• Thaw in U.S.-Cuba Sanctions: a New Revolution?
  • October 1, 2009 | Author: Mark F. Brzezinski
  • Law Firm: McGuireWoods LLP - Washington Office
  • In March 2009, the U.S. government announced it will lift restrictions vis-à-vis Cuba in several areas. As a result, sanctions involving travel and remittance restrictions for individuals with family members in Cuba, the telecommunications sector, and travel related to agricultural and medical sales, have been eased.

    This policy change was implemented by the Department of Treasury’s Office of Foreign Assets Control (OFAC) through several amendments to the Cuban Assets Control Regulations (CACR). The amendments came into force Sept. 3, 2009, and have important implications for business relations with Cuba. The Bureau of Industry and Security also made adjustments to its Export Administration Regulations (EAR). When dealing with Cuba, it is important to understand what has, and has not, been changed. While these changes ease sanctions on Cuba somewhat, they in no way end or suspend the existing U.S. embargo imposed on Cuba.

    Background

    Since the 1960s, the United States has imposed an embargo to restrict trade with, and travel to, Cuba. This embargo was designed to isolate Cuba so long as it continued denying democratic and human rights. As such, the Cuban sanctions are among the most comprehensive programs administered by OFAC. The embargo is primarily governed by the recently amended CACR, and by EAR.

    Sanctions Prior to Policy Change

    The sanctions imposed by CACR (last modified in 2004) were very comprehensive. Several pertinent provisions include:

    • Comprehensive embargo against Cuba. The embargo makes it illegal for persons subject to U.S. jurisdiction to engage in any transaction in which Cuba or a Cuban national has any interest, direct or indirect.
    • Travel to family members in Cuba. A person subject to the jurisdiction of the United States is only eligible for a license to travel to Cuba once every three years for a maximum period of 14 days to immediate family. Additional strict provisions were also in place.
    • Remittance to family members in Cuba. List of items eligible for an export or re-export license exemption to identified family members (i.e., immediate family) in Cuba was limited to food and medical supplies that all could not succeed a value of $400 per shipment.
    • Telecommunications. Consumer communications devices required individual licenses and telecommunications services had to be part of approved programs.

    Amendments Following Policy Change

    On Sept. 3, 2009, CACR was modified, in relevant part, as follows:

    • Travel to family members in Cuba. A person subject to the jurisdiction of the United States is now eligible to visit a broader category of people (i.e., close relatives) in Cuba once every year (plans are made to expand to unlimited visits per year), with no maximum imposed on the length of the stay.
    • Remittance to family members in Cuba. List of items eligible for an export or re-export license exemption is broadened to include clothing, personal hygiene items and other non-sensible items. Also the list of recipients is broadened to include any individual (other than Party officials), and the maximum value is raised to $800 per shipment.
    • Telecommunications. New license exceptions are created that allow contractual arrangements between non-Cuba service providers to provide service in Cuba, payments made by telecommunications providers for services between the United States and Cuba, transactions related to establishing facilities for providing telecommunications services linking the United States and Cuba, and finally license exceptions that allow travel-related transactions to make doing business in the three aforementioned areas possible.
    • Agriculture and medicine. Under the Trade Sanctions Reform and Export Enhancement Act (TSRA) several new license exceptions related to agricultural and medical sales are now available such as travel-related transactions connected to the marketing of certain agricultural commodities, medicine or medical devices to Cuba.