U.S. businesses will have more freedom to sell products and services directly to the Cuban government under a new set of regulations the U.S. government unveiled Tuesday.
In the 13 months since President Obama’s December 2014 announcement that the Cold War foes would reestablish diplomatic relations, his administration has made it easier for U.S. companies to sell items directly to Cuban entrepreneurs to help them gain some economic independence from the communist government.
The new regulations set to go in effect Wednesday would allow more sales to Cuban government entities so long as the transactions “provide goods and services to the Cuban people.”
“These regulatory changes will … facilitate exports that will help strengthen civil society in Cuba and enhance communications to, from and among the Cuban people,” Commerce Secretary Penny Pritzker, who visited the island in October, said in a statement.
The announcement drew fire from critics of Obama’s opening with Cuba who say Obama’s moves to strengthen ties will only bolster a communist regime that has controlled the island and suppressed personal freedoms for a half century.
“The Obama administration’s one-sided concessions to Cuba further empower the regime and enable it with an economic windfall,” said Republican presidential candidate Sen. Marco Rubio of Florida, a Cuban-American. “These regulations are more proof that the Obama administration’s intent has never been to empower the Cuban people but to empower the Cuban government’s monopolies and state-run enterprises.”
Supporters of the opening say the administration’s efforts to facilitate trade and travel with Cuba is the best way to bring change to the island. Sen. Jeff Flake, R-Ariz., said it is time for Congress to take the next step of weakening or ending the economic embargo on Cuba, a broad restriction that only Congress can lift.
“After fifty years of regulatory inertia, I am pleased to see a sustained effort to ease antiquated travel and trade restrictions toward Cuba,” he said.
The departments of Commerce and Treasury have weakened the embargo by twice publishing new rules to make it easier for Americans to trade with and travel to the island. The new rules announced Tuesday include a variety of new opportunities.
One of the changes will make it easier for Cuba to pay for U.S.-made goods. Up until now, when purchasing items from the U.S., Cuba had to pay cash up front or route the purchase through a third country, a costly and burdensome process that the Cubans have complained about for years. The new regulations allows U.S. banks to provide direct financing for such exports, removing one of the biggest impediments to direct trade.
The rules also create an opening for U.S. citizens to organize a variety of events on the island, from research conferences to sports competitions. Under previous rules, U.S. citizens were only allowed to attend such events in Cuba.
The new regulations also make it easier for U.S. business representatives to visit the island on fact-finding trips to explore business opportunities.
The new regulations also make it easier for U.S. airlines to work with their Cuban counterparts to expand commercial flights between the countries. The State Department announced in December that it had reached a deal with Cuba to fly up to 110 round-trip flights a day, quadrupling the current flow of air traffic between the two countries. Tuesday’s announcement expanded on that by making it easier for airlines to work with and operate in Cuba.
The most visible change, however, is the ability of U.S. business to sell directly to Cuba’s state-run companies.
The Obama administration has been very careful about preventing members of Cuba’s leadership, including communists who run the government and military personnel who control many state-run enterprises, would not be the main beneficiaries of the new economic opportunities. But it’s proven difficult to get money and materials directly into the hands of Cuban entrepreneurs and civil society leaders, prompting the change.
Under the new rules, U.S. companies can sell to government agencies that help the Cuban people, including those in the fields of agricultural production, education, food processing, disaster preparedness, public health, sanitation, residential construction, public transportation, energy production and water supplies. The new regulations will continue to prohibit sales to the government in other areas, such as tourism.
Ned Price, a spokesman for the National Security Council, said its now Cuba’s turn to make internal changes to ensure that the new relationship is a sustained one.
“Just as the United States is doing its part to remove impediments that have been holding Cubans bank, we urge the Cuban government to make it easier for its citizens to start businesses, engage in trade, and access information online,” Price said.