News & Noteworthy

Close but Few Cigars

Posted by John Saylor on Jun 28, 2016 10:30:00 AM

We are pleased to introduce John Saylor, another export veteran who will be blogging regularly for CTP. John is the Chairman of the VA/DC District Export Council (DEC), a volunteer organization that mentors local businesses seeking to export.  With over 40 years of experience in transportation, logistics, and  trade development, John brings a valuable perspective to CTP’s blogosphere. John’s blog series will focus on trade policy, regulatory changes, and local trade-related events, attempting to keep CTP subscribers abreast of relevant opportunities and developments. Take it away, John.

On May 25th, the White House conducted abriefing to unveil the latest policy and regulatory changes regarding Cuba. This event drew considerable media attention, given the on-going desire by President Obama to chart a new course in bilateral relations and to further engage and empower the Cuban people.It was announced and further explained that the Department of Commerce’s Bureau of Industry and Security (BIS) and the Department of Treasury’s Office of Foreign Assets Control (OFAC) have been cooperating to draft additional rules to further the Cuban cause. Finally, through this coordinated effort, BIS and OFAC have revised the licensing policy by amending the Export Administration Regulations (EAR) and the Cuban Assets Control Regulations (CACR) (31 C.F.R. Part 515), respectively, in order to allow certain export transactions to occur.

Under the EAR, the previous BIS general policy of denial for exports and reexports to Cuba subject to the EAR has been amended to include several license exceptions not previously available. This includes license exceptions for the Support of the Cuban People (SCP), Agricultural Commodities (AGR), Consumer Communications Devices (CCD), Gift Parcels and Humanitarian Donations (GFT), and for Aircraft, Vessels, and Spacecraft (AVS) flying or sailing to Cuba, even temporarily. The effect of these license exceptions means that you may now export or reexport to Cuba without an individual validated license if your transaction meets all the applicable terms and conditions. Note: it is imperative that you read each license exception carefully as the provisions are generally narrow.  Also note that the United States continues to maintain a comprehensive embargo on trade with Cuba.  Only Congress has the authority to lift this embargo.

In terms of the CACR, OFAC has issued new policies on travel and related transactions to allow for people-to-people educational travel, the payment of salaries, and the purchase of Cuban-origin merchandise. In terms of banking and financial services, OFAC has revised its policies to allow for greater access to the U.S. financial system. Specifically, payments may be processed using U.S. dollar monetary instruments, U-turn payments may be made through the U.S. financial system, and Cuban nationals may hold bank accounts with American banks.

OFAC’s policies have also expanded to authorize certain US persons to establish and maintain a business presence in Cuba. This includes exporters of certain items authorized for export or reexport to Cuba, entities in the business of providing mail or parcel transmission and cargo transportation services in connection with authorized trade, and providers of travel and carrier services to facilitate trade. Previously, only providers of certain telecommunications and internet-based services were authorized.

As for the famous and much desired Cuban cigars, they are now available but only in harshly limited quantity.  Why harsh?  Authorized Americans visiting Cuba are now allowed to bring back $100 worth of tobacco or alcohol (or a combination of the two) but no more than $100 total.  Bottom-line quandary for aficionados, if you want Cuban cigars, you’ll have to pass on the fine Cuban rum!

These long-awaited changes provide exciting opportunities for both the Cuban people and the American business community. As a result of our extensive experience with both BIS and OFAC, CTP is well positioned to help companies navigate the upcoming tidal change in the Cuba trade embargo. 

Topics: Private, Export Compliance