On January 27, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) amended the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR), respectively, to further implement policy measures announced by Pres. Obama on December 17, 2014 for the purpose of engaging and empowering the Cuban people. Below we briefly discuss OFAC’s amendments and BIS’ corresponding changes.
OFAC’s amendments (1) removed certain payment and financing restrictions for authorized exports and reexports of non-agricultural items to Cuba and (2) further facilitated U.S.-Cuba travel by (i) allowing “blocked space, code-sharing, and leasing arrangements with Cuban airlines,” and (ii) authorizing additional travel-related (and other) transactions.
Non-Agricultural Export Trade Financing
OFAC removed the former limitations on payment and financing terms for all non-agricultural exports from the U.S. or non-agricultural reexports of 100% U.S.-origin items from a third country, provided that the exports or reexports are licensed or otherwise authorized by BIS.
Prior to the issuance of the rule, the only available options were payment of cash-in-advance or financing by a banking institution located in a third country. OFAC also added an authorization for depository institutions to provide financing for these authorized exports.
Travel and Related Services
OFAC authorized persons subject to U.S. jurisdiction to enter into blocked space, code-sharing
, and leasing arrangements with Cuban airlines (including a national of Cuba), in order to facilitate travel by air. In addition, OFAC authorized travel-related and other transactions directly incident to the temporary sojourn of aircraft and vessels, as authorized by BIS, for U.S.-Cuba travel. BIS made corresponding amendments to permit certain transactions related to the safety of civil aviation and safe operation of commercial aircraft.
OFAC also authorized additional travel-related and other transactions related to organizing professional meetings and other events,
disaster preparedness and response projects, and information and informational materials, including transactions directly incident to professional media or artistic productions in Cuba.
For more details, please see OFAC’s final rule here
BIS amended the EAR to revise the exceptions to the general policy of denial for exports and reexports to Cuba. Specifically, BIS amended its licensing policy to add (1) a general policy of approval for certain exports and reexports to Cuba previously subject to case-by-case review and (2) a policy of case-by-case review for certain exports and reexports of items not eligible for License Exception Support for the Cuban People (SCP), in order to meet the needs of the Cuban people.
General Policy of Approval for Certain Exports and Reexports
As a result of BIS’s amendments, license applications to export or reexport the following items are subject to a general policy of approval (formerly subject to case-by-case review):
- 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 non-governmental organizations 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;
- Agriculture-related items that are outside the scope of the EAR’s definition of “agricultural commodities” (such as insecticides, pesticides, and herbicides), and also agricultural commodities not eligible for License Exception Agricultural commodities (AGR), such as those not designated as EAR99; and
- Items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation.
Policy of Case-by-Case Review for Certain Exports and Reexports
BIS also revised its licensing policy to one of case-by-case review for the export and reexport of certain items (formerly subject to a general policy of denial) to meet the needs of the Cuban people, including:
- Items to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people;
- Items for agricultural production, artistic endeavors, education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation, and public transportation;
- 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; and
- Items to wholesalers and retailers for domestic consumption by the Cuban people.
Licenses issued under this case-by-case review policy will generally contain a condition prohibiting (1) reexports from Cuba and (2) uses that enable or facilitate the export of goods or services from Cuba to third countries.
It is important to keep in mind that BIS will continue to apply a policy of denial for exports and reexports of items for use by state-owned enterprises, agencies, and other organizations that primarily generate money for the Cuban government, including those that promote tourism and those that are engaged in mining-related activities. In addition, items destined for the Cuban military, police, intelligence, and security services also remain subject to a policy of denial.
For more details, please see BIS’s final rule here.
The Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) authorizes agricultural exports only if one of the payment and financing terms specified in the TSREEA are used.
These events include “amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba.” OFAC also amended the CACR to remove the requirements that all U.S. profits from certain events be donated to an independent nongovernmental organization in Cuba or a U.S.-based charity, as well as requirements that workshops and clinics be organized and run by the authorized traveler.
In addition, OFAC published updated Cuba-related Frequently Asked Questions, available here