US Policy Toward Cuba: What Opportunities Exist for US (and non-us) Busineses? APPENDIX A EXCERPTS OF RELEVANT BIS AND OFAC REGULATIONS

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1 Daniel Waltz Substantive Materials US Policy Toward Cuba: What Opportunities Exist for US (and non-us) Busineses? APPENDIX A EXCERPTS OF RELEVANT BIS AND OFAC REGULATIONS OFAC 31 CFR Mail and telecommunications-related transactions Mail and telecommunications-related transactions. (b) All transactions, including payments, incident to the provision of telecommunications services related to the transmission or the receipt of telecommunications involving Cuba, including the entry into and performance under roaming service agreements with telecommunications services providers in Cuba, by persons subject to U.S. jurisdiction are authorized. This paragraph does not authorize any transactions addressed in paragraphs (c) or (d) of this section, nor does it authorize the entry into or performance of a contract with or for the benefit of any particular individual in Cuba. (c) All persons subject to U.S. jurisdiction are authorized to enter into, and make payments under, contracts with telecommunications service providers, or particular individuals in Cuba, for telecommunications services provided to particular individuals in Cuba, provided that such individuals in Cuba are not prohibited officials of the Government of Cuba, as defined in of this part, or prohibited members of the Cuban Communist Party, as defined in of this part. The authorization in this paragraph includes payment for activation, installation, usage (monthly, pre-paid, intermittent, or other), roaming, maintenance, and termination fees. (d) General license for telecommunications facilities. Transactions, including payments, incident to the establishment of facilities, including fiber-optic cable and satellite facilities, to provide telecommunications services linking the United States or third countries and Cuba, including facilities to provide telecommunications services in Cuba, are authorized. (e) Persons subject to U.S. jurisdiction are authorized to enter into licensing agreements related to services authorized by paragraphs (b) through (d) of this section, and to market such services. (h) For purposes of this section, the term telecommunications services includes data, telephone, telegraph, internet connectivity, radio, television, news wire feeds, and similar services, regardless of the medium of transmission, including transmissions by satellite. 31 CFR Exportation and reexportation of certain internet-based services. (a) Except as provided in paragraph (b) of this section, the following transactions are authorized: (1) Certain internet-based services. The exportation or reexportation, directly or indirectly, from the United States or by a person subject to U.S. jurisdiction to Cuba of services incident to the exchange of communications over the internet, such as instant messaging, chat and , social v1 2564

2 networking, sharing of photos and movies, web browsing, blogging, web hosting provided that it is not for the promotion of tourism, and domain name registration services. (2) Services related to certain exportations and reexportations. To the extent not authorized by paragraph (a)(1) of this section or by , the exportation or reexportation of services, including software design, business consulting, and information technology management services (including cloud storage), that are related to the following items, or of services to install, repair (including repair training), or replace such items: (i) Items subject to the EAR. In the case of items subject to the Export Administration Regulations (EAR) (15 CFR part 730 et seq.), items exported or reexported to Cuba pursuant to 15 CFR (License Exception Consumer Communication Devices (CCD)); 15 cfr Consumer Communications Devices (CCD). (a) Authorizations. This section authorizes the export or reexport of commodities and software to Cuba or Sudan subject to the requirements stated herein. This section does not authorize U.S.-owned or -controlled entities in third countries to engage in reexports of foreign produced commodities to Cuba for which no license would be issued by the Department of the Treasury pursuant to 31 CFR (b) Eligible commodities and software. Commodities and software in paragraphs (b)(1) through (17) of this section are eligible for export or reexport under this section to Cuba or Sudan. (1) Consumer computers designated EAR99 or classified under Export Control Classification Numbers (ECCN) 5A992.c or 4A994.b; (2) Consumer disk drives and solid state storage equipment classified under ECCN 5A992 or designated EAR99; (3) Input/output control units (other than industrial controllers designed for chemical processing) designated EAR99; (4) Graphics accelerators and graphics coprocessors designated EAR99; (5) Monitors classified under ECCN 5A992.c or designated EAR99; (6) Printers classified under ECCN 5A992.c or designated EAR99; (7) Modems classified under ECCNs 5A991.b.2, 5A991.b.4., or 5A992.c or designated EAR99; (8) Network access controllers and communications channel controllers classified under ECCN 5A991.b.4 or designated EAR99; (9) Keyboards, mice and similar devices designated EAR99; (10) Mobile phones, including cellular and satellite telephones, personal digital assistants, and subscriber information module (SIM) cards and similar devices classified under ECCNs 5A992.c or 5A991 or designated EAR99; (11) Memory devices classified under ECCN 5A992.c or designated EAR99; v1 2564

3 (12) Consumer information security equipment, software (except encryption source code ) and peripherals classified under ECCNs 5A992.c or 5D992.c or designated EAR99; (13) Digital cameras and memory cards classified under ECCN 5A992 or designated EAR99; (14) Television and radio receivers classified under ECCN 5A992 or designated EAR99; (15) Recording devices classified under ECCN 5A992 or designated EAR99; (16) Batteries, chargers, carrying cases and accessories for the equipment described in this paragraph that are designated EAR99; (17) Consumer software (except encryption source code ) classified under ECCNs 4D994, 5D991 or 5D992.c or designated EAR99 to be used for equipment described in paragraphs (b)(1) through (b)(16) of this section; and (18) (Sudan only) Global Positioning System receivers or similar satellite receivers controlled under ECCN 7A994. (c) Eligible and ineligible end-users (1) Organizations. (i) This license exception may be used to export or reexport eligible commodities and software to and for the use of independent non-governmental organizations in Cuba or Sudan. (ii) The Cuban Government or the Cuban Communist Party and organizations they administer or control are not eligible end-users. (2) Individuals. This License Exception may be used to export eligible commodities and software to and for the use of individuals other than the following: (i) Ineligible Cuban Government Officials. Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces. (ii) Ineligible Cuban Communist Party Officials. Members of the Politburo. 15 CFR Support for the Cuban People (SCP). (a) Introduction. This License Exception authorizes certain exports and reexports to Cuba that are intended to support the Cuban people by improving their living conditions and supporting independent economic activity; strengthening civil society in Cuba; and improving the free flow of information to, from, and among the Cuban people. (b) Improving living conditions and supporting independent economic activity. (1) 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; (2) Tools and equipment for private sector agricultural activity; (3) Tools, equipment, supplies, and instruments for use by private sector entrepreneurs; or v1 2564

4 (4) Items sold directly to individuals in Cuba for their personal use or their immediate family's personal use (other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section). (d) Improving communications. (1) The export or reexport to Cuba of items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation and upgrades. (2) The export or reexport to Cuba of items for use by news media personnel engaged in the gathering and dissemination of news to the general public.. (3) The export or reexport to Cuba of items for use by U.S. news bureaus engaged in the gathering and dissemination of news to the general public. (4) The export or reexport to Cuba of commodities or software that will be used by individuals or private sector entities to develop software that will improve the free flow of information or that will support the private sector activities described in paragraph (b) of this section. (e) Facilitating engagement, communications, and commerce. (1) The export or reexport to Cuba of items for use by persons authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC) to establish and maintain a physical or business presence in Cuba pursuant. (2) The export or reexport to Cuba of items to be given away for free as gifts for promotional purposes. 15 CFR Cuba Licensing Policy (b) Licensing policy. Items requiring a license are subject to a general policy of denial, except as follows: (1) Medicines and Medical Devices. Applications to export medicines and medical devices as defined in part 772 of the EAR will generally be approved. (2) Exports and reexports that generally will be approved. Applications for licenses to export or reexport the following generally will be approved: (i) Telecommunications items that would improve communications to, from, and among the Cuban people; (ii) Commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; (iii) Commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public; (iv) Agricultural items that are outside the scope of agricultural commodities as defined in part 772 of the EAR, such as insecticides, pesticides and herbicides, and agricultural commodities not eligible for License Exception AGR; v1 2564

5 (v) Items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises; and (vi) Items necessary for the environmental protection of U.S. and international air quality, waters, or coastlines (including items related to renewable energy or energy efficiency). (3) Exports and reexports that may be authorized on a case-by-case basis. (i) Applications for licenses to export or reexport items to meet the needs of the Cuban people, including exports and reexports of such items to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people may be authorized on a case-by-case basis. This policy of case-by-case review includes applications for licenses to export or reexport items for: (A) Agricultural production, artistic endeavors (including the creation of public content, historic and cultural works and preservation), education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation and public transportation; (B) Wholesale and retail distribution for domestic consumption by the Cuban people; (C) Construction of facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people; and (D) Items that will enable or facilitate export from Cuba of items produced by the private sector v1 2564

6 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala Panel 6 Outline Guide to Doing Business in Cuba Post-Castro and U.S. Embargo [JULISSA REYNOSO] I. The History of Sanctions Against Cuba A. There were two early legislative acts that gave the President the power to implement sanctions on Cuba. 1. Foreign Assistance Act of 1961 Under the Act, President John F. Kennedy banned all U.S. trade with Cuba. 2. Trading with the Enemy Act of 1917 and the 1950 national emergency declared by President Harry S. Truman at the start of the Korean War With this authority, President Kennedy imposed a broad embargo on all transactions with Cuba except as explicitly licensed by the President. President Kennedy s actions established the framework of the embargo that remained for the next half century. B. Attempts to Multilateralize the Embargo The U.S. earned initial success in persuading other nations to join in the embargo against Cuba, but the cooperation later withered away. 1. Initial Successes In 1964, at the U.S. s urging, the Organization of American States (OAS), imposed mandatory sanctions against Cuba by calling for all member states to cut economic and diplomatic relations. Only Mexico refused to comply. European countries were reluctant but most limited trade and investment at the U.S. s insistence. 2. But by the mid-1970s, Latin American countries began to openly ignore the sanctions program and restored relations with Cuba. There were also calls from inside Congress to end the embargo. a) U.S. corporations operating abroad began feeling legal pressure from their host governments. So President Gerald Ford lifted the embargo on trade with Cuba by subsidiaries of U.S. corporations operating abroad. b) 1975 Latin American countries pressured the U.S. into voting in favor of lifting the 1964 OAS sanctions. C. The U.S. used sanctions to punish Cuba for its involvement in foreign conflicts v1 2564

