January 16, 2015
Export Controls & Economic Sanctions Alert
Today sweeping new rules on travel, trade and finance with Cuba come into effect. The U.S. Departments of Treasury and Commerce announced the changes yesterday, thus moving faster than anticipated by many in Washington to implement President Obama’s announcement from December 17, 2014 to ease sanctions on Cuba.
We will discuss the changes to the Cuba sanctions on a webinar on Tuesday, January 20, 2015, at noon EST. See the Events section on the left to register.
While the Cuba embargo remains in effect and most transactions remain prohibited, the new rules significantly relax travel restrictions, free airlines and travel agents to provide services for authorized travel, and allow U.S. financial institutions to engage with Cuban banks and approve certain exports, including personal computers, mobile phones, televisions, consumer software and building materials and equipment for the construction of privately owned residences. Travelers in 12 categories of authorized travel will be able to make arrangements through any service provider that complies with the current regulations governing travel services to Cuba. Travel agents and airlines will be allowed to provide authorized travel and air carrier services without the need for a specific license. Depository institutions will be permitted to open and maintain correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions. U.S. financial institutions will be authorized to enroll merchants and process credit and debit card transactions for travel-related and other transactions.
A new general license (i.e., blanket authorization) will facilitate the establishment of commercial telecommunications facilities within Cuba and linking Cuba to other countries. The new rules also allow exports of tools and equipment for private agricultural activity or for use by private sector entrepreneurs. Exporters will no longer have to wait for payment from Cuba before shipping their products. The regulatory interpretation of “cash in advance” is being redefined from “cash before shipment” to “cash before transfer of title to, and control of,” the exported items to allow expanded financing of authorized trade with Cuba.
U.S. insurers will be authorized to provide coverage for global health, life, or travel insurance policies for individuals ordinarily resident in a third country who travel to or within Cuba. Health, life, and travel insurance-related services will continue to be permitted for authorized U.S. travelers to Cuba. A general license will authorize foreign vessels to enter the United States after engaging in certain trade with Cuba. The new rules also raise the limits on and relax the restrictions on authorized remittances and authorize certain transactions with Cuban nationals located outside of Cuba.
These changes present new opportunities for U.S. companies, particularly in the travel, telecommunications, software, consumer products, banking, insurance, construction, equipment manufacturing and shipping sectors. U.S. Secretary of Commerce Penny Pritzker announced that the new rules “are an important first step toward increased engagement that will expand our economic relationship and strengthen our people to people connections with Cuba.” Secretary Pritzker also indicated that “our regulations will change export policy and authorize the flow of certain goods and services to Cuba without a license, to spur private sector activity and encourage entrepreneurship in Cuba. These are smart changes in America’s outdated policy that will help the Cuban people realize an improved standard of living, greater economic independence, and increased prosperity.”
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
Export Controls & Economic Sanctions Alert | 04.20.15
Public-Private Partnerships Alert | 01.28.15