prohibit direct financial transactions with those entities on the List, and that the agencies initiate a process to make such regulatory changes within 30 days of the date on which the Memorandum was issued. U.S. persons who travel to Cuba under group people-to-people travel (since authorization for individual people-to-people travel will be terminated pursuant to the Memorandum) also will be prohibited from engaging in transactions with entities on the List, which is potentially problematic considering that many hotels, restaurants, and tour services are believed to be controlled by GAESA or its affiliates or subsidiaries.
Significantly, though, the Treasury Department has stated that prohibitions against engaging in transactions with entities on the List will not take effect until the amendments to the CACR are issued, unless such prohibitions already exist. Moreover, the Memorandum makes clear that the regulatory changes to be made by the Treasury Department and the Commerce Department shall not prohibit transactions that are consistent with the policy objectives set forth in the Memorandum and that satisfy one or more of the following criteria: (1) concern U.S. Government operations in Cuba (e.g., relating to the U.S. Embassy in Havana or the Naval Station at Guantanamo Bay); (2) support programs to build democracy in Cuba; (3) concern air and sea operations that support permissible travel, cargo, or trade; (4) support the acquisition of visas for permissible travel; (5) support the expansion of direct telecommunications and Internet access for the Cuban people; (6) support the sale of agricultural commodities, medicines, and medical devices sold to Cuba consistent with applicable U.S. laws (e.g., Trade Sanctions Reform and Export Enhancement Act of 2000 and the Cuba Democracy Act of 2002); (7) relate to sending, processing, or receiving authorized remittances; (8) otherwise further U.S. national security or foreign policy interests; or (9) are required by law. However, companies interested in engaging in such transactions should review carefully the amended regulations that are issued and consult with seasoned export controls and sanctions practitioners, as necessary, to ensure that they can comply with all applicable requirements.