7 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala Cuba sent combat troops to Angola to assist in defending against an invasion by South Africa. Secretary of State Henry Kissinger, who initially attempted to normalize relations with Cuba, abandoned these efforts in response. But President Jimmy Carter continued Kissinger s normalizing efforts by lifting the embargo on travel entirely and licensed Cuban Americans to send remittances to family. The rest of the embargo including the ban on food and medicine remained in place as a bargaining chip, but it was never used. 2. Cuba s support of revolutionary movements in Central America In response, President Ronald Reagan tightened the embargo, reimposed the ban on travel, increased enforcement, and added Cuba to the State Department s list of state sponsors of international terrorism. D. Congress codifies U.S. sanctions against Cuba into law. 1. Cuban Democracy Act (1992) On the heels of Cuba s loss of Soviet economic assistance, Congress passed legislation to tighten the embargo to collapse the Cuban government. a) Reimposed ban on trade with Cuba by subsidiaries of U.S. corporations operating abroad. b) Prohibited vessels that entered Cuban ports from then entering U.S. ports for 180 days. This prohibition raised Cuba s shipping costs during a time when Cuba was forced to change its international trade relations after the fall of European communism. c) Instructed the President to urge countries to stop all aid to Cuba or risk losing aid from the U.S., a provision aimed at Russia. d) And the sanctions were to remain in force until the President certified that Cuba became a democracy by holding free and fair multiparty elections and by establishing a free market economy. 2. Cuban Liberty and Democratic Solidarity Act ( Helms-Burton Act ) (1996) Passed after Cuba shot down 2 small aircraft flown by a Cuban exile group, Brothers to the Rescue, and killed 4 pilots. a) Most significant effect Wrote the economic sanctions program into law. This stripped the President of executive power to lift the embargo at his/her discretion. But it also codified presidential power to license exceptions to the embargo with virtually no limits v1 2564

8 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala b) Called on the President to seek a mandatory international embargo from the UN Security Council, urge foreign governments to end assistance to Cuba, and oppose Cuba s entry into international financial institutions. c) Authorized U.S. nationals, including Cuban Americans, to sue foreign companies for trafficking in their confiscated property in Cuba. This was an effort to discourage foreign investment. But this provision never went into effect. d) Made settlement of U.S. property claims a condition for lifting the embargo. This is a significant obstacle to forming a legislative majority to lift the embargo. The property claims issue dates back to the early years of the Cuban revolution when Cuba expropriated about $1.9 billion worth of U.S. property. Today, with accumulated interest, the figure is up to $8 billion. 3. Trade Sanctions Reform and Export Enhancement Act (2000) Lifted the embargo on the sale of agricultural commodities to Cuba. But the Act banned trade credits to Cuba to finance agricultural sales and tourism. The ban on tourism was defined as any travel outside the scope of the categories of legal travel. The Act was supported by a coalition of Democrats and farm state Republicans. Cuba began buying food from the U.S. in Sales peaked at $710 million in 2008 but eventually fell to $171 million because U.S. exporters could not offer financing. E. Recent Presidents begin to use their licensing authority in relations with Cuba. 1. President Bill Clinton In his second term, he sought to expand social connections between Cuba and the U.S. a) Relaxed travel restrictions for humanitarian, cultural, and educational travel. b) Expanded air service c) Allowed anyone, not just family members, to send remittances. d) Creation of people-to-people travel category for educational visits that did not involve credit from an academic institution. This became the main provision non-cuban Americans used to travel to Cuba v1 2564

9 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala By the end of the Clinton administration, 50,000 non-cuban Americans traveled to Cuba each year. 2. President George W. Bush As a reward for the support he received from Cuban American conservatives in Florida, Bush tightened the embargo and rolled back President Clinton s actions. a) Ended the people-to-people educational travel category and eliminated most academic exchanges. b) Cut Cuban American travel from 1 annual trip to 1 every 3 years, with no exceptions for family emergencies. c) The results: travel to Cuba by U.S. residents cut in half, reduced humanitarian assistance from $10 million annually to $4 million, and remittances decreased from $1.25 billion to $1 billion annually. II. Obama Era* President Barack Obama maintained that the old U.S. policy of hostility failed and the U.S. should be willing to engage with Cuba diplomatically. A. First Term Relaxed sanctions limiting family, cultural, and educational ties to Cuba. 1. Lifted all limits on family travel and remittances. 2. Licensed U.S. telecommunications companies to contract with the Cuban government to provide services within Cuba. The aim was to expand the public s access to information. But U.S. companies found the licensing requirements too difficult, so no companies took advantage of the opportunity But the Obama administration did not support an attempt by congressional Democrats to repeal the ban on tourism. And the measure was defeated. 4. After the mid-term elections, the Obama administration approved a narrower set of regulatory changes on travel. The changes resulted in substantial increases in travel and remittances. a) Restored the people-to-people category of educational travel that President Clinton created but Bush ended. b) Granted general licenses for religious and academic travel. c) Loosened restrictions on academic exchanges v1 2564

10 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala d) Restored the license for non-family remittances, which President Clinton started but Bush ended. Under Obama, remittances rose from about $1.5 billion in 2008 to $2.5 billion in e) Relaxed restrictions on gift packages (goods Cuban Americans brought on trips to Cuba), which were restricted to food, medicine, and some consumer staples under President Bush. The loosened restrictions led to over $2 billion in gift packages. Remittances and gift packages, previously too limited to do more than supplement consumption, now provided seed capital and important inputs to Cuba s growing sector of small private businesses. 5. Political shift in South Florida s Cuban diaspora a) President Obama won 35% of the Cuban American vote in 2008; earned 48% in b) 2014 Florida International University s periodic poll of Cuban Americans in South Florida found that 52% favored lifting the embargo. B. Second Term President Obama uses executive authority to weaken embargo that he admits was codified in legislation. 1. In 2015, the Obama administration implemented a number of regulatory changes. a) January 2015 The Department of the Treasury and Department of Commerce published new regulations that authorized general licenses for all 12 categories of legal travel. This allowed travelers to determine for themselves whether their travel plans were within the 12 legal categories. b) Provided general licenses to travel providers, which led to the rapid expansion of travel opportunities. c) Provided general licenses to telecommunications companies to provide services. d) Abolished limits on humanitarian and non-family remittances. 2. May 2015 President Obama removes Cuba from the list of state sponsors of international terrorism. a) Allowed the U.S. to restore full diplomatic relations with Cuba v1 2564

11 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala b) Meant that Cuba was no longer subject to sanctions as a state sponsor of terrorism. But Cuba received little economic benefit because the sanctions were narrower than the economic embargo written into law by the Helms-Burton Act. 3. September 2015 The Obama administration announced regulatory reforms to encourage U.S. business ties with Cuba. The main provision allowed U.S. businesses, educational institutions, and humanitarian organizations to establish a business presence in Cuba, which includes offices, retail outlets, and warehouses. 4. January 2016 The Obama administration released a new package of regulatory changes to authorize U.S. businesses to make sales to Cuban state enterprises as long as the trade would meet the needs of the Cuban people. The criterion was left purposely vague in order to sell almost any consumer good. The changes showed that the administration recognized that to build commercial ties with Cuba, U.S. companies would need to be able to do business with Cuba s state-owned businesses. a) The Treasury Department removed the prohibition on offering trade credits to Cuba. This did not include trade credits to finance the export of agricultural commodities, which remained explicitly prohibited under the Trade Sanctions Reform and Export Enhancement Act. 5. March 2016 Regulatory changes a) Lifted prohibition on the use of U.S. dollars in international transactions involving Cuba. In return, the Cuban Foreign Ministry promised to lift a 10% tax on converting dollars to convertible pesos, which was implemented to discourage payments and remittances in dollars. b) Relaxed restrictions on people-to-people travel, which allowed travelers to design their own educational programs instead of requiring that they travel on packaged tour groups with a travel provider. c) Licensed U.S. businesses to employ Cuban nationals, including athletes. C. What s left of the embargo after all of the regulatory changes under the Obama Administration v1 2564

12 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala 1. The flood of U.S. commerce into Cuba failed to materialize. Some U.S. firms struck deals in Cuba, but they were relatively small. Firms were hesitant to take full advantage of the commercial opportunities available under the changes because of Cuba s difficult business environment and uncertainty of U.S. policy after the 2016 presidential election. 2. The basic framework of the sanctions remained in place. a) Cuba s state enterprises could not export to the U.S. market, which made trade primarily one-way. b) Most U.S. firms outside of the telecommunications industry could not invest in Cuba or partner in joint ventures with Cuban state enterprises. III. Trump Era* During his presidential campaign, Trump announced that he would reverse all of his predecessor s actions. A. June 16, 2017 Trump announced his new policy for Cuba. Though he talked about canceling the last administration s one-sided deal with Cuba, Trump s policy leaves in place most of the measures President Obama implemented. 1. Many changes still in place: the embassies will remain open, direct commercial flights and cruises will still operate, travelers will still be able to spend unlimited amounts of money in Cuba and bring back goods to the U.S., and Americans can still send remittances. 2. Changes under the policy a) Originally, Trump said people-to-people trips would be prohibited because travelers used the category to disguise trips that were purely for tourism, which is prohibited. So travelers will now have to travel through a licensed tour company. But the Treasury Office later announced that the travel restrictions were broader: The new policy will also impact certain categories of educational travel as well as travel under support for the Cuban people. b) Expanded the definition of prohibited members of the Cuban government, which may exclude a larger group from receiving remittances. c) U.S. businesses that have contingent or other contractual agreements with the Cuban government that were agreed to before Trump s new regulations will be allowed to continue the transactions v1 2564

13 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala After the new regulations are issued, the Trump policy will bar any new direct transactions with any entities related to the Cuban military, intelligence, or security services. The State Department will publish a list of entities and subentities with which U.S. companies will be prohibited from entering direct transactions. 3. Until the new regulations are issued, the Obama-era rules remain in effect. IV. Future of Cuba Sanctions* A. It s unclear just how aggressive the Trump administration will be towards Cuba. 1. On one hand, Trump could follow President Bush s lead and reward Cuban American conservatives for their support in the presidential election by further rolling back the regulatory changes implemented by the Obama administration. Trump s tone about how he views his predecessor s regulatory changes may make U.S. banks and other businesses hesitant about doing business with Cuba because of the potential of future regulations that reverse the Obama administration initiatives. 2. On the other, the changing makeup of Congress may lead to an appetite for repealing the embargo. a) After gaining two seats in the Senate, Democrats who have shown more of a willingness to engage with Cuba could team up with some Republicans to form a majority in favor of lifting bans on tourism and agricultural sales credits. b) Farm state and pro-business Republicans could see the benefits of trade with Cuba, and team up with Democrats to form a majority for repealing the ban on agricultural financing. c) A bipartisan Cuba Working Group in the House of Representatives has worked on expanding its group to prepare for legislative battles. The group consists of equal numbers of Democrats and Republicans who oppose the embargo. d) Public opinion even among Republicans supports ending the sanctions v1 2564

14 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala (1) A July 2015 Pew Research Center poll revealed 59% of Republicans overall favored ending the embargo and 55% selfidentified conservative Republicans favored ending it. [Daniel Waltz] V. US Policy Toward Cuba: What Opportunities Exist for US (and non-us) Busineses? A. Introduction. On December 17, 2014, President Obama announced a new and more tolerant US policy toward Cuba. With a year the Cuban Interests Section in Washington and the US Interests Section in Havana had been upgraded to the status of Embassies, Cuba had been removed from the US list of state sponsors of terrorism, and direct bilateral discussions had begun between the two governments on a variety of topics. All of this is enormously significant, but does nothing to open business opportunities for US or Cuba companies. This presentation will discuss the relaxation of the US embargo of Cuba that have been implemented to date and the corresponding opportunities they create for bilateral US-Cuba trade. B. Who s who: 1. Commerce Department s Bureau of Industry and Security (BIS) licenses exports of products, software and technology under the Export Administration Regulations, 15 CFR Parts (EAR). 2. Treasury Department s Office of foreign Assets Control (OFAC) implements the US embargo under the Cuban Assets Control Regulations, 31 FR Part 515 (CACR). Licenses exports of services. OFAC s licensing process: slow, opaque and unpredictable. BIS licensing process: efficient, transparent and predictable. There s no dual licensing. Exports authorized under the BIS regulations require no separate OFAC license. C. Status quo ante: 1. Travel: There were 12 categories of permissible travel. Many required a specific license from OFAC. The most flexible provided for educational people-to-people travel. These packages had to be prepared by tour operators and submitted to OFAC for approval v1 2564

