UPDATE ON U.S. LAWS REGARDING COMMERCE WITH CUBA

Transcription

1 UPDATE ON U.S. LAWS REGARDING COMMERCE WITH CUBA Caribbean Shipping Association Cocoa Beach, FL May 17, 2016 Jennifer R. Diaz, Esq. Board Certified International Attorney Founding Partner Diaz Trade Law, P.A. Office: (305) Cell: (305)

2 DISCLAIMER This presentation is for informational purposes only and does not purport to provide legal advice as all cases and facts are different. The information in this presentation is provided as is and no representations are made whatsoever. You should not rely on the information included in this presentation as an alternative to legal advice from your attorney. For questions related to a specific matter, you should consult your attorney. To the extent permitted by law, this presentation is Copyright by Diaz Trade Law, P.A.

3 AGENDA Cuba Update! Background U.S. Federal Agencies Involved Summary of Changes What s legal NOW? Major Impacts to Business Top Tips! Resources

4

5 POLLS ON CUBA SUPPORT

6 Polls of Cuban-Americans

7 Polls of Cuban-Americans

8 AUDIENCE POLL Are you in favor of an end to the travel ban? Of an end to the embargo?

9 THE U.S. REGULATIONS COMMONLY REFERRED TO AS THE U.S. EMBARGO PROHIBITS FREE TRAVEL TO CUBA.

10

11 Primary Legal Authority & Other Supporting Laws & Regulations Trading with the Enemy Act of 1917 (TWEA) Proclamation Embargo on all Trade with Cuba (Feb. 1962) The Cuban Assets Control Regulations, 31 CFR Part 515 (July 1963) Export Administration Regulations (EAR) (15 CFR 730 et seq.) The Cuban Democracy Act of 1992 The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 Trade Sanctions Reform and Export Enhancement Act of 2000

12 U.S. Federal Government Agencies Key Players Treasury Department s Office of Foreign Assets Control (OFAC) Cuban Assets Control Regulations (CACR) (31 C.F.R. Part 5151) Commerce s Bureau of Industry and Security (BIS) Export Administration Regulations (EAR) (15 C.F.R. Parts )

13 OFAC s Jurisdiction Includes Both Persons And Property Subject To U.S. Jurisdiction Persons include: Individuals U.S. citizens and permanent resident aliens located anywhere in the world Individuals, regardless of citizenship, physically located in the United States Entities Organized under U.S. law, including foreign branches of U.S. companies Physically located in the U.S., including U.S. branches, agencies and representative offices of foreign corporations Owned or controlled by a U.S. citizen, lawful permanent resident, or entity organized under U.S. law.

14 BIS Jurisdiction & License Requirements Exports and reexports of commodities, software, and technology (i.e., items) License requirement for exports and reexports of all items subject to the EAR unless authorized by license exception ( 746.2(a)) General 25 percent de minimis level for foreign-made items located abroad ( 734.4)

15 Poll: What date did President Obama announce the U.S. will lay out a new course in our relations with Cuba? A. December 17, 2014 B. January 17, 2014 C. January 1, 2015 D. February 1, 2016

16 Answer: What date did President Obama announce the U.S. will lay out a new course in our relations with Cuba? A. December 17, 2014

17 IMPORTANT DATES December 17, 2014 Pres Obama announced the U.S. will lay out a new course in our relations with Cuba. January 16, 2015 Revised Cuba Regulations were officially released by OFAC and BIS April 14, 2015 President Obama announced his decision to REMOVE Cuba from the State sponsor of terrorism designation September 21, 2015 Additional Revised Cuba Regulations were officially released by OFAC and BIS January 27, 2016 Additional Revised Cuba Regulations were officially released by OFAC and BIS March 16, 2016 Additional Revised Cuba Regulations were officially released by OFAC and BIS

18 December 17, 2014 Promise Re-establishing diplomatic ties by creating a U.S. Embassy Reviewing Cuba s designation as a State Sponsor of Terrorism Facilitating remittances to Cuba by U.S. persons

19 January 16, 2015 Major Changes 1. Travel 2. Telecom 3. Building Materials, Tools, Equipment and Supplies 4. Financial Services 5. Personal Imports

20 January 16, 2015 Changes - Travel 12 categories of Travel Now Falling Under a General License: 1. Family visits 2. Official business of the U.S. government, foreign governments, and certain intergovernmental organizations 3. Journalistic activity 4. Professional research and professional meetings 5. Educational activities 6. Religious activities 7. Public performances, clinics, workshops, athletic and other competitions, and exhibitions 8. Support for the Cuban people 9. Humanitarian projects 10. Activities of private foundations or research or educational institutes 11. Exportation, importation, or transmission of information or information materials 12. Certain export transactions that may be considered for authorization under existing regulations and guidelines

21 Want More Information About the Original January 16, 2015 Changes? for a copy of the article or go to

22 April 14, 2015 TOP IMPACTS OF CUBA BEING REMOVED FROM TERRORISM LIST? (1) Perception (2) Credit (3) Diplomacy (4) Trade

23 July 20, 2015 The Embassy of the United States of America re-opened in Havana and the Cuban Embassy re-opened in Washington, D.C.

