Trade Compliance Flash: Trump Administration Implements New Cuba Policy
On November 8, 2017, the Trump administration announced that its new Cuba policy would be implemented effective November 9, 2017, consistent with the National Security Presidential Memorandum Strengthening the Policy of the United States Toward Cuba (NSPM) issued by President Trump on June 16, 2017. The NSPM will be implemented through actions of the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), the U.S. Department of the Commerce's Bureau of Industry and Security (BIS), and the U.S. Department of State.
These actions include restricting certain types of travel and increasing the number of Cuban government-related parties with whom certain transactions will be prohibited, while at the same time expanding the authorization for exports supporting free enterprise in Cuba under the License Exception Support for the Cuban People (SCP). Although the new regulations will generally make doing business in Cuba more challenging, some exporters may find that opportunities now exist to export a broader range of products in support of the Cuban people.
As required by the NSPM, the Department of State published a List of Restricted Entities and Subentities Associated with Cuba (Cuba Restricted List or CRL), which sets out two Cuban government ministries and 180 entities "determined to be under the control of, or to act for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit the Cuban government at the expense of the Cuban people or private enterprise in Cuba." The entities on the CRL include many operators of hotels, restaurants, marinas, and tours, as well as Corporación CIMEX S.A., Grupo d Administraci Empresarial S.A. (GAESA), and several of their subentities. The terminal port operators at Mariel and Havana also are listed. Although the restrictions resulting from the CRL will be implemented through regulations issued by OFAC and BIS, the CRL will be updated periodically by the Department of State and is available on its website. Importantly, the Department of State has stated that "entities owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the list."
In conjunction with the publication of the CRL, OFAC amended the Cuban Assets Control Regulations (CACR) to prohibit transactions with entities listed on the CRL. Direct financial transactions with such entities (i.e., acting as the originator or ultimate beneficiary of a funds transfer to or from a listed entity) are generally prohibited. Transactions with entities listed on the CRL will not be allowed on the basis that they are incident to other licensed transactions if the terms of the relevant general or specific license expressly exclude such transactions, and several other general licenses have been amended to clarify that they do not authorize prohibited financial transactions with listed entities. OFAC also expanded the definition of "prohibited officials of the Government of Cuba" and placed restrictions on various categories of authorized travel. However, direct travel-related transactions or commercial transactions/engagements with entities on the CRL will be allowed if they were initiated or in place prior to the date that the entity or subentity was added to the CRL, and certain other exceptions apply.
BIS also has amended its regulations to incorporate and give effect to the CRL and OFAC's expansion of prohibited government officials. Specifically, BIS established a general policy of denial for license applications for the export items to entities and subentities on the Cuba Restricted List, unless the transaction is determined by BIS, in consultation with the Department of State, to be consistent with the NSPM. In addition, the BIS definition of ineligible Cuban government officials has been updated to conform to the new OFAC definition of prohibited government officials. This amendment affects License Exceptions Gift Parcels and Humanitarian Donations (GFT), Consumer Communications Devices (CCD), and SCP. However, BIS has, at the same time, also expanded License Exception SCP by eliminating the requirement that the items be used only in certain sectors of the economy. The result is that a broader range of items may now be exported or reexported to Cuba for use by the Cuban private sector, consistent with the administration's policy of supporting free enterprise in Cuba, although certain exceptions continue to apply.
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