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Wednesday
Jan212015

Easing the embargo: New Cuba trade regulations take effect

Amendments to the Treasury Department’s Cuban Assets Control Regulations came into effect Friday. While the Cuba embargo remains in place, the regulatory amendments reflect the Obama Administration’s policy “to further engage and empower the Cuban people” and are continuations of amendments made in September 2009 and January 2011.

On the same day, the Commerce Department’s Export Administration Regulations (EAR) were similarly amended to reflect the policy.

The amendments primarily impact travel, exports to the Cuban private sector, financial services, and telecommunications. In a nutshell, the regulations now authorize and facilitate certain types of travel to Cuba, increase the limit on remittances to Cuba, allow U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, authorize certain transactions with Cuban nationals outside Cuba, and allow a number of other activities related to, in particular, telecommunications, financial services, trade, and shipping.

With regard to private sector exports, the Treasury Department now explicitly authorizes certain micro-financing and entrepreneurial and business training. In addition, the Commerce Department provides a license exception for the export (and re-export) of the following three categories of commercially sold items:

  • building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, including privately-owned residences, businesses, places of worship, and buildings for private sector social or recreational use,
  • tools and equipment for private sector agricultural activity, and
  • tools, equipment, supplies, and instruments for use by private sector entrepreneurs.

For the license exception to apply, however, items that fall within these three categories must be classified in the Commerce Control List (CCL) as “EAR99” or otherwise, the CCL classification “reason for control” can only be anti-terrorism (“AT”).

In addition, correspondent accounts at Cuban financial institutions are now permitted, and parties engaging in authorized exports will no longer be required to have “cash before shipment” when selling to Cuba but rather, “cash before transfer in titles.” This amendment to the interpretation of “cash in advance” will allow for more efficient and flexible financing of authorized trade in Cuba.

As relates to telecommunications, the Commerce Department provides a couple different license exceptions for the export of certain items intended to improve the free flow of information to, from, and among the Cuban people. The amended regulations now authorize either donated or sold items for telecommunications, including access to the internet and use of internet services, and certain consumer communications devices (e.g., computers and mobile phones) as well as certain information security-related software. 

One license exception applies to certain items for use by news media personnel and U.S. news bureaus engaged in the gathering and dissemination of news to the general public. Similar to the license exception for private sector exports discussed above, the applicability of these communications-related license exceptions may likewise be restricted by the CCL classification for the specific item at issue. 

The 54-year old embargo remains in place, but the President has asked Congress to lift it.  He has also announced that the Administration will begin measures to reopen the embassy in Havana and has asked the State Department to review Cuba’s current designation as a “state sponsor of terrorism.”  Being cleared from that designation would allow for further easing of the current strict level of trade controls.

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Nina Mohseni is an associate attorney at Sandler, Travis & Rosenberg in Chicago where she practices customs and international trade law.  She is the vice president of the Chicago chapter of the Organization of Women in International Trade (OWIT Chicago) and vice chair of the Chicago Bar Association’s International Corporate and Trade Law Committee.