24 September 21, 2015 Changes -Travel Related: OFAC: Authorized travelers can get to Cuba by Vessel Vessel can offer certain lodging services. Close Relatives can join Can open bank account for authorized transactions BIS: New Exception Aircraft, Vessels, and Spacecraft (AVS) will authorize temporary sojourns to Cuba of cargo vessels for hire for use in the transportation of items

25 September 21, 2015 Changes -Telecommunications & Internet OFAC has authorized the importation into the U.S. Cuban-Origin mobile applications and the employment of Cuban national by persons subject to U.S. jurisdiction to develop mobile applications, as well as authorizing persons subject to U.S. jurisdiction to provide services related to all such items that were exported to Cuba

26 September 21, 2015 Changes OFAC Now allows all persons subject to U.S. jurisdiction to provide goods and services to Cuban national individuals located in a third country and banking institutions to open, maintain, and close bank accounts for such Cuban nationals. Physical Presence and Operations in Cuba (The amendments authorize certain listed activities to maintain physical presence (e.g., office space, warehouse, and outlet space) in Cuba.)

27 September 21, 2015 Changes Support for the Cuban People License Exception (SCP) now includes: Leases and loans Temporary exports Remittances Removed limit on donative remittances

28 September 21, 2015 Changes Legal Services to Cuba and Cuban Nationals (To comply with US laws, before US courts) Gift Imports Educational Activities Ordinarily Incident Transactions Air Ambulances and Emergency Medical Services Humanitarian Projects Supporting Diplomatic Relations

29 WHAT ARE THE MAJOR CHANGES FROM JANUARY 27, 2016? Financing More Travel BIS General Approval and Denial Policy The list of authorized humanitarian projects has been expanded by OFAC to include projects that focus upon disaster preparedness, relief, and response.

30 Major Travel Changes from February 16, 2016: Air Carriers On February 16, 2016, The United States and Cuba signed an agreement allowing commercial air traffic to resume between the countries for the first time in fifty years. New flights are expected to operate daily by next fall (up to 110 daily roundtrip flights from the U.S.!). U.S. visitors to Cuba will still have to qualify under one of the travel categories legally authorized by the U.S. government.

31 WHAT ARE THE MAJOR CHANGES FROM MARCH 16, 2016? Travel & Related Transactions Build Your Own People-to-people educational travel Payment of salaries Cuban-origin merchandise

32 WHAT ARE THE MAJOR CHANGES FROM MARCH 16, 2016? Banking & Financial Services U-turn payments through the U.S. financial system Processing of U.S. dollar monetary instruments S. bank accounts for Cuban nationals Trade & Commerce Physical and business presence Importation of software Cuban private sector Grants & Awards OFAC will authorize the provision of educational grants and awards

33 BIS March 16, 2016 Changes License Exception AVS: The new rule allows for vessels departing the United States on temporary sojourn to Cuba with cargo for other destinations

34 POLL Is travel to Cuba for tourism authorized?

35 POLL Is travel to Cuba for tourism reasons only authorized? - No! Despite what you see on Facebook

36 Travel, that is allowed! Tourism = NO! 12 General License / Authorized Traveler Categories: 1. family visits; 2. official business of the U.S. government, foreign governments, and certain intergovernmental organizations; 3. journalism; 4. professional research and professional meetings; 5. educational; 6. religious; 7. public performances, clinics, workshops, athletic and other competitions, and exhibitions; 8. support for the Cuban people; 9. humanitarian projects; 10. activities of private foundations or research or educational institutes; 11. exportation, importation, or transmission of information or information materials; and 12. certain export transactions that may be considered for authorization under existing regulations and guidelines.

37

38

39

40 TOURISM GROWTH! Tourism is one of Cuba s key sources of revenue, generating nearly $2.4 billion of income. Close to 1 million visited the island in just the first quarter of 2015, according to the country s Tourism ministry Both American and United Airlines have expressed interests in making direct flights to the island. So have Delta and Southwest!

