U.S. - CUBA REGULATIONS UPDATE

Size: px

Start display at page:

Download "U.S. - CUBA REGULATIONS UPDATE"

Maryann Stokes
5 years ago
Views:

U.S. - CUBA REGULATIONS UPDATE OCTOBER 14, 2016 KEY TAKEAWAYS ABOUT ASG Tday, as part f the effrt t cement the prgress made in the U.S.-Cuba relatinship, the Obama administratin annunced a new Presidential Plicy Directive (PPD) and a fifth rund f regulatry changes further easing U.

1 U.S. - CUBA REGULATIONS UPDATE OCTOBER 14, 2016 KEY TAKEAWAYS ABOUT ASG Tday, as part f the effrt t cement the prgress made in the U.S.-Cuba relatinship, the Obama administratin annunced a new Presidential Plicy Directive (PPD) and a fifth rund f regulatry changes further easing U.S. sanctins n Cuba. These regulatins becme effective n Octber 17. The regulatry changes were substantial. They included authrizatin t imprt sme Cuban pharmaceuticals, t exprt cnsumer gds frm the U.S. t Cuba fr persnal use, and t enter int cntingent cntracts, amng thers. The PPD is imprtant because it institutinalizes the administratin s Cuba plicy by prviding frmal guidance t relevant U.S. Gvernment agencies, clarifying and aligning their strategic bjectives twards Cuba. In the cming mnths, the Obama administratin will lk t prmte new bilateral agreements and cmmercial deals that will help cnslidate the prgress made since December In additin, the administratin will cntinue t urge Cngress t lk fr pprtunities t amend legislatin that eases the embarg and t cnfirm the nminatin f Jeffrey DeLaurentis as U.S. ambassadr t Cuba. Shuld Hillary Clintn win the electin, her administratin is expected t cntinue the current plicy f nrmalizatin, thugh her attentin may be cnsumed by ther pririties in her first mnths. Fr his part, Dnald Trump has vwed t reverse the president s plicy if Cuba des nt agree t U.S. demands n human rights, thugh it remains unclear if he wuld maintain this psitin as president. Meanwhile, it is pssible that ppnents f the embarg will try t push Cubafriendly legislatin in early 2017, thugh this will largely depend n the makeup f the next Cngress. Albright Stnebridge Grup (ASG) is a leading glbal business strategy firm. We help clients understand and successfully navigate the ecnmic, plitical, and scial landscape in internatinal markets. ASG s wrldwide team f cmmercial diplmats has served clients in mre than 110 cuntries. ALBRIGHTSTONEBRIDGE.COM A FINAL PUSH As the Obama administratin nears the end f its term, fficials have been lking fr ways t make the bilateral prgress with Cuba irreversible. In the last mnth alne, the president nminated current Charge d affaires Jeffrey DeLaurentis t becme the first U.S. ambassadr t Cuba in fifty years despite uncertainty ver whether he can

