Cuba

American Honda Finance Corporation (American Honda) has settled with the Office of Foreign Assets Control (OFAC) over potential civil liability for 13 violations of the Cuban Assets Control Regulations (CACR), which allegedly occurred between 2011 and 2014. What’s notable is that the matter involved the Canadian affiliate of the global company which was acting entirely independently and outside of the U.S. (more…)

Sanctions against Cuba continue to lift. Effective this week, the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) have relaxed controls in several areas of trade and commerce with Cuba, including loosening restrictions on exporting to and importing from Cuba, carving out new allowances for U.S. persons entering into contingent contracts with Cubans, and opening new opportunities for American entrepreneurs in the civil aviation, construction, and health sectors. Among the changes is also a provision that will allow Americans to travel to Cuba to attend professional meetings and conferences related to tourism. (more…)

The Department of Treasury and Department of Commerce have made several changes to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) since the Administration announced its new direction toward Cuba in December 2014. Since the amendments have occurred in multiple sets of rule changes over the past seventeen months, here is an attempt to summarize where we are in terms of what is now allowed.
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I am here to encourage newly authorized trade to and from Cuba.  However, my job is also to ensure that exporters have all of the information they need to make informed business decisions and remain compliant with U.S. trade laws – not just the information in the introductory paragraphs of news articles or press releases. (more…)

On March 16, 2016, in what could be the final set of amendments  to the Cuban Assets Control Regulations (CACR) under the Obama Administration, the Office of Foreign Assets Control (OFAC) published a Final Rule that further facilitates travel to Cuba, authorizes additional types of financial transactions, and allows companies to have a greater business presence on the island.  As expected, Wednesday’s changes represent yet another small step towards normalization that builds upon past rounds of regulatory amendments implemented on January 16, June 15, and September 21, 2015, and January 27, 2016. (more…)

As you know there are ongoing changes to the Cuba export regulations.  President Obama announced the reopening of the U.S. embassy in Havana and a Cuban embassy in Washington. The Commerce Department will remove Cuba from list of countries subject to anti-terrorism (AT) controls, and Cuba has been removed from the list of state sponsors of terrorism (SSOT).  Our January blog is still the state of play for permissible business. (more…)

After President Obama’s announcement that his Administration will pursue a policy aimed at improving U.S.-Cuba diplomatic relations and ultimately eliminating the economic embargo on Cuba, the U.S. Treasury and Commerce Departments took the first step towards lowering barriers to trade with Cuba by amending existing sanctions regulations. The changes to the Cuban Assets Control Regulations (31 C.F.R. §515) and Export Administration Regulations (15 C.F.R. §§730-774) went into effect on January 16, 2015 and include a number of amendments that open up doors for trade and investment in Cuba, particularly for U.S. companies in the travel and medical industries. Below is a list of dos and don’ts for transactions involving Cuba and Cuban nationals to help your company determine how to take advantage responsibly and effectively of these recent developments.  Whether Congress acts to inhibit or roll back these foreign policy changes remains a question at this writing.

NOW PERMITTED:

  • U.S. companies can export and sell certain communications devices, related services, building materials, equipment, tools for use by the private sector to construct or renovate privately-owned buildings, and tools and equipment for private agricultural activity under new license exception SCP (Support for the Cuban People) and license exception CCD (Consumer Communication Devices) has been expanded to include certain personal computers, mobile phones, and consumer software.
  • With proper agency approval, U.S. companies can potentially export items related to environmental protection.  This includes energy efficient items.
  • Airlines and travel agents can engage in transactions incident to approved travel to Cuba without a specific license from the Treasury’s Office of Foreign Assets Control.
  • Certain U.S. persons can travel to Cuba without a specific license.  This change applies to individuals that would have been authorized to travel to Cuba under one of the 12 preexisting categories, including journalistic activity; professional research; educational activities; religious activities; public performances, and athletic and other competitions.
  • U.S. travelers can spend an unlimited amount on expenses incident to travel to Cuba and can also use credit and debit cards while in Cuba.
  • U.S. travelers can take $10,000 of family remittances with them to Cuba.
  • U.S. travelers can bring $400 of goods back to the U.S. from Cuba.  This includes up to $100 of tobacco or alcohol products.
  • Insurers can provide health, travel, and life insurance to U.S. travelers and third-country nationals that travel to Cuba.