41 POLL What major cruise line is planning to cruise to Cuba in the near future?

42 ANSWER What major cruise line is planning to cruise to Cuba in the near future? Carnival Cruise Lines Fathom (May 1, 2016)

43 CARNIVAL GETS APPROVAL TO CRUISE TO CUBA STARTING IN MAY 2016 This will be the first time in over 50 years that a cruise ship will be allowed to travel from the US to Cuba. Today we ve made history, said Arnold Donald, CEO of Carnival Corp., in a call from Havana. This is a historic opportunity, and we know there is pent-up demand amongst Americans who want to experience Cuba.

44 CARNIVAL CRUISE LINES: MAJOR SHIP WILL DOCK IN CUBA MAY 2016

45 AIRBNB Airbnb - April 1. Nate Blecharczyk, co-founder and CTO of Airbnb: It s not a meaningful revenue source now. [But] Maybe over time. Still, the company is putting significant marketing muscle to advertise its presence in Cuba. There are several reasons for the push. Most people expect the number of travelers coming to Cuba to greatly increase, Blecharczyk says. In that case, Airbnb can play a role in helping Cuba accommodate many more travelers. It could become a case study.

46 STARWOOD HOTELS WILL RENOVATE AND RUN THREE CUBAN HOTELS Starwood Hotels will renovate and run three Cuban hotels, which will return U.S. hotel chains to the island more than 50 years after all American hotels were taken over by Fidel Castro. All Cuban hotels are state-owned A hotel owned by the tourism arm of the Cuban military will become a Sheraton Four Points. Specific License

47 POLL How long should you keep records of your travel to Cuba?

48 5 Years ANSWER

49 Diaz Trade Law Top Travel Tips! 1. KEEP RECORDS (we DON T know who the next President will be, or what their stance on Cuba is) for 5 Years. 2. Ensure you DO meet one of the 12 Authorized Traveler Categories. NO purely touristic visits. ConsultOFAC s FAQ s, if still unsure, contact your lawyer to determine if you fit into one of the Make sure you have a travel agenda detailing your appointments (if they don t fill up a FULL DAY, you re not done drafting it, and maybe will need a travel sponsor for your people to people mission after all). 4. If you re participating in a People to People mission, ask yourself (hint, at least one answer should be YES), does this agenda seek to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people s independence from Cuban authorities? 5. If you re participating in a People to People mission, check your agenda PRIOR to traveling; predominantly meeting with the government of Cuba or Cuban Communist Party Officials will NOT be an authorized trip.

50 POLL Can I purchase Cubanorigin cigars and/or Cubanorigin rum or other Cubanorigin alcohol over the internet? What about on vacation in Europe?

51 ANSWER No Online Yes in Europe ( )

52 PERSONAL IMPORTS Authorized travelers to Cuba are authorized to import into the U.S. $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined, for personal use only.

53 GOODS AND SERVICES THAT CAN BE IMPORTED FROM CUBA The State Department s Section List Categories of goods that are not eligible for import into the United States Any other goods produced by independent Cuban entrepreneurs and not covered by the listed sections and chapters of the HTS may be imported

54 REMOVAL OF THE DOLLAR TAX IN CUBA Recently, the U.S. lifted a ban on Cuban access to the global banking system, a longstanding Cuban demand. Foreign Minister Bruno Rodriguez told reporters that Cuba will attempt a series of international transactions in coming days. If they work, Cuba will eliminate the 10 percent penalty (on converting U.S. dollars).

55 OBAMA S MARCH 2016 TRIP TO CUBA Rolling Stones, Baseball, Interviews and more. Havana is only 90 miles from Florida, but to get here, we had to travel a great distance, over barriers of history and ideology, barriers of pain and separation, Obama said in the address televised across Cuba. I have come here to bury the last remnant of the Cold War in the Americas.

56 DO CUBAN ENTREPRENEURS RECEIVE A LICENSE FROM THE CUBAN GOVERNMENT? Persons subject to U.S. jurisdiction importing goods, or involved in specific business transactions, are required to obtain evidence that demonstrates the Cuban entrepreneur s independent status, and, in the case of an entity, that the entity is private (i.e., not owned or controlled in whole or in part by the Cuban government).

