Today, the U.S. Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to further tighten restrictions on Cuba. The changes, which are effective immediately, are part of a broader U.S. government effort to tighten the embargo on Cuba after a tentative easing of relations under the Obama Administration.
The amendment lowers the applicable de minimis threshold for non-U.S. items that contain U.S.-origin content; tightens rules regarding the leasing or chartering of aircraft or vessels; and limits license exception Support for the Cuban People (SCP), including by clarifying the scope of authorized telecommunications exports and reexports.
10 percent de minimis threshold
First, and most importantly for non-U.S. companies, BIS lowered the de minimis threshold for Cuba from 25 percent to 10 percent. During the Obama Administration, the de minimis level for Cuba was raised from 10 percent to 25 percent. This amendment reverses that change.
The amendment means that non-U.S. companies must now obtain a BIS license or use an EAR license exception before exporting any product (including goods, software, or technology) to Cuba if the product contains more 10 percent U.S.-origin content, by value. According to BIS, such license applications will face a presumption of denial unless the project supports U.S. policy, defined in Section 742.2(b) of the EAR. Non-U.S. companies should review pending and planned projects in Cuba to ensure compliance with the new rules. There is no grace or wind down period associated with the change.
The EAR’s de minimis provisions are an example of the extraterritorial application of U.S. export control laws – non-U.S. items located outside of the United States are subject to the EAR’s license requirements if the items contain more than a de minimis level of controlled U.S.-origin content.
Aircraft & vessel restrictions
Second, BIS is rescinding a favorable a licensing policy regarding the export or reexport of aircraft leased to Cuban state-owned airlines and is revoking licenses issued under the prior licensing policy within seven days. License requests related to such exports and reexports will now face a presumption of denial. The amendment also tightens the restrictions in license exception Aircraft, Vessels, and Space (AVS) when applied to aircraft or vessels leased to or chartered by a Cuban national or a state sponsor of terrorism.
New limits on license exception Support for the Cuban People
Finally, the amendment narrows license exception SCP with respect to certain donated items, clarifies the scope of the authorized telecommunications exports, and limits exports on promotional items.
- Donations of items for use in scientific, archeological, cultural, ecological, education, historic preservation, or sporting activities will now require an individual license from BIS if the donations are made to the Cuban government or communist party.
- The amendment clarifies that SCP’s telecommunications provision is limited to items for the creation and upgrade of telecommunications infrastructure (i.e., backbone items) that support the free flow of information to the Cuban people and to non-backbone items for end use by specific Cuban nationals and specific private sector end users. SCP does not authorize the export of non-backbone items to other end users, such as Cuban state-owned enterprises.
- A provision of SCP previously allowing the export of certain promotional items has been rescinded.