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February 4, 2016

OFAC, BIS Implement More Changes in Support of President’s Cuba Policy

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

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.[1] 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,[2] 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.[3]

BIS

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):

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:

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.

[1] 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.
[2] 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.
[3] In addition, OFAC published updated Cuba-related Frequently Asked Questions, available here.