On Dec. 17, 2014, President Obama announced that the United States would be setting a new course in U.S. relations with Cuba by easing some of the trade and travel restrictions, which have been in place for over 50 years. Obama stated that the policy of isolating Cuba has failed to accomplish the long-term objective of promoting the emergence of a democratic Cuba, stating that doing the same thing and expecting a different result is no good for the American or Cuban people. The main goal in lifting some of the restrictions is purported to focus on improving human rights, empowering democratic reforms and promoting the independence of the Cuban people so that they do not need to rely so heavily on the Cuban state. As a result of Obama’s announcement, on Jan. 16, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (31 CFR Section 515) and the U.S. Department of Commerce Bureau of Industry and Security (BIS) amended the Export Administrations Regulations (15 CFR Sections 736, 740, 746 and 748) to implement the policy change by significantly loosening export and travel restrictions to Cuba.
The U.S. embargo against Cuba was first implemented by the Department of the Treasury and the Department of Commerce in 1963 through a series of regulations that prohibited U.S. persons from dealing in any property in which Cuba or a Cuban national had an interest, imposed a total freeze on Cuban assets and financial dealings with Cuba, and prohibited Americans from traveling to Cuba without a specific license permitting their travel for an approved purpose included in one of 12 delineated categories of authorized travelers. All exports to Cuba also required a specific license, making it virtually impossible to provide goods to the country.
The amendments outlined by the Department of the Treasury and the Department of Commerce do not completely eliminate the embargo against Cuba, but rather serve to ease several restrictions that have been in place. Specifically, the amendments are meant to more easily facilitate travel to Cuba for authorized persons, raise the limit on remittances to Cuba, allow U.S. financial institutions to open correspondent accounts at Cuban financial institutions and initiate new efforts to increase Cubans’ access to telecommunications equipment.
The greatest impact on individuals relates to the ability to more freely travel to Cuba without the requirement to obtain a specific license for each entry to Cuba. From now on, general licenses will be made available to authorized travelers in one of 12 categories; (1) family visits; (2) official business of the U.S. government, foreign governments and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, worships, athletic and other competitions and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or education institutions; (11) exportation, importation or transmission of information or informational materials, and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines. Travel by tourists to Cuba is still restricted.
Under the former regulations, U.S. persons were only allowed to remit $500 per quarter to assist Cuban nationals. With the new amendments in place, U.S. persons are now allowed to provide a remittance of $2,000 on a quarterly basis for general donative remittances to Cuban nationals. Further, donative remittances for humanitarian projects, support for the Cuban people and support for the development of private businesses in Cuba will no longer require a specific license to move forward. Eliminating the requirements for a specific license to engage in these transactions are meant to help to empower the Cuban people to fight for democracy.
The new regulations will also have a substantial impact on American business dealings with Cuba. The BIS will now permit American companies to export telephones, computers and Internet technology to Cuba and send these supplies to private Cuban firms. The ability to export telecommunications equipment will likely have the greatest impact on the Cuban economy by providing additional ways to communicate and trade with the world through the use of this new equipment. Though export licenses will generally still be required, a new exception to the export license requirement has been added to allow the exports of goods that generally support the Cuban people. Wide ranges of goods will likely fall into this category and allow for the export of a large amount of new goods to the Cuban people.
The new OFAC regulations also make significant changes to the shipping sector by creating new exceptions to the “180-day rule” set forth in 31 CFR Section 515.207, which bars vessels from the U.S. for 180 days after calling Cuba to engage in the trade of goods or the purchase or provision of services. The new regulation (31 CFR Section 515.550) provides for the following exceptions from the vessel ban as follows: (1) shipment of cargoes exported under Commerce Department authorization including agricultural, medical, telecommunications and other permitted goods; (2) carriage of students, faculty and staff that are authorized to travel to Cuba, and (3) vessels engaged in the exportation or re-exportation to Cuba from a third country of most agricultural commodities, medicine or medical devices. The Department of Commerce’s rules still do not allow vessels to depart the U.S. for Cuba without an export license. Although vessels that have traded in Cuba now will not have to wait 180 days before heading to the U.S., a vessel wanting to travel from the U.S. to Cuba is still going to need an export license to do so.
The steps taken by Obama, the Department of the Treasury and the Department of Commerce are essential to help improve the lives of the Cuban people and normalize the relationship between the U.S. and Cuba; however, until the U.S. Congress takes formal action to fully normalize relations with Cuba, many restrictions still remain in place. Before engaging in any activities with Cuba, individuals and business should give careful consideration to the new regulations to ensure compliance.
To read a copy of the White House Fact Sheet on these new policies click here.
To read a copy of the Amendments to the Cuban Assets Control Regulations issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control click here.
To read a copy of the Amendments to the Export Administration Regulations issued by the U.S. Department of Commerce click here.
Michelle Otero Valdés is the managing partner of the Miami office of Chalos & Co. P.C., which specializes in both civil and criminal maritime and admiralty law matters. Visit www.chaloslaw.com. Read more blog posts from Michelle Otero Valdés at http://miamishippinglaw.blogspot.com/. Melissa Russo, an attorney in the firm’s New York office, contributed to this article.
