9 Oct 2015
White House Further Relaxes Commercial Restrictions on Cuba
Two U.S. federal agencies on 21 September took action to further ease U.S. sanctions against Cuba related to travel, telecommunications and Internet-based services, business operations in Cuba, and remittances. Several days later U.S. President Barack Obama and Cuban President Raúl Castro met in New York as part of Castro’s visit to the United States for a series of United Nations meetings. The two leaders discussed the on-going advances in bi-lateral relations, including the regulatory changes that will allow more U.S. citizens to travel to and do business in Cuba. President Obama highlighted steps that the United States intends to take to further improve ties while underscoring that continued reforms in Cuba would increase the impact of U.S. regulatory changes. Mr. Obama also expressed optimism at the UN about an eventual decision by the U.S. Congress to lift the long-standing U.S. trade embargo on Cuba.
The key changes made by the Treasury Department’s Office of Foreign Assets Control and the U.S. Department of Commerce’s Bureau of Industry and Security in final rules that took effect on 21 September are summarised below. Meanwhile, the DOC has announced that Secretary of Commerce Penny Pritzker will travel to Havana 6-7 October to meet with senior Cuban officials and co-chair a regulatory dialogue through which U.S. officials will describe the recent changes made to rules governing trade, financial transactions and travel. U.S. officials were also expected to hear from Cuban leaders on the structure and status of the Cuban economy, including the non-governmental sector.
Physical Presence in Cuba
Persons subject to U.S. jurisdiction and engaging in the following categories of authorised activities will be able to establish a physical presence, such as an office, retail outlet or warehouse, in Cuba: news bureaus, exporters of authorised goods such as agricultural products and materials for construction or renovation of privately-owned buildings, providers of authorised mail and parcel transmission services and cargo transportation services, providers of telecom or Internet-based services, entities organising or conducting certain educational activities, religious organisations, and providers of travel and carrier services. In addition, these individuals and entities will be authorised to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba.
Transportation by vessel of authorised travellers between the United States and Cuba, without stops in third countries, is allowed by general licence, and certain lodging services aboard such vessels in connection with such transportation are also authorised. Licence exception AVS (aircraft, vessels and spacecraft) will authorise trips to Cuba of no more than 14 days for cargo vessels for hire for use in the transportation of items, passenger vessels for hire for use in the transportation of passengers and/or items, and recreational vessels used in connection with authorised travel.
Close relatives will be allowed to visit or accompany authorised travellers for additional educational activities, journalistic activity, professional research and religious activities as well as activities related to humanitarian projects and activities of private foundations or certain research or educational institutes. A close relative is defined as someone related to a person by blood, marriage or adoption and who is no more than three generations removed from that person or a common ancestor with that person. All authorised travellers will be allowed to open and maintain bank accounts in Cuba in order to access funds for authorised transactions while in Cuba.
Commercial and Financial Transactions
All persons subject to U.S. jurisdiction will be allowed to provide goods and services to individual Cuban nationals located outside of Cuba provided there is no commercial exportation of goods or services to or from Cuba. Banking institutions will be able to open and maintain accounts for Cuban individuals for use while they are outside of Cuba and to close such accounts.
Persons subject to U.S. jurisdiction will be allowed to establish and maintain a business presence in Cuba, including through subsidiaries, branches, offices, joint ventures, franchises, and agency or other business relationships with any Cuban individual or entity, to provide authorised telecom and Internet-based services and to enter into licencing agreements related to, and to market, such services. Persons subject to U.S. jurisdiction will also be allowed to import Cuban-origin mobile applications and to hire Cuban nationals to develop them.
An existing authorisation for the provision of services related to certain consumer communications devices exported to Cuba will be expanded to authorise services related to additional types of items authorised by Commerce and to add training related to the installation, repair or replacement of those items. Licence exception CCD (consumer communications devices) will no longer be limited to sales or donations, a change intended to support other types of transactions such as leases and loans of eligible items for use by eligible end-users.
Licence Exception SCP
Licence exception SCP (Support for the Cuban People) will authorise certain exports and re-exports of items to Cuba for use in establishing, maintaining and operating a physical presence in Cuba. Eligible end-users of the items include certain persons providing telecom or Internet-based services, establishing telecom facilities, providing travel or carrier services, organising or conducting educational activities, or transporting authorised items between the United States and Cuba.
Licence exception SCP will also:
- no longer be limited to sales or donations in order to support other types of transactions, such as leases and loans of eligible items for use by eligible end-users;
- authorise certain temporary re-exports from a foreign country to Cuba when the items are for use in scientific, archaeological, cultural, ecological, educational, historic preservation or sporting activities or in the traveller’s professional research and meetings;
- authorise exports or re-exports to eligible end-users in Cuba of certain commodities and software for use in software development; and
- authorise temporary exports and re-exports to Cuba of additional categories of items, including certain tools of trade to install, service or repair items and certain commodities and software for exhibition or demonstration.
A licence will be required for the release of technology or source code on the Commerce Control List to Cuban nationals in the United States or a third country but not for the deemed export or deemed re-exports of technology or source code designated as EAR99.
Legal Services, Market Research and Civil Aviation Safety
OFAC’s existing general licence authorising the provision of certain legal services to Cuba and Cuban nationals will be expanded to allow the receipt of payment for such services, subject to limitations related to payments from prohibited Cuban government or Cuban Communist Party officials. Additionally, a new general licence will authorise persons subject to U.S. jurisdiction to receive, and make payment for, certain legal services from Cuba or Cuban nationals.
A new general licence will allow certain travel-related transactions and such additional transactions as are directly incident to the conduct of market research, commercial marketing, sales negotiation, accompanied delivery, installation, or servicing in Cuba of items consistent with the DOC’s export or re-export licencing policy, provided that the traveller’s schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule.
A case-by-case review policy will apply to licence applications for exports and re-exports to Cuba of items to help ensure the safety of civil aviation and the safe operation of commercial passenger aircraft. Items that are to be reviewed pursuant to this policy include aircraft parts and components; software and technology related to the safety of flight; air traffic control, aviation communications and aviation weather related equipment; airport safety equipment; and devices used for security screening of passengers and baggage.
Gift Imports and Ordinarily Incident Transactions
Imports of merchandise from Cuba or Cuban-origin merchandise from a third country intended as gifts, excluding alcohol and tobacco products, will be allowed to be sent to the United States provided that it is not carried by a traveller, is valued at not more than US$100, and is a type and in quantities normally given as a gift.
OFAC is also clarifying that the Cuba sanctions provisions that are already in place allow most transactions that are ordinarily incident and necessary to give effect to a licenced transaction. For example, certain payments made using online payment platforms are permitted for authorised transactions.