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White House Further Eases Restrictions on Commercial Relations with Cuba

Wednesday, January 27, 2016
Sandler, Travis & Rosenberg Trade Report

Two federal agencies are taking action to further ease U.S. sanctions against Cuba related to non-agricultural export trade financing, travel and related services, and permitted exports and reexports. Among the changes being made by the Treasury Department’s Office of Foreign Assets Control and the Commerce Department’s Bureau of Industry and Security in final rules that will take effect Jan. 27 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 reexports of 100 percent U.S.-origin items from a third country that are licensed or otherwise authorized by the Department of Commerce, 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 authorized only if one of the payment and financing terms specified in the statute are used. OFAC has also added an authorization for depository institutions to provide financing for such authorized exports.

Travel and Related Services. The entry into blocked space, code-sharing and leasing arrangements to facilitate the provision of carrier services by air authorized 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 authorized 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 license authorizing 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 programs (such as movies and TV programs), music recordings and the creation of artworks. OFAC has removed a restriction in an existing general license and is explicitly authorizing 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 organize 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 authorized. The requirements for certain events that all U.S. profits from the event after costs be donated to an independent non-governmental organization in Cuba or a U.S.-based charity and that workshops and clinics be organized and run, at least in part, by the authorized traveler have also been removed.

Finally, the list of authorized humanitarian projects in section 515.575 has been expanded to include disaster preparedness and response.

Exports and Reexports. BIS has amended the exceptions to the general policy of denial in the Export Administration Regulations for exports and reexports to Cuba by identifying additional types of exports and reexports 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 organizations 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 license 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 reexport of such aircraft leased to state-owned enterprises.

The exceptions to the general policy of denial in the EAR for exports and reexports to Cuba have also been amended by identifying types of exports and reexports 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 reexports for this purpose made to SOEs and agencies and organizations 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 reexports of items for agricultural production, artistic endeavors (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 reexports 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 reexports to wholesalers and retailers of items for domestic consumption by the Cuban people. Licenses issued under this case-by-case review licensing policy generally will have a condition prohibiting both reexports 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 reexport items for use by SOEs, agencies or other organizations 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 reexport items destined to the Cuban military, police, intelligence and security services will remain subject to a general policy of denial.

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