2 get cnfirmed, bth cuntries held the furth bilateral cmmissin t advance the nrmalizatin prcess, and senir U.S. fficials including Dr. Jill Biden and U.S. Trade Representative Michael Frman traveled t Cuba t engage in high-level discussins. The new PPD and fifth rund f regulatry changes build n nging effrts by institutinalizing the U.S. plicy twards Cuba and by remving additinal barriers fr U.S. cmpanies and rganizatins interested in engaging with Cuba. The new directive utlines the U.S. visin fr the future f the bilateral relatinship, and prvides guidance t the executive branch n hw t achieve its key Cuba plicy bjectives. While these changes will likely be the mst substantive regulatry steps in the cming mnths, the administratin will lk t apprve specific licenses that fall within its plicy pssibly even issuing anther rund f changes r initiatives. The administratin will als urge Cngress t cnfirm DeLaurentis and pass Cuba-friendly legislatin. In the annex f this paper, ASG includes the full regulatry changes t the Cuban Assets Cntrl Regulatins (CACR) and Exprt Administratin Regulatins (EAR) just annunced. Belw we highlight sme f the mst significant nes fr the private sectr: Health related transactins and Cuban-rigin pharmaceuticals. The Treasury Department s Office f Freign Asset Cntrl (OFAC) will allw the imprtatin f Cuban-rigin pharmaceuticals apprved by the U.S. Fd and Drug Administratin (FDA) int the U.S., as well as jint medical research with Cuban entities. Thugh the administratin previusly issued a general license fr imprts f certain gds prduced by Cuban entrepreneurs, the imprt f Cuban pharmaceuticals represents a willingness t allw at least certain imprts frm Cuban state-wned institutins by general license. Services related t infrastructure. OFAC will allw U.S. persns t prvide services t Cuba related t infrastructure develpment, repair and maintenance. The term infrastructure includes areas such as water and waste management, public transprtatin, nn-nuclear electricity generatin and distributin, hspitals, public husing, and primary and secndary schls, amng thers. Cuba is in dire need f infrastructure develpment and upgrades, s this change represents a significant pprtunity fr U.S. cmpanies and rganizatins. It is unclear hw receptive Cuba will be t U.S. invlvement in mre sensitive sectrs, thugh cmpanies shuld explre pprtunities. Cnsumer gds fr persnal use. The Cmmerce Department s Bureau f Industry and Security (BIS) will allw the exprt f certain cnsumer gds sld nline r ther means t individuals in Cuba fr persnal use. This change cvers mst items being sld t Cubans fr persnal cnsumptin as lng as they d nt have high levels f encryptin r ther advanced technlgy, and shuld prvide real pprtunities fr nline retailers and thers invlved in direct sales. Sales cannt g t prhibited fficials in Cuba, thugh as nted belw, the definitin f whm this cvers has narrwed. Albright Stnebridge Grup 2

3 Narrwing the Definitin f Prhibited Officials. The U.S. Gvernment significantly reduced the number f individuals with which U.S. cmpanies in allwed categries cannt d business, essentially limiting this categry t high-level fficials in the Cuncil f Ministers, flag fficers f the Revlutinary Armed Frces, and members f the Plitbur. This shuld reduce the cmpliance burden fr cmpanies cnsidering selling gds r engaging in ther allwed activities. Cntingent cntracts. OFAC is adding an expanded general license that will authrize persns subject t U.S. jurisdictin t enter int certain cntingent cntracts fr transactins currently prhibited by the embarg, prvided that cntract perfrmance is made expressly cntingent n prir authrizatin by OFAC and any ther relevant federal agencies, r n authrizatin n lnger being required. This change is significant fr tw reasns: First, it allws cmpanies that are cnsidering entering deals in Cuba t negtiate apprpriate cntracts befre getting a license frm OFAC a prcess that can be lengthy. Secnd, it allws fr cmpanies t d the same even in areas that are nt currently part f the plicy, in anticipatin f all r part f the embarg being revked. It is unclear hw willing Cuba wuld be t engage in such cntracts withut sme assurance that they can be implemented within a reasnable timeframe. Despite these psitive changes, the U.S. private sectr cntinues t face challenges. Elements f the embarg cntinue t pse significant barriers t trade, travel, and investment, and few cmpanies are able r willing t take advantage f easing fr fear that they may get inadvertently caught up in sanctins. Withut definitive mvement by Cngress, U.S. cmpanies als remain uncertain ver the permanence f the executive actins. Mrever, Cuba s cumbersme bureaucracy, red tape, and slw apprval prcesses have been majr impediments t signing cmmercial deals. Althugh bilateral relatins are imprving, there is still suspicin n bth sides, making it difficult fr sme U.S. cmpanies t take full advantage f the new regulatins. LOOKING AHEAD The results f the Nvember 2016 U.S. electins will determine the path frward with Cuba, as the new president will have the authrity t cntinue Obama s plicy r reverse the changes made since December Hillary Clintn has publicly supprted the president s plicy and the lifting f the embarg, and is expected t cntinue his apprach with Cuba. Hwever, Clintn will have limited ability t undertake additinal changes thrugh executive actin, as the Obama administratin has taken many f the majr steps it culd under current law. Instead, t make significant prgress in the regulatry space, Clintn wuld need t fcus attentin n pushing fr legislatin that remves parts f r the full embarg. Fr his part, Dnald Trump presents a bigger challenge fr cmpanies interested in pprtunities in Cuba. While he previusly supprted rapprchement, the Republican candidate has repeatedly stated in recent mnths that he wuld reverse President Obama s plicy unless the Cuban Gvernment meets U.S. demands n human rights. Sme f his statements may have been plitical psturing t shre up Republican vtes in Flrida and elsewhere, and if elected he may feel less cmpelled t fllw thrugh. Albright Stnebridge Grup 3

