• The New Cuba Policy: What It Means for Travel and Trade
  • February 9, 2015
  • Law Firm: Fragomen Del Rey Bernsen Loewy LLP - New York Office
  • President Obama’s December 17 announcement on U.S.-Cuba relations is the first step toward an eventual relaxation of restrictions on travel and investment between the two countries. Normalization is expected to take place gradually, and will eventually include new regulations that broaden the range of permissible activities with Cuba.

    But until that time, actions that were previously prohibited - including most travel, export, and business with Cuba - remain prohibited, and individuals and organizations must continue to comply with current regulations. These rules have broad applicability to organizations, U.S. citizens, lawful permanent residents and foreign nationals under the jurisdiction of the United States. Engaging in prohibited activities - including unauthorized travel - can subject violators to significant penalties and could have immigration consequences for non-citizens.

    WHAT'S AHEAD FOR U.S.-CUBA RELATIONS

    The U.S. government is planning several initial actions toward normalizing relations with Cuba:

    Reestablishment of Diplomatic Relations

    The U.S. government will reinstate diplomatic relations and open an embassy in Cuba. This is the first step toward formal government-to-government discussions on a wide variety of issues, including human rights and democratic reforms in Cuba, both of which are key prerequisites to an easing of existing restrictions.

    Relaxation of Travel, Financial and Trade-Based Sanctions

    The U.S. embargo of Cuba prohibits most travel, financial dealings, exports and imports. These restrictions are administered by 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). The two agencies are expected to issue new regulations in the near future.

    Initially, OFAC is expected to permit a broader range of travel and related activities to take place under a “general license.” An OFAC general license provides authorization for certain designated activities without the need for formal agency approval. The types of activities likely to be affected include family visits; professional research and professional meetings; educational, religious or journalistic activities; public performances, clinics, workshops, athletic and other competitions and exhibitions; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation or transmission of information or information materials; certain export transactions; and official business of the U.S. government, foreign governments and certain intergovernmental organizations.

    The amount of money that can be remitted to Cuba nationals is expected to be raised to $2,000 per quarter, from $500. Certain exports are likely to be permitted, including building materials for private residential construction, goods for use by private sector Cuban entrepreneurs and agricultural equipment for small farmers.

    New Rules for U.S.-Owned or Controlled Entities in Third Countries

    Under current rules, U.S.-owned or controlled entities in third countries are generally prohibited from transacting with Cuba or Cuban nationals. This prohibition will be relaxed to permit entities to engage in services to and financial transactions with Cuban nationals in third countries.

    Review of State Sponsor of Terrorism Designation

    The United States government will consider whether Cuba’s designation as a state sponsor of terrorism remains appropriate. This designation generally triggers restrictions on U.S. immigration and foreign assistance, a ban on defense and military exports and sales, certain controls on export or re-export of dual-use items and financial and other restrictions.

    WHAT THIS MEANS FOR ORGANIZATIONS AND INDIVIDUALS

    The U.S. government has taken an important preliminary step toward normalized relations with Cuba, but existing rules and sanctions remain in place. Because violation of these rules has significant consequences for organizations and individuals, any proposed activities with Cuba must be carefully evaluated in advance.