Obama Administration Eases Embargo Against Cuba
International Trade & Customs Update
Date: December 19, 2014
On December 17, 2014, President Obama announced a number of measures aimed at establishing diplomatic and commercial relations with Cuba and its people. Citing the lack of positive impact economic sanctions have had on developing a stable Cuba, the President emphasized that these measures are designed to empower Cuban people in driving economic and political reform. The President stated his intent to pass certain executive measures that will ease specific trade and travel restrictions, including allowing U.S. businesses to sell/export to a number of specified private sectors in Cuba.
Measures to Be Taken
Re-Establishment of Diplomatic Relations. The United States plans to open an American embassy in Havana in the coming months.
Expansion of Travel Licenses. While U.S. persons will still not be allowed to travel to Cuba solely for tourism purposes, general licenses will be made available for certain authorized travelers for:
- Family visits
- Official business of the U.S. government, foreign governments and certain intergovernmental organizations
- Journalistic activity
- Professional research and professional meetings
- Educational activities
- Religious activities
- Public performances, clinics, workshops, athletic and other competitions, and exhibitions
- Support for the Cuban people
- Humanitarian projects
- Activities of private foundations or research or educational institutes
- Exportation, importation or transmission of information or information materials
- Certain export transactions that may be considered for authorization under existing regulations and guidelines
Raising of Remittance Levels. The level of general donative remittances to Cuban nationals from U.S. persons will be raised from $500 to $2,000 per quarter, while certain categories of remittances (e.g., donative remittances for humanitarian projects) will not require a specific license.
Expansion of Commercial Exports of Certain Goods and Services. Building materials for private residential construction, goods for use by private sector Cuban entrepreneurs and agricultural equipment for small farmers will all be authorized for export to Cuba by U.S. persons. In addition, the commercial export of certain consumer telecommunication hardware and devices, software, applications and services will also be authorized.
Expansion of Import Authorizations. Licensed U.S. travelers will be allowed to import up to $400 worth of goods from Cuba (only $100 of which can consist of tobacco products and alcohol).
Facilitation of Authorized Transactions. U.S. institutions will be permitted to open correspondent bank accounts at Cuban financial institutions, and travelers to Cuba will be allowed to use U.S. debit and credit cards.
Updating Cuba Sanctions in Third Countries. General licenses will be issued authorizing U.S.-owned or -controlled entities in third countries to provide services to, and engage in financial transactions with, Cuban persons in third countries, along with a number of other third-country measures.
Reviewing Cuba’s Designation as a State Sponsor of Terrorism. The State Department will be reviewing Cuba’s designation as a state sponsor of terrorism, which is attributed to those countries that have repeatedly provided support for acts of international terrorism. The State Department is to provide a report to the President regarding Cuba’s designation, which has been in place since March 1, 1982. A repeal of the designation could result in a lifting of certain restrictions on U.S. assistance, the ban on defense exports and sales, controls over exports of dual-use items, and miscellaneous other financial restrictions.
Many of the measures listed cannot be implemented solely by the President; for example, the Treasury Department’s Office of Foreign Assets Control (OFAC), which administers the Cuban Assets Controls Regulations, and the Commerce Department’s Bureau of Industry and Security (BIS), which administers the Export Administration Regulations, must issue revised regulations for the changes to travel and trade restrictions to take effect. In addition, lifting the entire 50-plus-year-old trade embargo will require congressional action – which certain key congressional lawmakers have stated will be difficult to do. The President has emphasized that he will continue to press Congress to do just that.
FOR MORE INFORMATION
We will continue to monitor developments regarding the easing of sanctions on Cuba, including when the President, OFAC and/or BIS issue formal executive measures implementing the actions discussed above. If you have questions, please contact:
James A. Losey
Partner, International Trade & Customs
Senior Counsel, International Trade & Customs
Samir D. Varma
Associate, International Trade & Customs
Scott E. Diamond
International Trade Specialist, International Trade & Customs
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