To further implement President Obama's December 2014 policy to support independent economic activity and improve communications and living conditions in Cuba, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) and the U.S. Department of Treasury's Office of Foreign Assets Controls (OFAC) have again amended their regulations to relax certain restrictions on doing business in Cuba. The amendments to OFAC's Cuban Assets Control Regulations (CACR), 31 CFR Part 515, are more extensive than the changes to BIS's Export Administration Regulations (EAR), 15 CFR Parts 730-774. The easing of the sanctions is focused on expanding commerce, travel, and trade to support the Cuban people, authorizing services related to Cuban infrastructure and civil-aviation-related services, and authorization for the conduct of medical research and importing Cuban-origin pharmaceuticals into the United States. The amendments are effective today and key changes are summarized in this WSGR Alert.
Amendments to the EAR
The scope of the EAR's license exception Support for the Cuban People (SCP) has been expanded to authorize exports and reexports of EAR99 items and items subject to the EAR controlled only for anti-terrorism reasons to eligible individuals in Cuba when: i.) the sales are direct; and ii.) the items are for the individual's personal use or the personal use of the individual's immediate family. Thus, online retailers and other such retailers may now sell consumer goods directly to individuals in Cuba without obtaining a license from BIS.
BIS also expanded the group of individuals within Cuba who are authorized to receive exports and reexports under license exceptions Gift (GFT), Consumer Communications Devices (CCD), and SCP. BIS has listed ineligible parties, which include members of the Council of Ministers, Flag Officers of the Revolutionary Armed Forces, and members of the Politburo. Thus, no exports or reexports of any items subject to the EAR may be made to these ineligible persons absent a specific license from BIS. This change aligns the scope of EAR authorizations with the CACR.
Further, it is important to remember that a license is still required for the export or reexport of any item (commodity, technology, and software) subject to the EAR to Cuba unless a license exception applies.
Amendments to the CACR
The CACR amendments apply to persons subject to the jurisdiction of the United States, including U.S. citizens wherever located and foreign persons in the United States. This WSGR Alert will refer to persons subject to U.S. jurisdiction as "U.S. persons."
Provision of Services to Cuba and Cuban Nationals
Significant CACR changes include the issuance of General Licenses authorizing:
U.S. persons to engage in commercial and non-commercial joint medical research projects with Cuban nationals, including in Cuba;
transactions incident to obtaining U.S. Food and Drug Administration (FDA) approval for Cuban-origin pharmaceuticals, including but not limited to discovery and development, pre-clinical and clinical research, regulatory review, approval and licensing, and importation into the U.S.;
the importation into the U.S. of FDA-approved Cuban-origin pharmaceuticals;
the marketing, sale, and distribution of the FDA-approved Cuban-origin pharmaceuticals in the U.S.; and
U.S. persons to open and maintain bank accounts in Cuba for conducting business covered by the aforementioned General Licenses.
In further support of collaboration and scientific research, the amendments expanded the General License set forth in Section 515.590 of the CACR to allow grants, scholarships, and awards to individuals in Cuba or Cuban nationals for educational activities, humanitarian projects, scientific research, and religious activities.
OFAC also issued new General Licenses authorizing U.S. persons:
to provide services to Cuba and Cuban nationals related to the development, repair, maintenance, and enhancement of certain Cuban infrastructure, including public transportation, water and waste management, electricity distribution sectors (not nuclear), primary and secondary schools, public housing, and hospitals to directly benefit the people in Cuba;
to provide civil-aviation-related services to Cuba and Cuban nationals for safety in civil aviation, including safe operation of civil aircraft; and
to enter into certain contingent contracts, as well as transactions ordinarily incident to negotiating and entering into such contracts, for transactions that require specific licenses under the CACR or EAR upon the condition that the performance of the contract is expressly contingent upon obtaining the requisite license(s) from the appropriate U.S. government agencies.
Importation of Cuban-Origin Items
OFAC relaxed the restrictions on the importation of Cuban-origin goods by deleting the value limitation on alcohol and tobacco products. The importation must occur as accompanied baggage of an authorized traveler and must be for personal use only.
Items that were exported to Cuba under a BIS or OFAC authorization are now authorized to be imported back into the U.S. under a new General License. The General License further authorizes U.S. persons to service and repair such items and engage in transactions ordinarily incident to the importation of goods into the U.S. However, the appropriate BIS or other required export or reexport authorization is required for the repaired or replacement items to go back to Cuba.
OFAC also broadened the General License authorizing personal remittances to now allow remittances to third country nationals for travel to, from or within Cuba so long as the third country national's travel would be authorized under the CACR if performed by a U.S. person.
What Has Not Changed—Restrictions Are Still in Place
The U.S. embargo against Cuba remains, and a license is required to export or reexport an item from the U.S. or any other item subject to the EAR to Cuba unless a license exception applies.
Travel to Cuba is still restricted and U.S. persons may only travel to Cuba under one of the General Licenses in the CACR or with a license from OFAC. Tourism travel is still not allowed.
Transacting business with any member of the Council of Ministers, Flag Officer of the Revolutionary Armed Forces, or member of the Politburo, as well as any other person on one of the applicable U.S. government lists of sanctioned persons is not permitted.
Transactions between a U.S.-owned or controlled company in a third country and Cuba for the export to Cuba of commodities produced in a foreign or third country (not the U.S. or Cuba) are not authorized absent a license from OFAC.