15 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala CSPs - Flights could be operated only by OFAC-licensed Carrier Service Providers (CSPs), all charter operators. TSPs - Booking on flights and other Cuba travel-related arrangements could be made only through OFAC-licensed (and OFAC-audited) Travel Service Providers (TSPs), which served as gatekeepers would book a flight only if satisfied that the Cuba travel was properly licensed). Authorized travelers were limited in the amount of their daily expenditures and could bring back only a limited dollar value of Cuban merchandise. Private aircraft and private boats had to be licensed by BIS for even short trips to Cuba. 2. Financial Services (Blocking) All assets in which Cuba or a Cuban national have an interest that come within the possession or control of a US Person are automatically blocked. No USD-denominated funds transfers involving Cuba. No direct linkages between US and Cuban banks were allowed. No US credit card use allowed. 3. Payments generally In 2014, BNP Paribas settled charges that it had violated the US embargo of Cuba by pleading guilty and paying $7.9 Billion. Earlier, other European banks had settled similar charges by paying smaller, but still massive amounts. Banks worldwide sat up and took notice. Payments to or from countries sanctioned by the US have become much more difficult as a result. 4. Informational material E.g., books, magazines, films, musical recordings, art work, completely exempt from regulations. 5. Exports of food licensed by BIS (fast and predictable). Also agricultural commodities (e.g., yellow pine lumber). Required payment of cash in advance, defined as payment before departure from the US. 6. Medicine & medical devices v1 2564

16 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala The U.S. allows exports to the other embargoed countries (Iran, Sudan & Syria), but will license exports to Cuba only if there is independent third-party end use monitoring (Cuban Democracy Act). This has been the kiss of death because: There aren t many independent (non-governmental) monitors in Cuba; It adds costs; and The Cuban government hates it. only. 7. Consumer Communications Devices: No commercial sales. Donations 8. Family Remittances: Authorized but regulated. D. What Has Changed? (Jan. 16 amendments) 1. Travel No more CSPs. Airlines can fly regularly scheduled flights. Many do from a variety of airports. No more TSPs. Any travel agent can book seats and make travel arrangements in Cuba. No more specific licenses. While the 12 categories of authorized travel remain, it is for the individual traveler to self-determine eligibility. This is true even of educational people-to-people travel. Travel agents will request completion of an affidavit confirming eligibility. Travel for tourism remains prohibited. Buried in the amended regulations is a general license that authorizes a 13 th category of travel to Cuba by those marketing sales to Cuba of the expanded list of permissible exports: 31 CFR (d) General license for travel-related transactions incident to sales of certain items. The travel-related transactions set forth in (c) and such additional transactions as are directly incident to the conduct of market research, commercial marketing, sales negotiation, accompanied delivery, or servicing in Cuba of items consistent with the export or reexport licensing policy of the Department of Commerce are authorized, provided that the traveler's schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule. There are no limits on daily expenditures or on the dollar value of Cuban merchandise brought back by returning travelers although all must be for personal consumption. Most short trips to Cuba by boats and privately-owned aircraft now authorized by a general license (AVS) under the EAR. Cruise ships now regularly leave US ports with Cuban ports included on the itinerary v1 2564

17 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala 2. Banks US banks can open correspondent accounts at Cuban banks. This addresses growing problems with the international payments system and sanctioned countries following the BNP Paribas settlement. Stonebridge Bank of Florida has opened a correspondent account at a Cuba bank. 3. Blocking US banks are no longer required to block most USD-denominated funds transfers involving Cuba (the U-Turn exception). 4. Credit cards Credit card issuers can process payments relating to lawful transaction by US persons with or in Cuba, and MasterCard has indicated that it will process payments for US citizens traveling lawfully in Cuba. The problem is, how to monitor what s lawful? Will individual cardissuing banks accept the risk? 5. Remittances Quarterly maximum raised from $500 to $2, Telecom Equipment and Services Eligible for Sale to the Cuban Government: The EAR allow the export to Cuba under a License Exception of Items intended to improve the free flow of information to, from, and among the Cuban people. Items, either sold or donated, for telecommunications, including access to the Internet, use of Internet services, infrastructure creation and upgrades. These items may be sold to Cuban government owned, operated or controlled companies and corporations for telecommunications infrastructure creation and upgrades. OFAC s regulations includes similarly broad authorizations for related transactions, services and payments. 1 These categories are extremely broad. Telecommunications items may also be authorized for export to Cuba on a case-by-case basis. So, products not automatically eligible for export under a license exception may be licensed by BIS for export to Cuba. 1 Excerpts of the relevant BIS and OFAC regulations are attached at Appendix A v1 2564

18 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala 7. Products authorized for export and sale to individuals and nongovernmental entities: Additional telecommunications-related products and consumer electronics products are authorized by BIS for export to Cuba under License Exceptions (CCL and SCP), but only if destined to non-governmental end users. (Such items can be sold to Cuban governmental entities, e.g., CIMEX, but only on condition that they be resold or made available for use only by Cuban individuals or non-governmental organizations.) BIS also allow additional categories of exports under a License Exception. But again, only if destined to non-governmental end users. These categories include: (1) 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; (2) Tools and equipment for private sector agricultural activity; (3) Tools, equipment, supplies, and instruments for use by private sector entrepreneurs; (4) A broad range of consumer electronics, including software; or (5) Items sold directly to individuals in Cuba for their personal use or their immediate family's personal use US companies eligible to sell their products in Cuba are now also eligible to rent real estate (retail, office, warehouse), to open Cuban banks accounts, to hire Cuban employees, etc. 8. Individual Export Licenses. In addition to exports authorized under the blanket License Exceptions summarized above, BIS licensing policy suggests that several categories of individual export licenses may receive favourable consideration. These include: (i) Telecommunications items that would improve communications to, from, and among the Cuban people; v1 2564

19 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala (ii) Commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; (iii) Commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public; (iv) Agricultural items that are outside the scope of agricultural commodities as defined in part 772 of the EAR, such as insecticides, pesticides and herbicides, and agricultural commodities not eligible for License Exception AGR; (v) Items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises; and (vi) Items necessary for the environmental protection of U.S. and international air quality, waters, or coastlines (including items related to renewable energy or energy efficiency). The following categories of exports and reexports that may be authorized on a case-by-case basis. (i) Items to meet the needs of the Cuban people, including exports and reexports of such items to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people. This policy of case-bycase review includes applications for licenses to export or reexport items for: (A) Agricultural production, artistic endeavors (including the creation of public content, historic and cultural works and preservation), education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation and public transportation; (B) Wholesale and retail distribution for domestic consumption by the Cuban people; (C) Construction of facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people; and (D) Items that will enable or facilitate export from Cuba of items produced by the private sector. Imports v1 2564

20 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala Persons subject to U.S. jurisdiction are authorized to engage in all transactions, including payments, necessary to import certain goods and services produced by independent Cuban entrepreneurs as determined by the State Department as set forth on the State Department's Section List, located at E. What do these amendments and policies mean as a practical matter in terms or market opening? There are significant opportunities for the telecom sector, but success depends upon finding a Cuban partner/buyer. There are significant opportunities for the travel and hospitality industry that are already being exploited (Starwood and Marriott were granted licenses to manage hotels in Cuba). Other opportunities exist, but they re more constrained. For example, consumer electronics, home improvement and agricultural equipment can be shipped under a License Exception only if destined to Cuba s non-governmental sector. Individual licenses issued under the BIS licensing policy open additional opportunities, for example: Aircraft parts; Agricultural chemicals; and Infrastructure that benefits the Cuban people. Such individual licenses may also offer opportunities. For example, the Roswell Park Cancer Institute in Buffalo, New York received a license authorizing it to begin clinical trials of a promising lung cancer vaccine developed in Cuba. As noted above, under the Obama Administration, Starwood and Marriott received OFAC licenses authorizing them to manage hotels in Cuba. VI. The Cuban Side. A. Cuba is a relatively small country. Its population is well educated, but its aggregate purchasing power is limited. While US companies may be authorized to make certain sales to the Cuban government (e.g., telecom and infrastructure), why would the Cuban government choose to buy from a US vendor? B. In addition to understanding what US law and policy does or does not allow, it is equally important to understand the policies and interests of the Cuban government. The US issued a license to Kleber, a company in Alabama, to begin assembling small tractors in the Mariel free trade zone for sale to Cuban farmers and private cooperatives. While the Cuban government is interested in attracting tenants to the new free trade zone, it ultimately decided v1 2564

21 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala that Kleber did not fit the government s interests in terms of the technology to be introduced into the country, levels of employment, etc. [JAMES MEYER] VII. Main Impediments to Doing Business in Cuba A. Embargo B. Libertad (Helms-Burton) Act C. Unsettled Claims D. Country risk under current Cuban legal regime: the rule of law issue VIII. Complex Spider-Webbing of US Laws Relating to Cuba Over Past 55 Years A. Executive Orders B. Statutes C. Code of Federal Regulations D. Federal Register Notices IX. Cuba Embargo A. Cuban Assets Control Regulations (CACR) B. Office of Foreign Assets Control (OFAC) X. Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 / Helms-Burton Act XI. XII. Marketplace Summary A. Prior vs. New Policy B. Non-U.S. Businesses in Cuba New Policies & Amendments to OFAC A. December 17, 2014 B. January 16, 2015 C. September 21, 2015 D. January 27, 2016 E. January 6, 2017 F. June 16, 2017 (Announced by White House Pending Issuance of Amended Regulation) XIII. The Issue of the Unsettled Claims A. Foreign Claims Settlement Commission v1 2564

22 New York State Bar Association International Section Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Seasonal Meeting 2017 Guatemala B. Cuban government has paid lump sum amounts to settle outstanding property claim to several foreign states, including Canada, France, Spain, and Switzerland C. Remaining property claimants against Cuban government and The 2007 Creighton Report XIV. The Importance of Resolving the Claims A. Foreign Investment Act of 1995 (Law No. 77), Sept. 5, 1995 B. Law of Foreign Investment (Law No. 118), March 29, 2014 C. ZED (Zona Especial de Desarrollo Mariel) XV. The Cuban Legal Regime & Rule of Law XVI. Questions on whether amendments are enough? XVII. Cuban Court of International Commercial Arbitration (CCACI) XVIII. OFAC Updated Frequently Asked Questions [Luis Fernando Andrade] XIX. Cuban Strategy to U.S. Policy C. Cuba s political regime outlived and outfox the unilateral and complex US legal framework imposed on Cuba for more than 50 years. D. Cuba established and developed its own successful world diplomacy that opened alternative strategic relationships. E. The US relationship with Cuba has been so ambivalent in a bipartisan way with few consistent policy engagements. F. Cuba s economic hardships have not been able to force political reforms. G. The US is currently isolated in its insistence on imposing the embargo on Cuba. H. The US relations with China and Vietnam both communist regimes are a reference of the future possibilities of doing business with Cuba. coast I. China s strategic relations with Cuba vis a vis the US port logistics on the east v1 2564