STILL NOT PERMITTED:

  • U.S. persons still cannot export or import items to or from Cuba for commercial purposes absent an applicable license or license exception.
  • U.S. persons still cannot transact with Cuban entities absent an applicable license or license exception.

Have a great week.

Doreen

It is quite likely that the current and upcoming changes to the United States’ relationship with Cuba will be the most significant we’ve seen since 1961, when the U.S. government initially cut ties with Havana and imposed an embargo on Cuba that has only grown stricter over the years. President Obama’s December 17 announcement signaled the start of efforts to normalize U.S.-Cuba relations and was immediately echoed by Cuban President Raul Castro as the two countries exchanged numerous prisoners on humanitarian grounds. The U.S.’ new approach, details of which were released in a White House fact sheet, includes plans to rekindle diplomatic ties through discussions led by Secretary Kerry, the establishment of a U.S. Embassy in Havana in the coming months, and high-level exchanges between the two governments beginning with the next round of U.S.-Cuba Migration Talks to be held in Havana later this month. The White House also indicated that the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security (BIS) would make adjustments to existing regulations in order to begin the normalization process. On January 15, both OFAC and BIS published final rules implementing President Obama’s initial reforms, which include the following changes, effective January 16th, 2014:

  • Travel: OFAC general licenses for 12 specific categories of travelers will make it easier for certain travelers such as those with family in Cuba, journalists, researchers, educators, and performers to visit Cuba as they will no longer need to apply for specific licenses.
  • Remittances: The amount a U.S. person will be able to remit to Cuba in a quarter will be increased from $500 to $2,000 and remittance forwarders and those sending money to support the development of private businesses in Cuba will no longer require specific licenses from OFAC to do so.
  • Exports: A small group of goods and services will be allowed to be exported from the U.S. to Cuba, including building materials for residential construction, agricultural equipment, consumer communication devices and related software, applications, hardware, and services, as well as other “goods for use by private sector Cuban entrepreneurs.”
  • Imports: Upon their return to the U.S., travelers to Cuba will be able to import up to $400 worth of Cuban goods ($100 of which can consist of tobacco or alcohol products).
  • Shipping: Certain vessels that have engaged in trade with Cuba will be allowed to enter the U.S.
  • Financial Institutions: U.S. entities will be allowed to open accounts at Cuban financial institutions and U.S. credit/debit cards will work in Cuba. Transactions incident to Cuban travel and related insurance coverage will also be permitted.
  • Extraterritorial Reach: The scope of U.S. sanctions against Cuba will be limited so that certain U.S. owned/controlled entities located in third countries will be allowed to transact with Cuban individuals in third countries.

For more details regarding these changes, you can take a look at the text of the OFAC changes here, the text of the BIS changes here, or review the Treasury Department’s fact sheet on the issue here.

It remains to be seen whether these initial executive-led changes open the door to a more comprehensive dismantling of the 50-year-old economic and financial embargo against Cuba and usher in a truly new chapter of normalized trade between the two countries. If this does occur, U.S. exporters and American industry as a whole will have the chance to gain big from opportunities made possible by the newly opened Cuban market. However, a more substantial easing of sanctions is unlikely absent direct congressional action to amend or repeal the various pieces of legislation underpinning the regulations promulgated by OFAC and BIS. President Obama along with the executive agencies can only go so far in suspending the economic embargo on Cuba due to limitations on their power to do so specified in Titles I and II of the Libertad Act (or Helms-Burton Act) of 1996. Undoubtedly, questions of the limits of executive power as compared to that of Congress to change U.S. law and foreign policy will fuel the debate, especially since President Obama must seek support for this initiative from a Republican Congress.

While drastic changes to the sanction regime will not happen overnight, how far OFAC is willing to go in implementing changes to the regulations and subsequent reaction in Congress will give us a better sense of how much support the President has, and how fierce the opposition is. These initial steps will help gage whether a transition to a truly “normalized” trade relationship with Cuba can be accomplished relatively quickly or if it will take many years to dismantle this longstanding policy. Stay tuned.