11 March 2016
U.S. Takes Additional Steps to Loosen Restrictions on Cuba
The Obama administration has taken additional steps over the past several months to further relax commercial restrictions on Cuba. The White House has also announced the President Obama will visit Cuba on 21 March, which will be the first visit by a sitting U.S. president to the island nation since President Calvin Coolidge went in 1928.
Of particular importance is a 16 February arrangement that provides for the re-establishment of scheduled passenger and cargo flights between the two countries for the first time in more than half a century. Under this arrangement U.S. carriers may operate up to 110 daily roundtrip flights between the U.S. and Cuba: 20 to Havana, and ten each to Cuba’s nine other international airports.
U.S. carriers were required to apply for an allocation of the new opportunities by 2 March. Answers to applications by the Department of Transportation are due by 14 March and replies to those answers are due by 21 March. The arrangement does not limit charter services, meaning that no DOT allocation procedures are needed and charter flights can continue as before. The DOT states that in selecting which carriers will be able to offer scheduled flights to Cuba and from which U.S. points it will consider which proposals will offer and maintain the best service to the traveling and shipping public. Recognising the eagerness of U.S. carriers to take advantage of these new opportunities, the department intends to reach a final decision as expeditiously as possible.
Two federal agencies also took action in late January 2016 to further ease U.S. sanctions against Cuba related to non-agricultural export trade financing, travel and related services, and permitted exports and re-exports. Among the changes made by the Treasury Department’s Office of Foreign Assets Control and the U.S. Commerce Department’s Bureau of Industry and Security in final rules that took effect on 27 January are the following.
Non-Agricultural Export Trade Financing. OFAC has removed the former limitations on payment and financing terms for all exports from the U.S. or re-exports of 100 percent U.S.-origin items from a third country that are licenced or otherwise authorised by the DOC, other than exports of agricultural items or commodities. As required by the Trade Sanctions Reform and Export Enhancement Act of 2000, such agricultural exports continue to be authorised only if one of the payment and financing terms specified in the statute are used. OFAC has also added an authorisation for depository institutions to provide financing for such authorised exports.
Travel and Related Services. The entry into blocked space, code-sharing and leasing arrangements to facilitate the provision of carrier services by air authorised pursuant to section 515.572(a)(2), including the entry into such arrangements with a national of Cuba, is now permitted. Also allowed are travel-related and other transactions directly incident to the facilitation of the temporary sojourn of aircraft and vessels as authorised by the DOC for travel between the U.S. and Cuba, including by certain personnel required for normal operation and service on board a vessel or aircraft or to provide services to a vessel in port or aircraft on the ground.
The general licence authorising travel-related and other transactions that are directly incident to the export, import or transmission of information materials has also been expanded to include professional media or artistic productions in Cuba. Such productions include media programmes (such as movies and TV programmes), music recordings and the creation of artworks. OFAC has removed a restriction in an existing general licence and is explicitly authorising transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments.
In addition, travel-related and other transactions to organise professional meetings or conferences, amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba is now authorised. The requirements for certain events that all U.S. profits from the event after costs be donated to an independent non-governmental organisation in Cuba or a U.S.-based charity and that workshops and clinics be organised and run, at least in part, by the authorised traveller have also been removed.
Finally, the list of authorised humanitarian projects in section 515.575 has been expanded to include disaster preparedness and response.
Exports and Re-exports. BIS has amended the exceptions to the general policy of denial in the Export Administration Regulations for exports and re-exports to Cuba by identifying additional types of exports and re-exports that are subject to a general policy of approval, including the following:
- telecommunications items that would improve communications to, from and among the Cuban people;
- certain commodities and software to human rights organisations or to individuals and NGOs that promote independent activity intended to strengthen civil society in Cuba;
- commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public;
- agricultural items that are outside the scope of “agricultural commodities” as defined in part 772 of the EAR (such as insecticides, pesticides and herbicides) as well as agricultural commodities not eligible for licence exception AGR (agricultural commodities) such as those specified in an entry on the Commerce Control List (i.e., are not designated EAR99); and
- items that are necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or re-export of such aircraft leased to state-owned enterprises.
The exceptions to the general policy of denial in the EAR for exports and re-exports to Cuba have also been amended by identifying types of exports and re-exports that will be reviewed to determine, on a case-by-case basis, whether such transactions meet the needs of the Cuban people, including exports and re-exports for this purpose made to SOEs and agencies and organisations of the Cuban government that provide goods and services for the use and benefit of the Cuban people.
This case-by-case review policy includes exports and re-exports of items for agricultural production, artistic endeavours (including the creation of public content, historic and cultural works and preservation), education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction, and renovation and public transportation. Also included are exports and re-exports of items for use in construction of facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people, as well as exports and re-exports to wholesalers and retailers of items for domestic consumption by the Cuban people. Licences issued under this case-by-case review licencing policy generally will have a condition prohibiting both re-exports from Cuba to any other destination and uses that enable or facilitate the export of goods or services from Cuba to third countries.
BIS will continue to apply a general policy of denial for applications to export or re-export items for use by SOEs, agencies or other organisations of the Cuban government that primarily generate revenue for the state, including those engaged in tourism or the extraction or production of minerals or other raw materials. Additionally, applications to export or re-export items destined to the Cuban military, police, intelligence and security services will remain subject to a general policy of denial.