23 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology Outline of Presentation I. The History of Hostility Towards and Sanctions Against Cuba A. The beginning of the hostility between the U.S. and Cuba began almost immediately after the fall of the Fulgencio Batista regime. Initially covert, U.S. efforts to undermine the Cuban government advanced to open antagonism. 1. July 6, 1960 After Cuba nationalized U.S. and British oil refineries for refusing to refine crude oil from the Soviet Union, President Dwight D. Eisenhower halted imports of Cuban sugar the heart of Cuba s economy. 2. Fidel Castro answered by nationalizing most U.S. property in Cuba and warned that a U.S. economic war on Cuba would lead nationalizing everything that the yanquis owned. 3. Eisenhower then imposed a ban on all U.S. exports to Cuba other than food and medicine. 4. Castro responded by nationalizing remaining U.S. property. B. There were two early legislative acts the gave the President the power to implement sanctions on Cuba. 1. Foreign Assistance Act of 1961 Under the Act, President John F. Kennedy banned all U.S. trade with Cuba. 2. Trading with the Enemy Act of 1917 and the 1950 national emergency declared by President Harry S. Truman at the start of the Korean War With this authority, President Kennedy imposed a broad embargo on all transactions with Cuba except as explicitly licensed by the President. President Kennedy s actions established the framework of the embargo that remained for the next half century. C. Attempts to Multilateralize the Embargo The U.S. earned initial success in persuading other nations to join in the embargo against Cuba, but the cooperation later withered away. 1. Initial Successes In 1964, at the U.S. s urging, the Organization of American States (OAS), imposed mandatory sanctions against Cuba by calling for all member states to cut economic and diplomatic relations. Only Mexico refused to comply. European countries were reluctant but most limited trade and investment at the U.S. s insistence. 2. But by the mid-1970s, Latin American countries began to openly ignore the sanctions program and restored relations with Cuba. There were also calls from inside Congress to end the embargo.

24 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology a) U.S. corporations operating abroad began feeling legal pressure from their host governments. So President Gerald Ford lifted the embargo on trade with Cuba by subsidiaries of U.S. corporations operating abroad. b) 1975 Latin American countries pressured the U.S. into voting in favor of lifting the 1964 OAS sanctions. D. The U.S. used sanctions to punish Cuba for its involvement in foreign conflicts Cuba sent combat troops to Angola to assist in defending against an invasion by South Africa. Secretary of State Henry Kissinger, who initially attempted to normalize relations with Cuba, abandoned these efforts in response. But President Jimmy Carter continued Kissinger s normalizing efforts by lifting the embargo on travel entirely and licensed Cuban Americans to send remittances to family. The rest of the embargo including the ban on food and medicine remained in place as a bargaining chip, but it was never used. 2. Cuba s support of revolutionary movements in Central America In response, President Ronald Reagan tightened the embargo, reimposed the ban on travel, increased enforcement, and added Cuba to the State Department s list of state sponsors of international terrorism. E. Congress codifies U.S. sanctions against Cuba into law. 1. Cuban Democracy Act (1992) On the heels of Cuba s loss of Soviet economic assistance, Congress passed legislation to tighten the embargo to collapse the Cuban government. a) Reimposed ban on trade with Cuba by subsidiaries of U.S. corporations operating abroad. b) Prohibited vessels that entered Cuban ports from then entering U.S. ports for 180 days. This prohibition raised Cuba s shipping costs during a time when Cuba was forced to change its international trade relations after the fall of European communism. c) Instructed the President to urge countries to stop all aid to Cuba or risk losing aid from the U.S., a provision aimed at Russia. d) And the sanctions were to remain in force until the President certified that Cuba became a democracy by holding free and fair multiparty elections and by establishing a free market economy. 2. Cuban Liberty and Democratic Solidarity Act ( Helms-Burton Act ) (1996) 1 Passed after Cuba shot down 2 small aircraft flown by a Cuban exile group, Brothers to the Rescue, and killed 4 pilots U.S.C

25 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology a) Most significant effect Wrote the economic sanctions program into law. This stripped the President of executive power to lift the embargo at his/her discretion. But it also codified presidential power to license exceptions to the embargo with virtually no limits. b) Called on the President to seek a mandatory international embargo from the UN Security Council, urge foreign governments to end assistance to Cuba, and oppose Cuba s entry into international financial institutions. c) Authorized U.S. nationals, including Cuban Americans, to sue foreign companies for trafficking in their confiscated property in Cuba. This was an effort to discourage foreign investment. But this provision never went into effect. d) Made settlement of U.S. property claims a condition for lifting the embargo. This is a significant obstacle to forming a legislative majority to lift the embargo. The property claims issue dates back to the early years of the Cuban revolution when Cuba expropriated about $1.9 billion worth of U.S. property. Today, with accumulated interest, the figure is up to $8 billion. 3. Trade Sanctions Reform and Export Enhancement Act (2000) 2 Lifted the embargo on the sale of agricultural commodities to Cuba. But the Act banned trade credits to Cuba to finance agricultural sales and tourism. The ban on tourism was defined as any travel outside the scope of the categories of legal travel. The Act was supported by a coalition of Democrats and farm state Republicans. Cuba began buying food from the U.S. in Sales peaked at $710 million in 2008 but eventually fell to $171 million because U.S. exporters could not offer financing. F. Recent Presidents begin to use their licensing authority in relations with Cuba. 1. President Bill Clinton In his second term, he sought to expand social connections between Cuba and the U.S. a) Relaxed travel restrictions for humanitarian, cultural, and educational travel. b) Expanded air service c) Allowed anyone, not just family members, to send remittances. d) Creation of people-to-people travel category for educational visits that did not involve credit from an academic institution. This became the main provision non-cuban Americans used to travel to Cuba U.S.C

26 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology By the end of the Clinton administration, 50,000 non-cuban Americans traveled to Cuba each year. 2. President George W. Bush As a reward for the support he received from Cuban American conservatives in Florida, Bush tightened the embargo and rolled back President Clinton s actions. a) Ended the people-to-people educational travel category and eliminated most academic exchanges. b) Cut Cuban American travel from 1 annual trip to 1 every 3 years, with no exceptions for family emergencies. c) The results: travel to Cuba by U.S. residents cut in half, reduced humanitarian assistance from $10 million annually to $4 million, and remittances decreased from $1.25 billion to $1 billion annually. II. Obama Era President Barack Obama maintained that the old U.S. policy of hostility failed and the U.S. should be willing to engage with Cuba diplomatically. A. First Term Relaxed sanctions limiting family, cultural, and educational ties to Cuba. 1. Lifted all limits on family travel and remittances. 2. Licensed U.S. telecommunications companies to contract with the Cuban government to provide services within Cuba. The aim was to expand the public s access to information. But U.S. companies found the licensing requirements too difficult, so no companies took advantage of the opportunity But the Obama administration did not support an attempt by congressional Democrats to repeal the ban on tourism. And the measure was defeated. 4. After the mid-term elections, the Obama administration approved a narrower set of regulatory changes on travel. The changes resulted in substantial increases in travel and remittances. a) Restored the people-to-people category of educational travel that President Clinton created but Bush ended. b) Granted general licenses for religious and academic travel. c) Loosened restrictions on academic exchanges. d) Restored the license for non-family remittances, which President Clinton started but Bush ended. Under Obama, remittances rose from about $1.5 billion in 2008 to $2.5 billion in 2012.

27 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology e) Relaxed restrictions on gift packages (goods Cuban Americans brought on trips to Cuba), which were restricted to food, medicine, and some consumer staples under President Bush. The loosened restrictions led to over $2 billion in gift packages. Remittances and gift packages, previously too limited to do more than supplement consumption, now provided seed capital and important inputs to Cuba s growing sector of small private businesses. 5. Political shift in South Florida s Cuban Diaspora a) President Obama won 35% of the Cuban American vote in 2008; earned 48% in b) 2014 Florida International University s periodic poll of Cuban Americans in South Florida found that 52% favored lifting the embargo. B. Second Term President Obama uses executive authority to weaken embargo that he admits was codified in legislation. 1. In 2015, the Obama administration implemented a number of regulatory changes. a) January 2015 The Department of the Treasury and Department of Commerce published new regulations that authorized general licenses for all 12 categories of legal travel. 3 This allowed travelers to determine for themselves whether their travel plans were within the 12 legal categories. b) Provided general licenses to travel providers, which led to the rapid expansion of travel opportunities. c) Provided general licenses to telecommunications companies to provide services. d) Abolished limits on humanitarian and non-family remittances. 2. May 2015 President Obama removes Cuba from the list of state sponsors of international terrorism. a) Allowed the U.S. to restore full diplomatic relations with Cuba. b) Meant that Cuba was no longer subject to sanctions as a state sponsor of terrorism. But Cuba received little economic benefit because the sanctions were narrower than the economic embargo written into law by the Helms-Burton Act. 3 U.S. Department of the Treasury Fact Sheet: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions. Press Center, January 15.

28 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology 3. September 2015 The Obama administration announced regulatory reforms to encourage U.S. business ties with Cuba. 4 The main provision allowed U.S. businesses, educational institutions, and humanitarian organizations to establish a business presence in Cuba, which includes offices, retail outlets, and warehouses. 4. January 2016 The Obama administration released a new package of regulatory changes to authorize U.S. businesses to make sales to Cuban state enterprises as long as the trade would meet the needs of the Cuban people. 5 The criterion was left purposely vague in order to sell almost any consumer good. The changes showed that the administration recognized that to build commercial ties with Cuba, U.S. companies would need to be able to do business with Cuba s state-owned businesses. a) The Treasury Department removed the prohibition on offering trade credits to Cuba. This did not include trade credits to finance the export of agricultural commodities, which remained explicitly prohibited under the Trade Sanctions Reform and Export Enhancement Act. 5. March 2016 Regulatory changes 6 a) Lifted prohibition on the use of U.S. dollars in international transactions involving Cuba. In return, the Cuban Foreign Ministry promised to lift a 10% tax on converting dollars to convertible pesos, which was implemented to discourage payments and remittances in dollars. b) Relaxed restrictions on people-to-people travel, which allowed travelers to design their own educational programs instead of requiring that they travel on packaged tour groups with a travel provider. c) Licensed U.S. businesses to employ Cuban nationals, including athletes. C. What s left of the embargo after all of the regulatory changes under the Obama Administration. 1. The flood of U.S. commerce into Cuba failed to materialize. Some U.S. firms struck deals in Cuba, but they were relatively small. Firms were hesitant to take full advantage of the commercial opportunities available under the changes because of Cuba s 4 U.S. Department of the Treasury Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations. Press Center, September U.S. Department of the Treasury Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations. Press Center, January U.S. Department of the Treasury Treasury and Commerce Announce Significant Amendments to the Cuba Sanctions Regulations ahead of President Obama s Historic Trip to Cuba. Press Center, March 15.