4 Nevertheless, such cmments were nt well received by Cuban authrities. Fidel Castr hinted at Havana s preference fr a Clintn presidency when he published an article n Octber 9 stating that Clintn beat Trump in the secnd debate. Cngress will cntinue t be a key player in the U.S.-Cuba relatinship ging frward. Depending n the utcme f the Nvember electins, lawmakers may wrk t apprve amendments t budgetary law that are Cuba-friendly. With little time left until the end f their term, and majr issues like supreme curt nminatins and the Trans-Pacific Partnership taking pririty, there is a lw likelihd that majr changes will get apprved. Hwever, a new Cngress in 2017, depending n its ultimate make up, may undertake effrts t lift parts r the full embarg. Albright Stnebridge Grup 4

5 ANNEX: OVERVIEW OF REGULATORY CHANGES Key changes published by the U.S. gvernment that will cme int effect n Mnday, Octber 17 include: Health-related Transactins: Expanding Opprtunities fr Scientific Cllabratin and Access t Medical Innvatins Jint medical research. OFAC is issuing a new authrizatin that will allw persns subject t U.S. jurisdictin t engage in jint medical research prjects with Cuban natinals. This authrizatin will encmpass bth nn-cmmercial and cmmercial research. Cuban-rigin pharmaceuticals. OFAC is issuing a new authrizatin that will allw transactins incident t btaining U.S. Fd and Drug Administratin (FDA) apprval f Cuban-rigin pharmaceuticals. An additinal authrizatin will allw the imprtatin int the United States, and the marketing, sale, r ther distributin in the United States, f FDA-apprved Cuban-rigin pharmaceuticals. Bank accunts. Persns subject t U.S. jurisdictin engaging in the afrementined health-related activities will als be authrized t pen and maintain bank accunts in Cuba fr use in cnducting the authrized business. Humanitarian-related Transactins: Prviding Additinal Grant Opprtunities and Strengthening Cuban Infrastructure Grants, schlarships, and awards. OFAC is expanding the authrizatin fr grants, schlarships, and awards t Cuba r Cuban natinals t include grants, schlarships, and awards related t scientific research and religius activities. Services related t Cuban infrastructure. OFAC is adding a new authrizatin that will allw persns subject t U.S. jurisdictin t prvide services t Cuba r Cuban natinals related t develping, repairing, maintaining, and enhancing certain Cuban infrastructure in rder t directly benefit the Cuban peple. Travel-related Transactins: Supprting Peple-t-Peple Cntact by Facilitating Authrized Travel and Cmmerce Imprtatin f Cuban-rigin merchandise as accmpanied baggage fr persnal use. OFAC is remving the mnetary value limitatins n what authrized travelers may imprt frm Cuba int the United States as accmpanied baggage. This includes the value limitatin n alchl and tbacc prducts. Persns subject t U.S. jurisdictin will be further authrized t imprt Cuban-rigin merchandise acquired in third cuntries int the United States as accmpanied baggage, again withut value limitatins. OFAC is als remving the prhibitin n freign travelers imprting Cuban-rigin alchl and tbacc prducts int the United States as accmpanied baggage. In all cases, the Cuban-rigin gds must be imprted fr persnal use, and nrmal limits n duty and tax exemptins will apply. Remittances. Persns subject t U.S. jurisdictin will be authrized t make remittances t third-cuntry natinals fr travel by third-cuntry natinals t, frm, r within Cuba, prvided the travel wuld be authrized by general license fr a persn subject t U.S. jurisdictin. Civil Aviatin: Supprting Internatinal Aviatin and Passenger Safety Albright Stnebridge Grup 5

