On October 14, 2016, the Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security (BIS) announced changes to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) respectively, to further relax U.S. sanctions targeting Cuba. The new amendments were published in the Federal Register on Monday, October 17, 2016.
With the new amendments, OFAC intends to “create more economic opportunities for Cubans and Americans” further implementing the new U.S. policy towards Cuba that President Obama originally announced on December 17, 2014. These amendments are supplementing those published on January 16, 2015, September 21, 2015, January 27, 2016, and in March 2016.
The specific changes made by OFAC and BIS expand the following opportunities for persons subject to U.S. jurisdiction:
- Opportunities for Trade and Commerce
Exports and Re-exports to Cuba. OFAC has expanded its existing export authorization to remove a pre-existing gap in its regulations. Specifically, OFAC has now removed the reference to “100% U.S. –origin items” from its export or re-export authorization. The net effect of this change is to authorize the importation into the United States of non-U.S. origin product for re-export of that product to Cuba. Because of statutory restrictions in the 1992 Cuban Democracy Act, OFAC continues to prohibit persons subject to U.S. jurisdiction to export most products from third countries to Cuba directly.
Consumer goods for personal use. BIS expanded its License Exception Support for the Cuban People (SCP) to authorize the export of all consumer goods for personal use when sold directly to an individual for use by the individual or his/her family. The items must be EAR99 or controlled on the Commerce Control List (CCL) only for anti-terrorism purposes. This updated License Exception facilitates direct sales to the Cuban people, including through online retailers.
Import of items previously exported or re-exported to Cuba. The import into the U.S. or into a third country of items previously exported or re-exported to Cuba is now authorized. U.S. persons can also be involved in the repair and service of such goods regardless of their involvement in the export or re-export. However, the exportation or re-exportation of the repaired goods back to Cuba may need a specific license.
Vessel transactions. Foreign vessels can now call on U.S. ports within 180 days of calling on a Cuban port provided that the foreign vessel had carried items from a third country to Cuba that –if subject to the EAR– would be designated as EAR99 or controlled on the CCL only for antiterrorism reasons.
Contingent contracts. Persons subject to U.S. jurisdiction may enter into contingent contracts for transactions prohibited by the CACR, provided that the performance of such contracts is made contingent to an OFAC authorization and/or the authorization of any other Agency. Prior to this, only executory contracts were authorized. This new language authorizes the execution of pro forma invoices, bids, or proposals in response to public tenders or binding memorandum of understanding.
Transit of Cargo. BIS now authorizes air cargo transiting Cuba via aircraft on temporary sojourn, under its License Exception for Aircraft Vessels and Spacecraft (AVS).
Prohibited Officials of the Cuban government. The definition of Cuban officials and prohibited members of the Communist party has been narrowed to cover members of the Council of Ministers and members of the Cuban Communist Party.
Donations. BIS has modified its License Exception for Gift Parcels and Humanitarian Donations (GFT) to authorize individuals who wish to send gift parcels to Cuba and certain donated items through a forwarding service acting on behalf of the donor, to an eligible recipient. BIS continues to maintain conditions regarding the types of items that qualify as gifts, eligible recipients, frequency of donations, and value of donations.
- Supporting People to People Contact and Facilitating Authorized Travel
Imports from Cuba. OFAC has removed several of the previous restrictions on imports of Cuban-origin product. Previously, travelers were only authorized to import a total of $400 (of which $100 could be tobacco or rum products) in Cuban-origin goods when traveling directly from Cuba. Now, authorized travelers may import into the United States the normal limits on duty and tax exemptions, including alcohol and tobacco products, provided that the merchandise is imported for personal use. Non-U.S. nationals traveling to the U.S. and persons subject to U.S. jurisdiction may also import Cuban-origin alcohol and tobacco into the U.S. as accompanied baggage from third countries, provided that it is for personal use.
Remittances. Remittances to third-country nationals for travel to, from, and within Cuba are authorized, provided that such travel would be authorized for a U.S. person.
Record keeping. OFAC is intending to eliminate the burden on record keeping requirements for providers of travel and carrier services to Cuba by allowing them to request either a copy of the travelers’ specific license or the specific license number.
Professional meetings in Cuba. The General License authorizing travel to Cuba for purposes of attending or organizing professional meetings has been expanded by eliminating the condition that the conference does not promote tourism in Cuba. Travel to Cuba for tourism purposes is still prohibited.
Civil Aviation Safety. A new general license authorizes the provision of services to Cuba and Cuban nationals for the safe operation of commercial aircraft.
- Opportunities for Scientific Collaboration and Access to Medical Innovations
Joint Research. OFAC issued a new authorization allowing persons subject to U.S. jurisdiction to engage in commercial and non-commercial joint medical research projects with Cuban nationals. OFAC may issue specific licenses for importation of Cuban-origin commodities for bona fide research projects.
Marketing sales or distribution in the United States of FDA-approved Cuban origin pharmaceuticals. Transactions to market, sell, or distribute FDA-approved Cuban origin pharmaceutical products are now authorized. OFAC is also authorizing the opening, use and maintenance, and closing of accounts for authorized health-related purposes in Cuba.
- Opportunities for Grants and Strengthening Cuba’s Infrastructure
Grants, scholarships and awards. OFAC specifically authorizes the provision of grants, scholarships and awards related to scientific research and religious activities. Previously, such contributions were only authorized for educational activities and humanitarian projects.
Cuban infrastructure. OFAC has also authorized the provision of services related to developing, repairing, maintaining and enhancing Cuban infrastructure that directly benefit the Cuban people. This includes services related to: (i) systems and assets used to provide the Cuban people with goods and services by public transportation; (ii) water management; (iii) waste management; (iv) non-nuclear electricity; (v) hospitals; (vi) public housing; (vii) schools; and (viii) environmental projects.