57 CUBAN ENTREPRENEURIAL JOBS / Cuentapropistas (Self-Employed) Accountant Animal Caretaker Automobile Battery Repair Barber Bus/Train/Taxi Stop Barker (calls out instructions to waiting passengers) Button Coverer (wraps buttons in cloth, popular in the 50 s and 60 s) Engraver of Numbers Flower Wreath Arranger Folkloric Dancers Fortune Tellers Restaurant Owner (paladares) Used Book Seller Knife Grinder Piñata Maker/Seller Producer/Seller of Brooms and Brushes Small-Truck Driver Car Body Remolding Car Painter Car washer/oil Changer

58

59 Since the Changes We have Seen Growth in the Cuban Economy

60 POLL Is your spouses father in law a close relative according to OFAC?

61 POLL No. A close relative has to share a dwelling and be related by blood, marriage or adoption (no more than 3 generations removed). ( )

62 POLL Can my close relatives accompany me on a trip that I am authorized to take to Cuba?

63 ANSWER Yes, if: You share a dwelling and are related by blood, marriage or adoption (no more than 3 generations removed). ( )

64 Banking in Cuba American Express and MasterCard said they'll let customers use their credit cards in the country. Stonegate has confirmed it now has a debit card that will work in Cuba American Express (AXP) is still reviewing the new regulations and a spokeswoman could not say when exactly the change would take place. According to the spokeswoman: The end goal is to do business there," she said. MasterCard (MA) has said that customers will be able to use their credit cards in Cuba Still, people should contact their bank before traveling to ensure that their card will be supported there, the company said in a statement last week.

65 Telecom! Numerous transactions are now authorized without a license!

66 CUBAN INTERNET ISSUES Only about 13% of Cubans have computers at home, and barely 5% have internet access. Fewer than 1 in 5 have mobile phone subscriptions, according to the United Nations

67 GOOGLE OFFERS FASTER INTERNET IN CUBA Google is opening a cutting-edge online technology center at the studio of one of Cuba's most famous artists, offering free Internet at speeds nearly 70 times faster than those now available to the Cuban public.

68 POLL How much does WiFi cost in public areas across Cuba?

69 $2 per hour! ANSWER

70 INTERNET GROWTH IN CUBA? In July, Cuba s state-run telecom ETECSA installed Wi-Fi in 35 public areas across the Caribbean island

71 POLL How many broadband internet accounts are in Cuba?

72 5,300 ANSWER

73 Netflix We are not in contact with the Cuban government on content, said Netflix spokeswoman Kari Perez. As we do globally, what content we show depends on our licensing rights. The announcement shows our confidence in the reforms underway in Cuba and that loosened restrictions on US businesses will lead to investments in the country, including infrastructure improvement. Netflix has become one of the first companies to enter Cuba s nascent digital entertainment industry, although few consumers are likely to immediately enjoy the benefits. $8/Month There are only 5,300 broadband internet accounts on the Caribbean island, where low wages mean Netflix s streaming of television and film content will cost almost half of an average Cuban s monthly wage. Netflix has also stated that it wouldn t accept Cuban Pesos, thus Cuba s twotiered system could create many problems on both sides

74 Communications IDT Corp and the Cuban state firm ETESCSA have Agreed to Direct Connect Both companies have agreed to direct connect phone calls between the two countries Previously, calls had to go through third countries such as Italy and Spain Boost Mobile, part of Sprint Corp., has also launched a prepaid plan allowing US customers to call and text Cuba directly, which is the first of its kind.

75 Remittances - POLL What is the total U.S. dollar amount of remittances sent to Cuba from the United States in 2013? In 2014? Projected from 2015?

76 Remittances - POLL What is the total U.S. dollar amount of remittances sent to Cuba from the United States in 2013? $2.8 Billion In 2014? $3.13 Billion Projected from 2015? $3.99 Billion

77 CUBA HAS LONG HAD A MAXIMUM WAGE OF ABOUT $20 A MONTH. Remittances from the United States have been helping fuel private enterprise on the island The limits on donative remittances to Cuban nationals other than prohibited Cuban Government or Cuban Communist Party officials, was removed entirely. The limits on authorized remittances that individuals may carry to Cuba, previously $10,000 for persons subject to U.S. jurisdiction and $3,000 for Cuban nationals, was also removed entirely. Someone receiving a remittance of $5,000, for example, from the United States can go and start a business or buy a small apartment, said Odilon Almeida, Western Union s president for the Americas and the European Union. I think remittances are changing Cuba faster than is perceived today.

