“Did you hear? The Cuban sanctions have been lifted! I can’t wait to go on a vacation and bring back some cigars.”
Whoa! Not so fast there, buddy.
With the recent announcements from the Department of the Treasury, Office of Foreign Assets Control (OFAC), concerning the amendments to the Cuban Assets Control Regulations (CACR) to implement the Obama Administration’s policy changes, Export Solutions has received many inquiries from companies who are eager to start doing business with Cuba.
We figured this was a good time to post a blog about what these changes mean. (And perhaps more importantly, what they do NOT mean.)
First, for the International Traffic in Arms Regulations (ITAR): There are no Cuba-related ITAR exemptions, nor are there any ITAR licenses that would be approved. Period. DDTC is not involved in any of these changes at this point, and it is highly doubtful they will be, so long as the present regime remains in power in Havana.
However, there are now Department of Commerce, Bureau of Industry and Security (BIS) exceptions, licenses allowable, and General License allowances for certain consumer electronics (e.g, certain otherwise uncontrolled smart phones, Sat phones, computers, peripherals, etc.) and products that benefit the Cuban people and/or that could help them to communicate with one another or with persons outside of Cuba. What this means is that individual persons and private/non-governmental enterprises (e.g. churches, hotels, privately-owned small businesses, etc.) are eligible for certain exceptions and approvable licensing … but NONE are available for government agencies/employees/members of the Castro Regime.
Some travel restrictions have been loosened under OFAC (31 CFR 500 series) General License for business, educational, humanitarian, journalistic, research, “people to people” activities, public activities (e.g. workshops, exhibitions, clinics, athletic, other competitions…etc.). However, there are no allowances for “conventional” tourism! (Sorry, but those Havana Honeymoons will have to wait.)
Only approved chartered flights are permitted between the U.S. and Cuba but, while the major U.S. carriers have applied for scheduled services to/from Cuba, so far they have not been approved. The good news is that the FAA is considering certain scheduled airline routes for approval in the next two months.
Here are some more interesting details:
- There are no longer per diem spending limits on living expenses while in Cuba. Authorized travelers can now use credit/debit cards in Cuba.
- Remittances to Cuban nationals have been raised from $500 up to $10,000, depending on the recipient.
- As of February 15, 2015, Section 515.582 CACR allows for the import of certain goods and services directly from documented independent businesses (permitted/licensed by the Cuban Government to operate,) in Cuba and for travelers to import authorized goods into the U.S., but these are subject to Tariff Column 2 duties, fees, and taxes. (So, there is no such thing as “Duty Free Cuba” right now.)
- Personal purchases, incident to authorized travel, such as up to $400 total, (only $100 of it can be cigars or rum,) are permitted, as are items to be consumed while in Cuba (no spending limits on per diem expenses either.)
- No commercial quantities of anything are permitted and bringing them in through a third country (i.e., “Canada”) is still illegal.
- U.S. owned or controlled entities in third countries, including banks, are authorized monetary transactions meeting the aforementioned non-commercial and other restrictions.
- DPL screening is STILL a MUST! All records of Cuba transactions must be kept for five (5) years.
Finally, as always, I offer the caveat that, if you do not have enough knowledge of the rules concerning Cuba to start doing business under the new guidelines, you should seek expert advice.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance.