Today, the two agencies primarily responsible for administering the U.S. embargo on Cuba announced revised rules liberalizing sanctions on that country. The changes are being made to implement the policy changes announced by President Obama on December 17, 2014 and include the easing of certain restrictions on travel, remittances, the processing of authorized financial transactions, transactions with Cuban nationals outside of Cuba, and the provision of telecommunications, financial services, trade, shipping, and other services. The changes do not lift the embargo on Cuba and substantial restrictions remain in place for U.S. persons wishing to do business in Cuba. The rules do, however, mark an important first step in easing the decades-long embargo on Cuba.
The new rules will take effect tomorrow when the Office of Foreign Assets Control (OFAC) and Bureau of Industry and Security (BIS) publish amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR) in the Federal Register.
Among the changes announced today are:
- Eased restrictions on the export of certain U.S. origin goods and software to Cuba. The EAR will be amended to add license exceptions permitting the export and reexport of EAR99 items and items controlled for anti-terrorism reasons only (i.e., ECCNs with "AT" as the only reason for control) that meet one of the following criteria, among other items:
- Consumer communication devices (CCDs), including personal computers, digital cameras, mobile phones, consumer "information security" or encryption items, and associated items;
- Building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings;
- Tools and equipment for private sector agricultural activity;
- Tools, equipment, supplies, and instruments for private sector entrepreneurs;
- Telecommunications items, including those related to accessing the internet, use of internet services, and internet creation and upgrades; and
- Items for use by news media.
BIS is also adjusting its licensing policy to consider, on a case by case basis, applications for the export of telecommunications items that do not qualify for use of one of the new license exceptions. Items necessary for environmental protection, including of U.S. or international air quality, waters, or coastlines and those related to renewable energy or energy efficiency will generally be approved. The new EAR license exceptions will not apply to the export or reexport of foreign made goods by overseas subsidiaries of U.S. companies.
OFAC's CACR will be amended to add a general license permitting exports and reexports authorized under the EAR. The CACR will also be amended to expand financing options for permissible exports to Cuba by allowing payment prior to the transfer of title and control to a Cuban purchaser. Previously payment prior to shipment was required.
General licenses for telecommunications and internet services. In addition to permitting the export of certain telecommunications items to Cuba, the CACR will be amended to allow U.S. persons to provide certain telecommunications and internet services to Cuba. U.S. persons will be authorized to provide services related to linking Cuba and third countries, internet-based communications, telecommunications facilities (including fiber optic cable and satellite facilities), internet-based communications services, and other communication-related services. U.S. persons must report transactions related to the provision of certain authorized telecommunications services to OFAC. Any exports or reexports of U.S. origin goods or software must also comply with the EAR.
Relaxed controls on certain financial transactions related to Cuba. Depository institutions will be permitted to establish and maintain correspondent accounts with Cuban banks, provided that the accounts are only used to process authorized transactions.
Eased restrictions on authorized travel and related travel expenses and services. The CACR will be amended to add a general license for the 12 existing categories of authorized travel to Cuba, making travel to the country easier, but still barring general tourism by U.S. persons. Authorized travelers will be permitted to use U.S. credit cards for authorized expenses and will no longer face a per-diem limit on authorized travel spending in Cuba. Authorized travelers to Cuba will also be permitted to bring up to $400 worth of Cuban origin goods into the United States, including up to $100 of Cuban tobacco or alcohol.
Travel service providers will be permitted to provide services related to authorized travel to Cuba without obtaining specific licenses from OFAC.
Permitting imports from "independent Cuban entrepreneurs." U.S. persons will be permitted to engage in all transactions necessary to import goods and services produced by "independent Cuban entrepreneurs," who will be identified by the State Department and listed on the State Department's website at: http://www.state.gov/e/eb/tfs/spi/.
- Increased remittances. Quarterly remittance limits will be raised from $500 to $2,000 and remittance forwarders will no longer need to obtain specific licenses, among other measures.
The new rules impact a wide-range of activities and come with various caveats, requirements, and restrictions. Please contact Eric McClafferty, Larry Lasoff, or Robert Slack if you are interested in tracking these developments and understanding the implications of the easing of sanctions for your business.