Safety-related services. OFAC is adding a new authrizatin that will allw persns subject t U.S. jurisdictin t prvide civil aviatin safety-related services t Cuba and Cuban natinals aimed at prmting safety in civil aviatin and the safe peratin f cmmercial aircraft.

6 Safety-related services. OFAC is adding a new authrizatin that will allw persns subject t U.S. jurisdictin t prvide civil aviatin safety-related services t Cuba and Cuban natinals aimed at prmting safety in civil aviatin and the safe peratin f cmmercial aircraft. Trade and Cmmerce: Blstering Trade and Cmmercial Opprtunities and the Grwth f Cuba s Private Sectr Exprt-related transactins. OFAC is amending its general license authrizing certain transactins incident t exprts and reexprts authrized by the BIS t eliminate references t 100% U.S.-rigin items. This is intended t minimize and clarify the circumstances in which an exprt r reexprt authrized by BIS requires additinal licensing by OFAC. Cnsumer gds fr persnal use. BIS will generally authrize exprts f certain cnsumer gds that are sld nline r thrugh ther means directly t eligible individuals in Cuba fr their persnal use. Imprts f previusly exprted items. OFAC is adding an authrizatin that will allw the imprtatin int the United States r a third cuntry f items that were previusly exprted r reexprted t Cuba pursuant t a BIS r OFAC authrizatin. This authrizatin will als permit persns subject t U.S. jurisdictin t service and repair such items. Exprting r reexprting replacement items r items that have been repaired r serviced must be separately authrized by OFAC and/r BIS as apprpriate. Cntingent cntracts. OFAC is adding an expanded general license that will authrize persns subject t U.S. jurisdictin t enter int certain cntingent cntracts fr transactins currently prhibited by the embarg, prvided that cntract perfrmance is made expressly cntingent n prir authrizatin by OFAC and any ther relevant Federal agency, r n authrizatin n lnger being required. Transactins rdinarily incident t negtiating and entering int such cntracts will als be authrized. Financing. OFAC is making a technical crrectin t clarify that agricultural items, such as pesticides and tractrs, authrized by BIS fr exprt r reexprt t Cuba are nt subject t restrictins n payment terms. As required by the Trade Sanctins Refrm and Exprt Enhancement Act, authrized exprts and reexprts t Cuba f agricultural cmmdities, such as pultry and crn, remain subject t the limited payment and financing terms f cash in advance r third cuntry financing. Certain vessel transactins. OFAC is issuing a general license that will waive the restrictin prhibiting freign vessels frm entering a U.S. prt fr purpses f lading r unlading freight fr 180 days after calling n a Cuban prt fr trade purpses if the items the vessel carried t Cuba wuld, if subject t the EAR, be designated as EAR99 r cntrlled n the Cmmerce Cntrl List fr anti-terrrism reasns nly. Transit f carg. BIS will generally authrize air carg t transit Cuba, cmplementing an existing general authrizatin fr carg transiting Cuba abard vessels. ASG's Latin America Practice has extensive experience helping clients navigate the Cuban market. Fr questins r t arrange a fllw-up cnversatin please cntact Karen Preh. Albright Stnebridge Grup 6

ASISA STANDARD ON UNCLAIMED ASSETS

ASISA STANDARD ON UNCLAIMED ASSETS 1. Backgrund This Standard prvides guidance fr members n the treatment f unclaimed assets. The LOA Cde n Unclaimed Assets was used as the basis t develp this Standard