Landmark Change in US Cuba Foreign Policy

As of January 16, 2015 several large changes have been made to embargo restrictions that inhibit trade between the U.S. and Cuba.  It has been half a century since President Kennedy started the Embargo, and the policy set in motion by President Obama will undoubtedly open the door for new business opportunities in the U.S. and Cuba.

Policy Focus

The President has made his reasons and emphasis for change apparent in his speeches and press releases.  The official release from the White House says that current policies against Cuba have, “failed to accomplish our enduring objective of promoting the emergence of a democratic, prosperous, and stable Cuba.” The release goes on to say that new regulation changes are, “aimed at supporting the Cuban people to gain greater control over their own lives and determine their country’s future.” The desire to rectify a failed policy in an attempt to strengthen our relationship with Cuba is evident in the wording of the regulation changes discussed below.

Export Changes

Two major changes have been made regarding the export policy from the U.S. to Cuba:

1) The Office of Foreign Assets Control (OFAC) aims to promote the infrastructure of telecommunication systems in Cuba.  In 31 CFR, Part 515, they authorized transactions to provide commercial telecommunications services that establish links within Cuba as well as between Cuba and third countries.  In addition, they have authorized persons of U.S. jurisdiction to provide additional services incident to internet-based communications and related to certain exportations and re-exportations of communications items.

2)  The Bureau of Industry and Security has made several license exceptions to 15 CFR Parts 736, 740, 746, and 748 for certain exports and re-exports to Cuba that are intended to support the Cuban people by improving their living conditions and supporting independent economic activity, thus strengthening civil society in Cuba.  Examples cited by the BIS include:  building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, such as residences, businesses, places of worship, and buildings for private sector social or recreational use.  Examples go on to include similar items for agricultural activity and private sector enterprise.

Import Changes

In addition to the export changes above, OFAC has made several exceptions within 31 CFR 515.582 for importation from self-employed individuals, private small businesses, and private cooperatives that are independent of Cuba’s state sector.   In order to utilize this exception, one will have to obtain and provide documentary evidence that demonstrates their independent status.  OFAC also made an amendment to authorize foreign vessels to enter the U.S. after engaging in certain trade with Cuba.

Conclusion

The regulation changes above only represent a small fraction of the revised policy to our trade embargo with Cuba.  These changes have the potential to represent huge opportunities for business expansion and industry growth.  Many, but not all, restrictions on travel to Cuba have been relaxed.  American credit and debit transactions are now allowed by travelers in Cuba.  Even the infamous ban on Cuban cigars has been removed (travelers are now allowed to take back up to 100 dollars worth of Cuban tobacco or alcohol products).  However, there is not unanimous support for these changes in Washington.  With the GOP taking the majority in Congress and the presidential elections coming up in 2016, it will be interesting to see how these changes unfold in the future.

Contributor: Michael Kader, allyn International

March 11, 2015

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