78 Building Materials! The following commercially sold or donated items may now be exported to Cuba without a license

79 The USA Today reported, that a Cuban-American civil trial lawyer that established a business that sells construction materials to entrepreneurs in Cuba said, "We're entering a very dark room and feeling out way through to get to the other side." Building in Cuba

80 POLL Can you guess what the average monthly salary in Cuba is?

81 ANSWER Can you guess what the average monthly salary in Cuba is? $20

82 Summary of 5 Major Changes Impacting U.S. Business Potential Opportunities Travel Carrier service by vessel and certain lodging services 31 CFR Personal imports - 31 C.F.R Finance Bank accounts for authorized travelers. 31 CFR to allow all authorized travelers to open and maintain bank accounts in Cuba in order to access funds while located in Cuba for authorized transactions, and to close such accounts. Telecommunications Subsidiaries, joint ventures, and other business relationships with Cuban individuals and entities. In order to further enhance the free flow of information to, from, and among the Cuban people and to better provide efficient and adequate telecommunications services between the United States and Cuba 31 CFR and Remittances 31 CFR (b) to remove the limitation on donative remittances 31 CFR (c)(4)(i) to remove the limitation on certain authorized remittances that authorized travelers may carry to Cuba Building Materials 15 CFR New License Exception Support for the Cuban People (SCP), among other provisions, authorizes the export and reexport to Cuba, without a license, of certain commercially sold categories of items: building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, including privately-owned residences, businesses, places of worship, and buildings for private sector social or recreational use; tools and equipment for private sector agricultural activity; and tools, equipment, supplies, and instruments for use by private sector entrepreneurs. Items eligible for this provision must be designated as EAR99 or controlled on the Commerce Control List (CCL) (15 CFR Part 774, Supplement No. 1) only for antiterrorism (AT) reasons.

83 REALITIES Average Monthly salary in Cuba is $20/month In most cases. U.S. persons can ONLY do business with PRIVATE entrepreneurs in Cuba (difficult to prove one is Private ) Financial institutions are still cautious Still need Specific Licenses for MOST transactions PATIENCE is required for business in Cuba

84 Top 10 Tips When Exporting To Ensure Compliance Export Compliance Steps 1. What is YOUR product? i. Know your product and Supplier ii. Request samples in advance of exportation 2. Which agency regulates YOUR product? 3. What is YOUR product classification? Classify your product correctly according to the Commerce Control List (CCL) or the United States Munitions List (USML) 4. Does YOUR product need a license? 5. Ensure the end user is not prohibited, Ensure the end uses are not prohibited 6. Check Consolidated List at Ensure you have a Formal Written Compliance Program!!! DO your DUE DILIGENCE! For a copy of the TOP 10 TIPS WHEN EXPORTING go to

85 Customs & Trade Blog SUBSCRIBE TODAY AT:

86 Cuba Blogs Build Your Own People to People Mission & More Cuba Changes, March 1, 2016 Up to 110 Daily Flights from the U.S. to Cuba, February 23, Top 10 Changes with Cuba as a Result of MORE NEW Revised OFAC and BIS Regulations, February 5, 2016 Update on U.S. Laws Regarding Commerce with Cuba, November 25, 2015 TOP 11 NEW Business Opportunities with Cuba as a Result of NEW OFAC and BIS Laws, September 28, Part Seminar Series You DON T Want to Miss!, August 6, 2015 Embassies and Island Wide Wi-Fi by July in Cuba, July 1, Doing Business in Cuba: What s Next? Live Webinar, June 23, Top Impacts of Cuba Being Removed From Terrorism List, May 29, Hear How Companies are SUCCESSFULLY Doing Business with Cuba, May 14, In Tampa? Meet the Expert, May 12, OFAC Publishes NEW FAQ on Cuba, April 16, Urban Land Institute Discusses New Trading Opportunities with Cuba, April 2, Revised Cuba Regulations Officially Released, January 16, TOMORROW Updated Cuban Assets Control Regulations Take Effect, January 15, TOP Questions and Answers on Obama s Cuba Announcement, December 19, Congressional Response to President Obama s Announcement on Future Relations with Cuba, December 18, Business with Cuba What s Legal and What s Not?, December 17, 2014.

87 Resources OFAC New Law Frequently Asked Questions Related to Cuba BIS New Law Frequently Asked Questions Related to Cuba

88 More Resources Unverified List Entity List Specially Designated Nationals List List/Pages/default.aspx U.S. Munitions List _Part_121.pdf Commodity Jurisdiction requests OFAC Specific License Request D-Trade Information Center

89 About Us Diaz Trade Law Cuba Experience Cuba VIDEO Diaz Trade Law Blog Jennifer R. Diaz

90 ANY QUESTIONS?

91 UPDATE ON U.S. LAWS REGARDING COMMERCE WITH CUBA Caribbean Shipping Association Cocoa Beach, FL May 16-18, 2016 Jennifer R. Diaz, Esq. Board Certified International Attorney Founding Partner Diaz Trade Law, P.A. Office: (305) Cell: (305)