29 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology difficult business environment and uncertainty of U.S. policy after the 2016 presidential election. 2. The basic framework of the sanctions remained in place. a) Cuba s state enterprises could not export to the U.S. market, which made trade primarily one-way. b) Most U.S. firms outside of the telecommunications industry could not invest in Cuba or partner in joint ventures with Cuban state enterprises. III. Trump Era During his presidential campaign, Trump announced that he would reverse all of his predecessor s actions. A. June 16, 2017 Trump announced his new policy for Cuba. 7 Though he talked about canceling the last administration s one-sided deal with Cuba, Trump s policy leaves in place most of the measures President Obama implemented. 1. Many Obama-era changes still in place: the embassies will remain open, direct commercial flights and cruises will still operate, travelers will still be able to spend unlimited amounts of money in Cuba and bring back goods to the U.S., and Americans can still send remittances. 2. Changes under the policy a) Originally, Trump said people-to-people trips would be prohibited because travelers used the category to disguise trips that were purely for tourism, which is prohibited. So travelers will now have to travel through a licensed tour company. But the Treasury Office later announced 8 that the travel restrictions were broader: The new policy will also impact certain categories of educational travel as well as travel under support for the Cuban people. b) Expanded the definition of prohibited members of the Cuban government, which may exclude a larger group from receiving remittances. c) U.S. businesses that have contingent or other contractual agreements with the Cuban government that were agreed to before Trump s new regulations will be allowed to continue the transactions. After the new regulations are issued, the Trump policy will bar any new direct transactions with any entities related to the Cuban military, intelligence, or security services. The State Department will publish a list of entities and subentities with which U.S. companies will be prohibited from entering direct transactions. 7 The White House Fact Sheet on Cuba Policy. The White House, June U.S. Department of the Treasury Frequently Asked Questions on President Trump s Cuba Announcement. UPDATED July 25, 2017.

30 New York State Bar Association International Section Seasonal Meeting 2017 Guatemala Enhancing Compliance and Ethics While Growing Markets: Development, Enforcement and Technology 3. Until the new regulations are issued, the Obama-era rules remain in effect. IV. Future of Cuba Sanctions A. It s unclear just how aggressive the Trump administration will be towards Cuba. 1. On one hand, Trump could follow President Bush s lead and reward Cuban American conservatives for their support in the presidential election by further rolling back the regulatory changes implemented by the Obama administration. Trump s tone about how he views his predecessor s regulatory changes may make U.S. banks and other businesses hesitant about doing business with Cuba because of the potential of future regulations that reverse the Obama administration initiatives. 2. On the other, the changing makeup of Congress may lead to an appetite for repealing the embargo. a) After gaining two seats in the Senate, Democrats who have shown more of a willingness to engage with Cuba could team up with some Republicans to form a majority in favor of lifting bans on tourism and agricultural sales credits. b) Farm state and pro-business Republicans could see the benefits of trade with Cuba, and team up with Democrats to form a majority for repealing the ban on agricultural financing. c) A bipartisan Cuba Working Group in the House of Representatives has worked on expanding its group to focus on legislative efforts on improving the relations between the U.S. and Cuba. The group consists of equal numbers of Democrats and Republicans who oppose the embargo. d) Public opinion even among Republicans supports ending the sanctions. (1) A July 2015 Pew Research Center poll revealed 59% of Republicans overall favored ending the embargo and 55% self-identified conservative Republicans favored ending it.

31 Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Codified in Title 22, Sections of the U.S. Code) P.L One Hundred Fourth Congress of the United States of America An Act To seek international sanctions against the Castro government in Cuba, to plan for support of a transition government leading to a democratically elected government in Cuba, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the "Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996". (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Purposes. Sec. 4. Definitions. Sec. 5. Severability. TITLE I--STRENGTHENING INTERNATIONAL SANCTIONS AGAINST THE CASTRO GOVERNMENT Sec Statement of policy. Sec Enforcement of the economic embargo of Cuba. Sec Prohibition against indirect financing of Cuba. Sec United States opposition to Cuban membership in international financial institutions. Sec United States opposition to termination of the suspension of the Cuban Government from participation in the Organization of American States. Sec Assistance by the independent states of the former Soviet Union for the Cuban Government.

32 coordinating official, is authorized to designate a United States-Cuba council-- (1) to ensure coordination between the United States Government and the private sector in responding to change in Cuba, and in promoting market-based development in Cuba; and (2) to establish periodic meetings between representatives of the United States and Cuban private sectors for the purpose of facilitating bilateral trade. (c) Implementation of Plan; Reports to Congress.-- (1) Implementation with respect to transition government.--upon making a determination that a transition government in Cuba is in power, the President shall transmit that determination to the appropriate congressional committees and shall, subject to an authorization of appropriations and subject to the availability of appropriations, commence the delivery and distribution of assistance to such transition government under the plan developed under section 202(b). (2) Reports to congress.--(a) The President shall transmit to the appropriate congressional committees a report setting forth the strategy for providing assistance described in section 202(b)(2) (A) and (C) to the transition government in Cuba under the plan of assistance developed under section 202(b), the types of such assistance, and the extent to which such assistance has been distributed in accordance with the plan. (B) The President shall transmit the report not later than 90 days after making the determination referred to in paragraph (1), except that the President shall transmit the report in preliminary form not later than 15 days after making that determination. (3) Implementation with respect to democratically elected government.--the President shall, upon determining that a democratically elected government in Cuba is in power, submit that determination to the appropriate congressional committees and shall, subject to an authorization of appropriations and subject to the availability of appropriations, commence the delivery and distribution of assistance to such democratically elected government under the plan developed under section 202(b). (4) Annual reports to congress.--not later than 60 days after the end of each fiscal year, the President shall transmit to the appropriate congressional committees a report on the assistance provided under the plan developed under section 202(b), including a description of each type of assistance, the amounts expended for such assistance, and a description of the assistance to be provided under the plan in the current fiscal year. (d) Reprogramming.--Any changes in the assistance to be provided under the plan developed under section 202(b) may not be made unless the President notifies the appropriate congressional committees at least 15 days in advance in accordance with the procedures applicable to reprogramming notifications under section 634A of the Foreign Assistance Act of 1961 (22 U.S.C ). SEC TERMINATION OF THE ECONOMIC EMBARGO OF CUBA. (a) Presidential Actions.--Upon submitting a determination to the appropriate congressional committees under section 203(c)(1) that a transition government in Cuba is in power, the President, after consultation with the Congress, is authorized to take steps to suspend the economic embargo of Cuba and to suspend the right of action created in section 302 with respect to actions thereafter filed against the Cuban Government, to the extent that such steps contribute

33 to a stable foundation for a democratically elected government in Cuba. (b) Suspension of Certain Provisions of Law.--In carrying out subsection (a), the President may suspend the enforcement of-- (1) section 620(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(a)); (2) section 620(f) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(f)) with respect to the "Republic of Cuba"; (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6003, 6004(d), and 6005); (4) section 902(c) of the Food Security Act of 1985; and (5) the prohibitions on transactions described in part 515 of title 31, Code of Federal Regulations. (c) Additional Presidential Actions.--Upon submitting a determination to the appropriate congressional committees under section 203(c)(3) that a democratically elected government in Cuba is in power, the President shall take steps to terminate the economic embargo of Cuba, including the restrictions under part 515 of title 31, Code of Federal Regulations. (d) Conforming Amendments.--On the date on which the President submits a determination under section 203(c)(3)-- (1) section 620(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(a)) is repealed; (2) section 620(f) of the Foreign Assistance Act of 1961 (22 U.S.C. 2370(f)) is amended by striking "Republic of Cuba"; (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6003, 6004(d), and 6005) are repealed; and (4) section 902(c) of the Food Security Act of 1985 is repealed. (e) Review of Suspension of Economic Embargo.-- (1) Review.--If the President takes action under subsection (a) to suspend the economic embargo of Cuba, the President shall immediately so notify the Congress. The President shall report to the Congress no less frequently than every 6 months thereafter, until he submits a determination under section 203(c)(3) that a democratically elected government in Cuba is in power, on the progress being made by Cuba toward the establishment of such a democratically elected government. The action of the President under subsection (a) shall cease to be effective upon the enactment of a joint resolution described in paragraph (2). (2) Joint resolutions.--for purposes of this subsection, the term "joint resolution" means only a joint resolution of the 2 Houses of Congress, the matter after the resolving clause of which is as follows: "That the Congress disapproves the action of the President under section 204(a) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 to suspend the economic

34 embargo of Cuba, notice of which was submitted to the Congress on.", with the blank space being filled with the appropriate date. (3) Referral to committees.--joint resolutions introduced in the House of Representatives shall be referred to the Committee on International Relations and joint resolutions introduced in the Senate shall be referred to the Committee on Foreign Relations. (4) Procedures.--(A) Any joint resolution shall be considered in the Senate in accordance with the provisions of section 601(b) of the International Security Assistance and Arms Export Control Act of (B) For the purpose of expediting the consideration and enactment of joint resolutions, a motion to proceed to the consideration of any joint resolution after it has been reported by the appropriate committee shall be treated as highly privileged in the House of Representatives. (C) Not more than 1 joint resolution may be considered in the House of Representatives and the Senate in the 6-month period beginning on the date on which the President notifies the Congress under paragraph (1) of the action taken under subsection (a), and in each 6-month period thereafter. SEC REQUIREMENTS AND FACTORS FOR DETERMINING A TRANSITION GOVERNMENT. (a) Requirements.--For the purposes of this Act, a transition government in Cuba is a government that-- (1) has legalized all political activity; (2) has released all political prisoners and allowed for investigations of Cuban prisons by appropriate international human rights organizations; (3) has dissolved the present Department of State Security in the Cuban Ministry of the Interior, including the Committees for the Defense of the Revolution and the Rapid Response Brigades; and (4) has made public commitments to organizing free and fair elections for a new government-- (A) to be held in a timely manner within a period not to exceed 18 months after the transition government assumes power; (B) with the participation of multiple independent political parties that have full access to the media on an equal basis, including (in the case of radio, television, or other telecommunications media) in terms of allotments of time for such access and the times of day such allotments are given; and (C) to be conducted under the supervision of internationally recognized observers, such as the Organization of American States, the United Nations, and other election monitors; (5) has ceased any interference with Radio Marti or Television Marti broadcasts;

