Softening of Cuba Sanctions Opens the Way for Some Travel and Trade

As part of a broader, ongoing effort to forge closer relations with Cuba, the Obama administration has enacted a new set of regulations intended to facilitate certain forms of authorized travel to Cuba. The regulations, which were published on January 16, 2015, in the Federal Register, also loosen the reins on proscribed forms of trade and financial dealings with the island nation and, in so doing, open a possible path toward the provision of communications-related goods and services. To what degree this opportunity ends up being realized will depend in part upon corresponding actions and accommodations by the Cuban government. U.S. citizens and companies wishing to take advantage of the new rules should take care to develop a full understanding of the changes as well as any related rules or restrictions that may still apply from the Cuban government.

The U.S. Department of the Treasury and the U.S. Department of Commerce joined in implementing these changes through (1) revisions to the Cuban Assets Control Regulations (CACR), governed by Treasury’s Office of Foreign Assets Control (OFAC), and (2) amendments to the Export Administration Regulations (EAR), overseen by Commerce’s Bureau of Industry and Security (BIS).

During his State of the Union address on January 20, 2015, the president reiterated his commitment to these changes, as well as his desire to see an end to the decades-old embargo. However, unless Congress acts to end the trade embargo, the embargo’s provisions will remain in effect, and violation of those provisions could still trigger consequences.

Travel Permitted Under a General License for Authorized Categories

While the new rules add significant flexibility for people who wish to visit Cuba under existing categories of authorized travel, most regular tourists will still be subject to the same statutes that prohibited travel as before.

The 12 categories for which travel to Cuba is authorized include

• family visits;
• official business of the U.S. government, foreign governments, and certain intergovernmental organizations; /li>
• 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;
• humanitarian projects;
• activities of private foundations or research, or educational institutes;
• exportation, importation, or transmission of information or information materials; and
• certain authorized export transactions.

The added flexibility under the new rules essentially amounts to U.S. citizens being accorded a presumption of trust when asserting their qualification under a particular authorized category, rather than being required to obtain a specialized license from the U.S. government documenting their travel eligibility. While this change is incremental, rather than a wholesale unwinding of the broad restrictions that have barred most Americans from traveling to Cuba over the past half-century, those travelers who are authorized to travel will now also be allowed to use U.S. credit and debit cards in Cuba. In practical terms, this opens the door for U.S. companies to offer Americans travel to Cuba with far less red tape, as long as those traveling fit under an appropriate category.

New Trade and Financial Dealings Allowed

American companies hoping to pursue business with entities in Cuba will also find new flexibility under the U.S. rules. Specifically, U.S. businesses may now

• establish commercial telecommunications facilities linking third countries and Cuba under a new OFAC general license;
• engage in the commercial sale of consumer communications-related devices, hardware, software, and services under a new U.S. Department of Commerce license exception;
• provide Internet-based communications services under an OFAC general license;
• sell personal computers, mobile phones, televisions, memory devices, recording devices, and consumer software without a special license;
• open and maintain correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions; and
• pursue certain micro-financing projects and entrepreneurial and business training, such as for private business and agricultural operations.

This new flexibility notwithstanding, the pace and exact nature of any new business dealings with Cuba will still be influenced by constraints imposed by Cuba’s outdated infrastructure and limited experience facilitating commercial ventures. As the Cuban government still controls imports to the country, bureaucratic hurdles and outright bans on certain products or technologies could also prove to be an issue in certain instances. Ogletree Deakins will continue to monitor developments as the new rules go into effect to determine where companies are enjoying the greatest traction in Cuba and in which areas they may be experiencing obstacles.

Finally, in a move that will certainly cheer cigar aficionados, the longstanding ban on Cuban cigars is now lifted. U.S. citizens are now permitted to bring up to $100 of Cuban tobacco and alcohol products back home.

Cuban Visas and Other Restrictions

It is important to note that, while general licenses are available through the U.S. under the new rules for certain categories of travel, the Cuban government may require that travelers obtain a separate visa. Accordingly, all travelers to Cuba should contact the Cuban Interests Section of Cuba’s Ministry of Foreign Affairs in Washington D.C. to determine the appropriate type of visa required for their purpose of travel.

In addition, all those eligible to travel to Cuba must have valid passports to gain entry into the country. Attempts to enter or exit Cuba without proper authorization would still be considered illegal and could result in arrest or other enforcement action by Cuban authorities up to and including jail terms.

Down the Road

Over time, the new rules should result in increased tourism to Cuba and an influx of capital through new trade and financial dealings. This increase in tourism and capital, in turn, will likely bring an increase in the need for infrastructure and services to accommodate the growing tourist trade. While actual outcomes are purely speculative at this time, these trends could translate into a growth in business for hotels, airlines, travel agents, tour operators, and other goods and services tied to tourism, as well as an enhanced presence for communications-related products, devices, and services.