Thursday, December 18, 2014 Trade Report
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The Obama administration announced Dec. 17 a number of measures designed to “chart a new course in [U.S.] relations with Cuba and to further engage and empower the Cuban people.” While the changes include some easing of restrictions on trade, the general U.S. embargo against Cuba remains in place and would require congressional action to be lifted. Initial comments from both Republicans and Democrats, however, indicate that prospects for such action are uncertain at best.
According to a White House fact sheet, long-standing U.S. policy has “failed to accomplish our enduring objective of promoting the emergence of a democratic, prosperous, and stable Cuba” and hindered the pursuit of U.S. interests in the Western Hemisphere. Asserting that “it is better to encourage and support reform than to impose policies that will render a country a failed state,” the fact sheet states that the U.S. is “choosing to cut loose the anchor of the past, because it is entirely necessary to reach a better future.”
Key components of the changes announced this week include the following.
Diplomatic Relations. The U.S. will immediately initiate discussions with Cuba on the re-establishment of diplomatic relations, which were severed in January 1961. In the coming months the U.S. will re-establish an embassy in Havana and carry out high-level government exchanges and visits. U.S. engagement will include continued strong support for improved human rights conditions and democratic reforms as well as work on matters of mutual concern such as migration, counternarcotics, environmental protection and human trafficking.
Travel. General licenses will be made available for all authorized travelers in the following existing categories: (1) family visits; (2) official business of the U.S. government, foreign governments and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines. Travelers in these 12 categories will be able to make arrangements through any service provider that complies with the Office of Foreign Assets Control regulations governing travel services to Cuba, and general licenses will authorize the provision of such services.
Trade. Expanded commercial sales/exports from the U.S. of certain goods and services will be authorized, including certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers.
Commercial exports of certain items that will contribute to the ability of the Cuban people to communicate with people in the U.S. and the rest of the world will be authorized. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware and services, as well as items for the establishment and update of communications-related systems.
Licensed U.S. travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined.
U.S. institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions. The regulatory definition of the statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title,” which will provide more efficient financing of authorized trade with Cuba.
Third Countries. U.S.-owned or -controlled entities in third countries will be generally licensed to provide services to, and engage in financial transactions with, Cuban individuals in third countries. In addition, general licenses will unblock the accounts at U.S. banks of Cuban nationals who have relocated outside of Cuba; permit U.S. persons to participate in third-country professional meetings and conferences related to Cuba; and allow foreign vessels to enter the U.S. after engaging in certain humanitarian trade with Cuba.
(OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations, which are expected in the coming weeks, and the Department of Commerce will implement the remainder of the changes via amendments to its Export Administration Regulations. OFAC states that none of the announced changes will take effect until these new regulations are issued.)
Terrorism. The U.S. will immediately launch a review of Cuba’s designation as a state sponsor of terrorism and provide a report within six months.