35 (6) makes public commitments to and is making demonstrable progress in-- (A) establishing an independent judiciary; (B) respecting internationally recognized human rights and basic freedoms as set forth in the Universal Declaration of Human Rights, to which Cuba is a signatory nation; (C) allowing the establishment of independent trade unions as set forth in conventions 87 and 98 of the International Labor Organization, and allowing the establishment of independent social, economic, and political associations; (7) does not include Fidel Castro or Raul Castro; and (8) has given adequate assurances that it will allow the speedy and efficient distribution of assistance to the Cuban people. (b) Additional Factors.--In addition to the requirements in subsection (a), in determining whether a transition government in Cuba is in power, the President shall take into account the extent to which that government-- (1) is demonstrably in transition from a communist totalitarian dictatorship to representative democracy; (2) has made public commitments to, and is making demonstrable progress in-- (A) effectively guaranteeing the rights of free speech and freedom of the press, including granting permits to privately owned media and telecommunications companies to operate in Cuba; (B) permitting the reinstatement of citizenship to Cuban-born persons returning to Cuba; (C) assuring the right to private property; and (D) taking appropriate steps to return to United States citizens (and entities which are 50 percent or more beneficially owned by United States citizens) property taken by the Cuban Government from such citizens and entities on or after January 1, 1959, or to provide equitable compensation to such citizens and entities for such property; (3) has extradited or otherwise rendered to the United States all persons sought by the United States Department of Justice for crimes committed in the United States; and (4) has permitted the deployment throughout Cuba of independent and unfettered international human rights monitors. SEC REQUIREMENTS FOR DETERMINING A DEMOCRATICALLY ELECTED GOVERNMENT. For purposes of this Act, a democratically elected government in Cuba, in addition to meeting the requirements of section 205(a), is a government which--

36 7201 TITLE 22 FOREIGN RELATIONS AND INTERCOURSE Page 1516 (b) Activities of the Department of Labor (1) In general The Secretary of Labor, acting through the head of the Bureau of International Labor Affairs of the Department of Labor, shall carry out additional activities to monitor and combat forced labor and child labor in foreign countries as described in paragraph (2). (2) Additional activities described The additional activities referred to in paragraph (1) are (A) to monitor the use of forced labor and child labor in violation of international standards; (B) to provide information regarding trafficking in persons for the purpose of forced labor to the Office to Monitor and Combat Trafficking of the Department of State for inclusion in trafficking in persons report required by section 7107(b) of this title; (C) to develop and make available to the public a list of goods from countries that the Bureau of International Labor Affairs has reason to believe are produced by forced labor or child labor in violation of international standards; (D) to work with persons who are involved in the production of goods on the list described in subparagraph (C) to create a standard set of practices that will reduce the likelihood that such persons will produce goods using the labor described in such subparagraph; and (E) to consult with other departments and agencies of the United States Government to reduce forced and child labor internationally and ensure that products made by forced labor and child labor in violation of international standards are not imported into the United States. (Pub. L , title I, 105, Jan. 10, 2006, 119 Stat ) CODIFICATION Section was enacted as part of the Trafficking Victims Protection Reauthorization Act of 2005, and not as part of the Trafficking Victims Protection Act of 2000 which comprises this chapter. CHAPTER 79 TRADE SANCTIONS REFORM AND EXPORT ENHANCEMENT Sec Definitions Restriction Exceptions Termination of sanctions State sponsors of international terrorism Congressional procedures Prohibition on United States assistance and financing Prohibition on additional imports from Cuba Requirements relating to certain travel-related transactions with Cuba Application of the Trade Sanctions Reform and Export Enhancement Act Technical clarification relating to provision of material support to terrorism Definitions In this chapter: (1) Agricultural commodity The term agricultural commodity has the meaning given the term in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602). (2) Agricultural program The term agricultural program means (A) any program administered under the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C et seq.); (B) any program administered under section 1431 of title 7; (C) any program administered under the Agricultural Trade Act of 1978 (7 U.S.C et seq.); (D) the dairy export incentive program administered under section 713a 14 of title 15; (E) any commercial export sale of agricultural commodities; or (F) any export financing (including credits or credit guarantees) provided by the United States Government for agricultural commodities. (3) Joint resolution The term joint resolution means (A) in the case of section 7202(a)(1) of this title, only a joint resolution introduced within 10 session days of Congress after the date on which the report of the President under section 7202(a)(1) of this title is received by Congress, the matter after the resolving clause of which is as follows: That Congress approves the report of the President pursuant to section 903(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000, transmitted on lllllll., with the blank completed with the appropriate date; and (B) in the case of section 7205(1) 1 of this title, only a joint resolution introduced within 10 session days of Congress after the date on which the report of the President under section 7205(2) 1 of this title is received by Congress, the matter after the resolving clause of which is as follows: That Congress approves the report of the President pursuant to section 906(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000, transmitted on lllllll., with the blank completed with the appropriate date. (4) Medical device The term medical device has the meaning given the term device in section 321 of title 21. (5) Medicine The term medicine has the meaning given the term drug in section 321 of title 21. (6) Unilateral agricultural sanction The term unilateral agricultural sanction means any prohibition, restriction, or condition on carrying out an agricultural program with respect to a foreign country or foreign entity that is imposed by the United States for reasons of foreign policy or national security, except in a case in which the United States imposes the measure pursuant to 1 So in original. Probably should be section 7204.

37 Page 1517 TITLE 22 FOREIGN RELATIONS AND INTERCOURSE 7203 (A) a multilateral regime and the other member countries of that regime have agreed to impose substantially equivalent measures; or (B) a mandatory decision of the United Nations Security Council. (7) Unilateral medical sanction The term unilateral medical sanction means any prohibition, restriction, or condition on exports of, or the provision of assistance consisting of, medicine or a medical device with respect to a foreign country or foreign entity that is imposed by the United States for reasons of foreign policy or national security, except in a case in which the United States imposes the measure pursuant to (A) a multilateral regime and the other member countries of that regime have agreed to impose substantially equivalent measures; or (B) a mandatory decision of the United Nations Security Council. (Pub. L , 1(a) [title IX, 902], Oct. 28, 2000, 114 Stat. 1549, 1549A 67.) REFERENCES IN TEXT The Agricultural Trade Development and Assistance Act of 1954, referred to in par. (2)(A), is act July 10, 1954, ch. 469, 68 Stat. 454, as amended, which is classified principally to chapter 41 ( 1691 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see Short Title note set out under section 1691 of Title 7 and Tables. The Agricultural Trade Act of 1978, referred to in par. (2)(C), is Pub. L , Oct. 21, 1978, 92 Stat. 1685, as amended generally by Pub. L , title XV, 1531, Nov. 28, 1990, 104 Stat. 3668, which is classified generally to chapter 87 ( 5601 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see Short Title note set out under section 5601 of Title 7 and Tables. Section 903(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000, referred to in par. (3)(A), is section 1(a) [title IX, 903(a)(1)] of Pub. L , which is classified to section 7202(a)(1) of this title. Section 906 of the Trade Sanctions Reform and Export Enhancement Act of 2000, referred to in par. (3)(B), is section 1(a) [title IX, 906] of Pub. L , which is classified to section 7205 of this title. Provisions relating to report of the President and enactment into law of a joint resolution are contained in section 905 of the Act, which is classified to section 7204 of this title. EFFECTIVE DATE Pub. L , 1(a) [title IX, 911], Oct. 28, 2000, 114 Stat. 1549, 1549A 72, provided that: (a) IN GENERAL. Except as provided in subsection (b), this title [enacting this chapter] shall take effect on the date of enactment of this Act [Oct. 28, 2000], and shall apply thereafter in any fiscal year. (b) EXISTING SANCTIONS. In the case of any unilateral agricultural sanction or unilateral medical sanction that is in effect as of the date of enactment of this Act, this title shall take effect 120 days after the date of enactment of this Act, and shall apply thereafter in any fiscal year. SHORT TITLE Pub. L , 1(a) [title IX, 901], Oct. 28, 2000, 114 Stat. 1549, 1549A 67, provided that: This title [enacting this chapter] may be cited as the Trade Sanctions Reform and Export Enhancement Act of DEFINITIONS Pub. L , 1(a) [title VII, 775], Oct. 28, 2000, 114 Stat. 1549, 1549A 45, provided that: For purposes of administering title IX of this Act [enacting this chapter], the term agricultural commodity shall also include fertilizer and organic fertilizer, except to the extent provided pursuant to section 904 of that title [22 U.S.C. 7203] Restriction (a) New sanctions Except as provided in sections 7203 and 7204 of this title and notwithstanding any other provision of law, the President may not impose a unilateral agricultural sanction or unilateral medical sanction against a foreign country or foreign entity, unless (1) not later than 60 days before the sanction is proposed to be imposed, the President submits a report to Congress that (A) describes the activity proposed to be prohibited, restricted, or conditioned; and (B) describes the actions by the foreign country or foreign entity that justify the sanction; and (2) there is enacted into law a joint resolution stating the approval of Congress for the report submitted under paragraph (1). (b) Existing sanctions The President shall terminate any unilateral agricultural sanction or unilateral medical sanction that is in effect as of October 28, (Pub. L , 1(a) [title IX, 903], Oct. 28, 2000, 114 Stat. 1549, 1549A 68.) Exceptions Section 7202 of this title shall not affect any authority or requirement to impose (or continue to impose) a sanction referred to in section 7202 of this title (1) against a foreign country or foreign entity (A) pursuant to a declaration of war against the country or entity; (B) pursuant to specific statutory authorization for the use of the Armed Forces of the United States against the country or entity; (C) against which the Armed Forces of the United States are involved in hostilities; or (D) where imminent involvement by the Armed Forces of the United States in hostilities against the country or entity is clearly indicated by the circumstances; or (2) to the extent that the sanction would prohibit, restrict, or condition the provision or use of any agricultural commodity, medicine, or medical device that is (A) controlled on the United States Munitions List established under section 2778 of this title; (B) controlled on any control list established under the Export Administration Act of 1979 or any successor statute (50 U.S.C. App et seq.); or (C) used to facilitate the design, development, or production of chemical or biological weapons, missiles, or weapons of mass destruction. (Pub. L , 1(a) [title IX, 904], Oct. 28, 2000, 114 Stat. 1549, 1549A 68; Pub. L , title II, 221(a)(1), Oct. 26, 2001, 115 Stat. 292.)

