[author: Elizabeth Owerbach]
On March 20, President Obama arrived in Cuba for an historic visit, marking a significant step in the Obama Administration’s efforts to normalize relations, a process that began in December 2014. The Administration has stated that while normalization will be “a complex, long-term process,” the United States will continue to “engage and work through challenges in order to empower the Cuban people and advance the interests of the United States.” Key issue areas for this initiative include connecting the U.S. and Cuban people, bolstering agricultural cooperation, and expanding business and commercial ties.
In the days leading up to President Obama’s visit, the Treasury Department Office of Foreign Assets Control (OFAC) and the Commerce Department Bureau of Industry and Security (BIS) issued amendments to their Cuba regulations, effective March 16, 2016. These updates follow a series of amendments which began in January 2015 to expand opportunities for engagement with Cuba and the Cuban people. These recent updates also come on the heels of the February 2016 announcement from the Department of Transportation that the United States is permitting the re-establishment of scheduled air services between the United States and Cuba. Select highlights from the March 2016 updates appear below. For more information, see the regulations and this fact sheet.
OFAC Amendments
Travel-related regulations
• People-to-people travel: OFAC has removed the requirement that people-to-people educational travel be conducted under the auspices of an organization that sponsors such exchanges. U.S. persons may now be authorized to travel on an individual basis for educational purposes.
• Cuban-origin merchandise: OFAC has authorized individuals subject to U.S. jurisdiction who are located in a third country to engage in the purchase or acquisition of certain Cuban-origin merchandise for personal consumption while in a third country.
Financial transactions
• U-turn payments: OFAC has authorized U-turn transactions in which Cuba or a Cuban national has an interest to be conducted through the U.S. financial system, where certain conditions are met.
• Processing U.S. dollar monetary instruments: OFAC has authorized U.S. banking institutions to process U.S. dollar monetary instruments presented indirectly by Cuban financial institutions.
Business and physical presence
• OFAC has expanded the list of categories of those subject to U.S. jurisdiction who are authorized to establish and maintain a business presence (such as a joint venture) in Cuba. This expansion includes exporters of goods that are authorized for export or re-export to Cuba or that are exempt.
• OFAC has expanded the list of categories of those subject to U.S. jurisdiction who are authorized to establish a physical presence, such as an office or other facility, in Cuba, to facilitate authorized transactions. This includes authorization for humanitarian entities and private foundations or research/educational institutes.
• OFAC has also clarified that the activities that may be carried out by exporters of items exported or re-exported pursuant to authorization by the Department of Commerce or OFAC, or that are otherwise exempt, at a physical presence authorized by this section, include the assembly of such items.
Telecommunications and internet-related services: OFAC authorizes the importation of Cuban-origin software.
BIS Amendments
License Exception AVS: BIS has revised License Exception Aircraft, Vessels and Spacecraft (AVS) to authorize transit through Cuban territory of cargo, laden aboard a vessel on temporary sojourn to Cuba, that is destined for other countries rather than require a license for that cargo to transit Cuban territory, provided that such cargo departs with the vessel at the end of its temporary sojourn, does not enter the Cuban economy, and is not transferred to another vessel while in Cuba.
License Exception SCP: BIS has revised License Exception Support for the Cuban People (SCP) to authorize export or reexport of EAR99 items and items controlled on the Commerce Control List only for anti-terrorism reasons for use by persons authorized to establish and maintain a physical or business presence in Cuba.
EAR Licensing Policy: BIS has adopted a policy of case-by-case review of license applications to export or re-export items that will enable or facilitate exports from Cuba of items produced by Cuba’s private sector. BIS has asserted that enabling or facilitating exports of items produced by the Cuban private sector, under certain circumstances, will also help meet the needs of the Cuban people and is consistent with the Administration’s policy. However, BIS generally will deny applications to export or re-export items for use by state-owned enterprises, agencies, and other organizations that primarily generate revenue for the state.
