On Tuesday, June 4, 2019, the Trump administration announced tighter restrictions on trade with Cuba, which affects, among other things, a popular category of travel to Cuba for U.S. citizens. In the action, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) modified its regulations to discontinue the license allowing group people-to-people travel to Cuba. Under the decision, only those U.S. travelers who had previously purchased a package for travel to Cuba by June 5, 2019 would be allowed to take advantage of the expired group people-to-people travel license.
Unfortunately, even this group of travelers may be unable to take advantage of this license, given that a rule change by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) immediately cut off travel to Cuba by cruise ships. Under this rule change, BIS now requires a license for passenger and recreational vessels and private and corporate aircraft to travel from the United States to Cuba; it is expected that many of these applications are likely to be denied. The BIS action will not, however, affect commercial air flights or voyages of cargo vessels, which continue to be authorized under the License Exception for Aircraft, Vessels, and Spacecraft (“AVS”).
These rule changes, which took effect the day following the announcement, had an immediate impact on the travel industry. It is estimated that approximately 800,000 cruise passengers are affected by the changes and will have to rebook their trips or travel to alternative destinations. In fact, the changes are expected to have such a significant impact on the cruise industry that the cruise lines Royal Caribbean and Norwegian publicly announced cuts to their earnings estimates.
The new travel restrictions were an additional step taken by the Trump Administration to carry out the policies articulated in the June 16, 2017 National Security Presidential Memorandum, “Strengthening the Policy of the United States Toward Cuba.” In the view of Treasury Secretary Steven Mnuchin, “Cuba continues to play a destabilizing role in the Western Hemisphere, providing a communist foothold in the region and propping up U.S. adversaries in places like Venezuela and Nicaragua by fomenting instability, undermining the rule of law, and suppressing democratic processes.”