38 7204 TITLE 22 FOREIGN RELATIONS AND INTERCOURSE Page 1518 REFERENCES IN TEXT The Export Administration Act of 1979, referred to in par. (2)(B), is Pub. L , Sept. 29, 1979, 93 Stat. 503, as amended, which is classified principally to section 2401 et seq. of Title 50, Appendix, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 2401 of Title 50, Appendix, and Tables. AMENDMENTS 2001 Par. (2)(C). Pub. L amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: used to facilitate the development or production of a chemical or biological weapon or weapon of mass destruction Termination of sanctions Any unilateral agricultural sanction or unilateral medical sanction that is imposed pursuant to the procedures described in section 7202(a) of this title shall terminate not later than 2 years after the date on which the sanction became effective unless (1) not later than 60 days before the date of termination of the sanction, the President submits to Congress a report containing (A) the recommendation of the President for the continuation of the sanction for an additional period of not to exceed 2 years; and (B) the request of the President for approval by Congress of the recommendation; and (2) there is enacted into law a joint resolution stating the approval of Congress for the report submitted under paragraph (1). (Pub. L , 1(a) [title IX, 905], Oct. 28, 2000, 114 Stat. 1549, 1549A 69.) State sponsors of international terrorism (a) Requirement (1) In general Notwithstanding any other provision of this chapter (other than section 7203 of this title), the export of agricultural commodities, medicine, or medical devices to Cuba, the Taliban or the territory of Afghanistan controlled by the Taliban, or to the government of a country that has been determined by the Secretary of State to have repeatedly provided support for acts of international terrorism under section 2371 of this title, section 2405(j)(1) of title 50, Appendix, or section 2780(d) of this title, or to any other entity in such a country, shall only be made pursuant to 1-year licenses issued by the United States Government for contracts entered into during the 1-year period of the license and shipped within the 12-month period beginning on the date of the signing of the contract, except that the requirements of such 1-year licenses shall be no more restrictive than license exceptions administered by the Department of Commerce or general licenses administered by the Department of the Treasury, except that procedures shall be in place to deny licenses for exports to any entity within such country, or in the territory of Afghanistan controlled by the Taliban, promoting international terrorism. (2) Exception Paragraph (1) shall not apply with respect to the export of agricultural commodities, medicine, or medical devices to the Government of Syria or to the Government of North Korea, or to any other entity in Syria or North Korea. (b) Quarterly reports The applicable department or agency of the Federal Government shall submit to the appropriate congressional committees on a quarterly basis a report on any activities undertaken under subsection (a)(1) of this section during the preceding calendar quarter. (c) Biennial reports Not later than 2 years after October 28, 2000, and every 2 years thereafter, the applicable department or agency of the Federal Government shall submit a report to the appropriate congressional committees on the operation of the licensing system under this section for the preceding 2-year period, including (1) the number and types of licenses applied for; (2) the number and types of licenses approved; (3) the average amount of time elapsed from the date of filing of a license application until the date of its approval; (4) the extent to which the licensing procedures were effectively implemented; and (5) a description of comments received from interested parties about the extent to which the licensing procedures were effective, after the applicable department or agency holds a public 30-day comment period. (Pub. L , 1(a) [title IX, 906], Oct. 28, 2000, 114 Stat. 1549, 1549A 69; Pub. L , title II, 221(a)(2), (3), Oct. 26, 2001, 115 Stat. 292.) AMENDMENTS 2001 Subsec. (a)(1). Pub. L , 221(a)(2), inserted, the Taliban or the territory of Afghanistan controlled by the Taliban, after Cuba and, or in the territory of Afghanistan controlled by the Taliban, after entity within such country. Subsec. (a)(2). Pub. L , 221(a)(3), inserted, or to any other entity in Syria or North Korea before period at end Congressional procedures (a) Referral of report A report described in section 7202(a)(1) or 7204(1) of this title shall be referred to the appropriate committee or committees of the House of Representatives and to the appropriate committee or committees of the Senate. (b) Referral of joint resolution (1) In general A joint resolution introduced in the Senate shall be referred to the Committee on Foreign Relations, and a joint resolution introduced in the House of Representatives shall be referred to the Committee on International Relations. (2) Reporting date A joint resolution referred to in paragraph (1) may not be reported before the eighth session day of Congress after the introduction of the joint resolution.

39 Page 1519 TITLE 22 FOREIGN RELATIONS AND INTERCOURSE 7209 (Pub. L , 1(a) [title IX, 907], Oct. 28, 2000, 114 Stat. 1549, 1549A 70.) Prohibition on United States assistance and financing (a) Prohibition on United States assistance (1) In general Notwithstanding any other provision of law, no United States Government assistance, including United States foreign assistance, United States export assistance, and any United States credit or guarantees shall be available for exports to Cuba or for commercial exports to Iran, Libya, North Korea, or Sudan. (2) Rule of construction Nothing in paragraph (1) shall be construed to alter, modify, or otherwise affect the provisions of section 6039 of this title or any other provision of law relating to Cuba in effect on the day before October 28, (3) Waiver The President may waive the application of paragraph (1) with respect to Iran, Libya, North Korea, and Sudan to the degree the President determines that it is in the national security interest of the United States to do so, or for humanitarian reasons. (b) Prohibition on financing of agricultural sales to Cuba (1) In general No United States person may provide payment or financing terms for sales of agricultural commodities or products to Cuba or any person in Cuba, except in accordance with the following terms (notwithstanding part 515 of title 31, Code of Federal Regulations, or any other provision of law): (A) Payment of cash in advance. (B) Financing by third country financial institutions (excluding United States persons or Government of Cuba entities), except that such financing may be confirmed or advised by a United States financial institution. Nothing in this paragraph authorizes payment terms or trade financing involving a debit or credit to an account of a person located in Cuba or of the Government of Cuba maintained on the books of a United States depository institution. (2) Penalties Any private person or entity that violates paragraph (1) shall be subject to the penalties provided in the Trading With the Enemy Act [50 U.S.C. App. 1 et seq.] for violations under that Act. (3) Administration and enforcement The President shall issue such regulations as are necessary to carry out this section, except that the President, in lieu of issuing new regulations, may apply any regulations in effect on October 28, 2000, pursuant to the Trading With the Enemy Act [50 U.S.C. App. 1 et seq.], with respect to the conduct prohibited in paragraph (1). (4) Definitions In this subsection (A) the term financing includes any loan or extension of credit; (B) the term United States depository institution means any entity (including its foreign branches or subsidiaries) organized under the laws of any jurisdiction within the United States, or any agency, office or branch located in the United States of a foreign entity, that is engaged primarily in the business of banking (including a bank, savings bank, savings association, credit union, trust company, or United States bank holding company); and (C) the term United States person means the Federal Government, any State or local government, or any private person or entity of the United States. (Pub. L , 1(a) [title IX, 908], Oct. 28, 2000, 114 Stat. 1549, 1549A 70.) REFERENCES IN TEXT The Trading With the Enemy Act, referred to in subsec. (b)(2), (3), is act Oct. 6, 1917, ch. 106, 40 Stat. 411, as amended, which is classified to sections 1 to 6, 7 to 39 and 41 to 44 of Title 50, Appendix, War and National Defense. For complete classification of this Act to the Code, see Tables. DETERMINATION AND WAIVER OF APPLICATION OF SECTION 908(a)(1) OF THE TRADE SANCTIONS REFORM AND EX- PORT ENHANCEMENT ACT OF 2000 WITH RESPECT TO LIBYA Determination of President of the United States, No , Sept. 20, 2004, 69 F.R , provided: Memorandum for the Secretary of State[,] the Secretary of Agriculture[, and] the Secretary of Commerce By virtue of the authority vested in me by the Constitution and laws of the United States, including section 908(a)(3) of the Trade Sanctions Reform and Export Enhancement Act of 2000, title IX, Public Law [22 U.S.C. 7207(a)(3)] (TSRA), I hereby determine that waiver of the application of section 908(a)(1) of TSRA with respect to Libya is in the national security interest of the United States and hereby waive the application of that section with respect to Libya. The Secretary of State is hereby authorized and directed to report this determination and waiver to the Congress and to arrange for its publication in the Federal Register. GEORGE W. BUSH Prohibition on additional imports from Cuba Nothing in this chapter shall be construed to alter, modify, or otherwise affect the provisions of section of title 31, Code of Federal Regulations, relating to the prohibition on the entry into the United States of merchandise that: (1) is of Cuban origin; (2) is or has been located in or transported from or through Cuba; or (3) is made or derived in whole or in part of any article which is the growth, produce, or manufacture of Cuba. (Pub. L , 1(a) [title IX, 909], Oct. 28, 2000, 114 Stat. 1549, 1549A 71.) Requirements relating to certain travelrelated transactions with Cuba (a) Authorization of travel relating to commercial sale of agricultural commodities The Secretary of the Treasury shall promulgate regulations under which the travel-related

40 7210 TITLE 22 FOREIGN RELATIONS AND INTERCOURSE Page 1520 transactions listed in subsection (c) of section of title 31, Code of Federal Regulations, may be authorized on a case-by-case basis by a specific license for travel to, from, or within Cuba for the commercial export sale of agricultural commodities pursuant to the provisions of this chapter. (b) Prohibition on travel relating to tourist activities (1) In general Notwithstanding any other provision of law or regulation, the Secretary of the Treasury, or any other Federal official, may not authorize the travel-related transactions listed in subsection (c) of section of title 31, Code of Federal Regulations, either by a general license or on a case-by-case basis by a specific license for travel to, from, or within Cuba for tourist activities. (2) Definition In this subsection, the term tourist activities means any activity with respect to travel to, from, or within Cuba that is not expressly authorized in subsection (a) of this section, in any of paragraphs (1) through (12) of section of title 31, Code of Federal Regulations, or in any section referred to in any of such paragraphs (1) through (12) (as such sections were in effect on June 1, 2000). (Pub. L , 1(a) [title IX, 910], Oct. 28, 2000, 114 Stat. 1549, 1549A 71.) Application of the Trade Sanctions Reform and Export Enhancement Act Nothing in the Trade Sanctions Reform and Export Enhancement Act of 2000 [22 U.S.C et seq.] shall limit the application or scope of any law establishing criminal or civil penalties, including any Executive order or regulation promulgated pursuant to such laws (or similar or successor laws), for the unlawful export of any agricultural commodity, medicine, or medical device to (1) a foreign organization, group, or person designated pursuant to Executive Order No of January 23, 1995, as amended; (2) a Foreign Terrorist Organization pursuant to the Antiterrorism and Effective Death Penalty Act of 1996 (Public Law ); (3) a foreign organization, group, or person designated pursuant to Executive Order No (September 23, 2001); (4) any narcotics trafficking entity designated pursuant to Executive Order No (October 21, 1995) or the Foreign Narcotics Kingpin Designation Act (Public Law ) [21 U.S.C et seq.]; or (5) any foreign organization, group, or persons subject to any restriction for its involvement in weapons of mass destruction or missile proliferation. (Pub. L , title II, 221(b), Oct. 26, 2001, 115 Stat. 292.) REFERENCES IN TEXT The Trade Sanctions Reform and Export Enhancement Act of 2000, referred to in text, is section 1(a) [title IX] of Pub. L , Oct. 28, 2000, 114 Stat. 1549, 1549A 67, which is classified generally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 7201 of this title and Tables. Executive Order No , referred to in par. (1), is listed in a table under section 1701 of Title 50, War and National Defense. The Antiterrorism and Effective Death Penalty Act of 1996, referred to in par. (2), is Pub. L , Apr. 24, 1996, 110 Stat. 1214, as amended. For complete classification of this Act to the Code, see Short Title of 1996 Amendment note set out under section 1 of Title 18, Crimes and Criminal Procedure, and Tables. Executive Order No , referred to par. (3), is listed in a table under section 1701 of Title 50, War and National Defense. Executive Order No , referred to par. (4), is listed in a table under section 1701 of Title 50, War and National Defense. The Foreign Narcotics Kingpin Designation Act, referred to in par. (4), is title VIII of Pub. L , Dec. 3, 1999, 113 Stat. 1626, as amended, which is classified principally to chapter 24 ( 1901 et seq.) of Title 21, Food and Drugs. For complete classification of this Act to the Code, see Short Title note set out under section 1901 of Title 21 and Tables. CODIFICATION Section was enacted as part of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 or USA PATRIOT Act, and not as part of the Trade Sanctions Reform and Export Enhancement Act of 2000 which comprises this chapter Technical clarification relating to provision of material support to terrorism No provision of the Trade Sanctions Reform and Export Enhancement Act of 2000 (title IX of Public Law ) [22 U.S.C et seq.] shall be construed to limit or otherwise affect section 2339A or 2339B of title 18. (Pub. L , title VIII, 807, Oct. 26, 2001, 115 Stat. 378.) REFERENCES IN TEXT The Trade Sanctions Reform and Export Enhancement Act of 2000, referred to in text, is section 1(a) [title IX] of Pub. L , Oct. 28, 2000, 114 Stat. 1549, 1549A 67, which is classified generally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 7201 of this title and Tables. CODIFICATION Section was enacted as part of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 or USA PATRIOT Act, and not as part of the Trade Sanctions Reform and Export Enhancement Act of 2000 which comprises this chapter. CHAPTER 80 DIPLOMATIC TELECOMMUNI- CATIONS SERVICE PROGRAM OFFICE (DTS-PO) Sec Reorganization of Diplomatic Telecommunications Service Program Office Personnel Diplomatic Telecommunications Service Oversight Board General provisions Reorganization of Diplomatic Telecommunications Service Program Office (a) Reorganization Effective 60 days after December 27, 2000, the Diplomatic Telecommunications Service Pro-

