By Helena D. Sullivan, Esq.
Global Trade Law
In December 2014, global headlines proclaimed the end of Cuba sanctions that had been in place since 1960. While immediately controversial, the true impact of the changes was not clear until January 16, 2015, when the Department of the Treasury, Office of Foreign Assets Control (OFAC) published its amendments to the Cuban Assets Control Regulations. While much more is permitted, it certainly cannot be said that Cuba is now open for U.S. business. Instead, companies and individuals wanting to trade with Cuba or travel there have to look carefully at what is newly permitted and what remains restricted.
A sure-to-be-popular question is whether the import of Cuban cigars and rum is now allowed. The answer is no, unless you travel to Cuba under an authorized category of “general license”. A general license is an authorization subject to certain preconditions allowing such activity, without application to OFAC for a “specific license”. Travel to Cuba will now be permitted not for general tourism, but when you fit under the following general license categories: family visits, official business of the U.S. and foreign governments and certain intergovernmental organizations, journalistic activity, professional research and meetings, educational activities, religious activities, public performances, clinics, workshops, athletic and other competitions and exhibitions, support for the Cuban people (e.g. human rights organizations), humanitarian projects, activities of private foundations or research or educational institutes, import/export/transmission of informational materials, and certain authorized export transactions. It should be noted that each participant in a group must qualify, and the schedule of such activity must be essentially full time. If you are able to travel to Cuba under a general license (or a specific license granted by OFAC), you can bring back up to $100 in Cuban tobacco and alcohol products, and the total value of everything you bring back including those products must not exceed $400.
As for trade with Cuba, U.S. companies may export, or reexport from third countries, U.S.-origin products only when such export or reexport is licensed or otherwise permitted by the Department of Commerce, Bureau of Industry and Security (BIS). BIS currently licenses very limited categories of items to Cuba. Investment or doing business in Cuba will require an application for a specific license to OFAC. Other than the aforementioned accompanied baggage allowance of $400 mentioned above, import of certain goods produced by independent Cuban entrepreneurs as set out in a list which will be published by the State Department will be authorized. Additionally, “informational materials” such as films, publications and photographs are exempt from the Cuban Assets Control Regulations.
A final caveat regarding export or reexport of U.S. origin items to Cuba. The regulations specify that only 2 payment terms are permitted. The first is cash in advance; the definition of cash in advance has been newly modified to mean payment before the transfer of title and control of the items to the Cuban purchaser (rather than cash before shipment). The second is financing by a banking institution in a third country, which can be confirmed or advised by a U.S. bank.
Thus, trade with Cuba is still quite restricted, although it will interesting to see what the list of products from designated Cuban entrepreneurs which will be permitted to be imported will look like.
Please feel free to contact me, Helena Sullivan, firstname.lastname@example.org, (212) 725-0200 ext. 119, and visit our website at www.barnesrichardson.com, which provides a lot of information on recent developments for importers and exporters.