41 8/19/2017 FACT SHEET: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions Press Center FACT SHEET: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions 1/15/2015 Amendments Implement Changes Announced by the President on December 17 Related to the Easing of Cuba Sanctions WASHINGTON - On December 17, 2014 the President announced a set of diplomatic and economic changes to chart a new course in U.S. relations with Cuba and to further engage and empower the Cuban people. The U.S. Department of the Treasury and the U.S. Department of Commerce today are announcing the forthcoming publication of the revised Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), which implement the changes announced on December 17 to the sanctions administered by Treasury s Office of Foreign Assets Control (OFAC) and Commerce s Bureau of Industry and Security (BIS). The changes take effect tomorrow, when the regulations are published in the Federal Register. These measures will facilitate travel to Cuba for authorized purposes, facilitate the provision by travel agents and airlines of authorized travel services and the forwarding by certain entities of authorized remittances, raise the limits on and generally authorize certain categories of remittances to Cuba, allow U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, authorize certain transactions with Cuban nationals located outside of Cuba, and allow a number of other activities related to, among other areas, telecommunications, financial services, trade, and shipping. Persons must comply with all provisions of the revised regulations; violations of the terms and conditions could result in penalties under U.S. law. To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here. To see the Commerce regulations, which can be found at 15 CFR parts , please see here. The regulations will be effective as of Friday, January 16. Major elements of the changes in the revised regulations include: Travel In all 12 existing categories of authorized travel, travel previously authorized by specific license will be authorized by general license, subject to appropriate conditions. This means that individuals who meet the conditions laid out in the regulations will not need to apply for a license to travel to Cuba. These categories are: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions. The per diem rate previously imposed on authorized travelers will no longer apply, and there is no specific dollar limit on authorized expenses. Authorized travelers will be allowed to engage in transactions ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there. Additionally, travelers will now be allowed to use U.S. credit and debit cards in Cuba. Travel and Carrier Services Travel agents and airlines will be authorized to provide authorized travel and air carrier services without the need for a specific license from OFAC. Insurance 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. Importation of Goods Authorized U.S. travelers to Cuba will be allowed to import up to $400 worth of goods acquired in Cuba for personal use. This includes no more than $100 of alcohol or tobacco products. Telecommunications In order to better provide efficient and adequate telecommunications services between the United States and Cuba, a new OFAC general license will facilitate the establishment of commercial telecommunications facilities linking third countries and Cuba and in Cuba. The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people within Cuba, in the United States, and the rest of the world will be authorized under a new Commerce license exception (Support for the Cuban People (SCP)) without requiring a license. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems. Additional services incident to internet-based communications and related to certain exportations and reexportations of communications items will also be authorized by OFAC general license. Consumer Communications Devices Commercial sales, as well as donations, of the export and reexport of consumer communications devices that enable the flow of information to from and among the Cuban people such as personal computers, mobile phones, televisions, memory devices, recording devices, and consumer software will be authorized under Commerce s Consumer Communication Devices (CCD) license exception instead of requiring licenses. Financial Services 1/3

42 8/19/2017 FACT SHEET: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions Financial Services Depository institutions will be permitted to open and maintain correspondent accounts at a financial institution that is a national of Cuba 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 consistent with section of the CACR. These measures will improve the speed and efficiency of authorized payments between the United States and Cuba. Remittances The limits on generally licensed remittances to Cuban nationals other than certain prohibited Cuban Government and Cuban Communist Party officials will be increased from $500 to $2,000 per quarter. Certain remittances to Cuban nationals for humanitarian projects, support for the Cuban people, or development of private businesses will be generally authorized without limitation. These general licenses will allow remittances for humanitarian projects in or related to Cuba that are designed to directly benefit the Cuban people; to support the Cuban people through activities of recognized human rights organizations, independent organizations designed to promote a rapid, peaceful transition to democracy, and activities of individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; and to support the development of private businesses, including small farms. Authorized travelers will be allowed to carry with them to Cuba $10,000 in total family remittances, periodic remittances, remittances to religious organizations in Cuba, and remittances to students in Cuba pursuant to an educational license. Under an expanded general license, banking institutions, including U.S.-registered brokers or dealers in securities and U.S.-registered money transmitters, will be permitted to process authorized remittances to Cuba without having to apply for a specific license. Third-Country Effects U.S.-owned or -controlled entities in third countries, including banks, will be authorized to provide goods and services to an individual Cuban national located outside of Cuba, provided the transaction does not involve a commercial exportation of goods or services to or from Cuba. OFAC will generally authorize the unblocking of accounts of Cuban nationals who have permanently relocated outside of Cuba. OFAC is issuing a general license that will authorize transactions related to third-country conferences attended by Cuban nationals. In addition, a general license will authorize foreign vessels to enter the United States after engaging in certain trade with Cuba. Small Business Growth Certain micro-financing projects and entrepreneurial and business training, such as for private business and agricultural operations, will be authorized. Also, commercial imports of certain independent Cuban entrepreneur-produced goods and services, as determined by the State Department on a list to be published on its website, will be authorized. Cash in Advance 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. Supporting Diplomatic Relations and USG Official Business The President announced the reestablishment of diplomatic relations with Cuba. To facilitate that process, OFAC is adding a general license authorizing transactions with Cuban official missions and their employees in the United States. In addition, in an effort to support important U.S. government interests, an expanded general license will authorize Cuba-related transactions by employees, grantees, and contractors of the U.S. government, foreign governments, and certain international organizations in their official capacities. Support for the Cuban People Exports and reexports to provide support for the Cuban people in three areas: improving living conditions and supporting independent economic activity; strengthening civil society; and improving communications will be eligible under Commerce s SCP license exception. To improve living conditions and support independent economic activity, SCP will authorize: (1) 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 building for private sector social or recreational use; (2) tools and equipment for private agricultural activity; and (3) tools, equipment, supplies, and instruments for use by private sector entrepreneurs. To strengthen civil society, SCP will authorize export and reexport of donated items and temporary export and reexport by travelers to Cuba of items for use in scientific, archaeological, cultural, ecological, educational, historic preservation, or sporting activities. SCP will also authorize exports and reexports to human rights organizations, individuals, or non-governmental organizations that promote independent activity intended to strengthen civil society. Travelers will also be able to export temporarily items for use in professional research in the traveler s profession or full time field of study under SCP. The activities or research must not be related to items on the United States Munitions List or items controlled for sensitive reasons on the Commerce Control List. To improve communications, SCP will authorize exports and reexports of items for use by news media personnel and U.S. news bureaus. SCP will not authorize the export of items on the Commerce Control List for sensitive reasons such as national security, nuclear proliferation, regional stability, missile technology, and other reasons of similar sensitivity. Gift Parcels Consolidated shipments of gift parcels will be eligible for the same Commerce license exception that authorizes individual gift parcels. Liberalizing License Application Review Policy Commerce will set forth a general policy of approval for applications to export or reexport items necessary for the environmental protection or enhancement of U.S. and international air and water quality or coastlines (including items that enhance environmental quality through energy efficiency). ### 2/3

43 8/19/2017 Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations Press Center Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations 9/18/2015 Amendments Further Implement President Obama s 2014 Announcement Related to the Easing of Cuba Sanctions WASHINGTON Today, the Department of the Treasury and the Department of Commerce are announcing additional revisions to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), building off the changes put into place by Treasury and Commerce on January 16, 2015 and further delivering on the new direction toward U.S. relations with Cuba that President Obama laid out last December. The changes, consistent with the President s December announcement, will take effect on Monday, September 21, 2015, when the regulations are published in the Federal Register. A fact sheet detailing the revisions, which will be administered by Treasury s Office of Foreign Assets Control (OFAC) and Commerce s Bureau of Industry and Security (BIS), is below. Treasury Secretary Jacob J. Lew said, Today s announcement underscores the Administration s commitment to promote constructive change for the Cuban people. These regulatory changes build on the revisions implemented earlier this year and will further ease sanctions related to travel, telecommunications and internet-based services, business operations in Cuba, and remittances. A stronger, more open U.S.-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike. By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous, and stable Cuba. Commerce Secretary Penny Pritzker said, The regulations published today are designed to empower the Cuban people and support the emerging Cuban private sector, bringing us one step closer to achieving President Obama's historic policy goals. These actions build upon previous Commerce regulatory revisions, and will ease restrictions on authorized travel, enhance the safety of Americans traveling to the country, and allow more business opportunities for the nascent Cuban private sector. These additional adjustments have the potential to stimulate long overdue economic reform across the country and improve the living standards of the Cuban people. These measures will further facilitate travel to Cuba for authorized purposes; expand the telecommunications and internet-based services general licenses, including by authorizing certain persons subject to U.S. jurisdiction (which includes individuals and entities) to establish a business presence in Cuba, such as through subsidiaries or joint ventures; allow certain persons to establish a physical presence, such as an office or other facility, in Cuba to facilitate authorized transactions; allow certain persons to open and maintain bank accounts in Cuba to use for authorized purposes; authorize additional financial transactions, including those related to remittances; authorize all persons subject to U.S. jurisdiction to provide goods and services to Cuban nationals located outside of Cuba; and allow a number of other activities, including those related to legal services, imports of gifts, and educational activities. These amendments also implement certain technical and conforming changes. To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here. To see the Commerce regulations, which can be found at 15 CFR parts 740, 746, and 772, please see here. Major elements of the changes in the revised regulations include: Travel Facilitating authorized travel and commerce, increasing contact between Americans and Cubans, and supporting civil society in Cuba: Transportation by vessel of authorized travelers between the United States and Cuba only and without stops in third countries will be authorized by general license. Certain related lodging services aboard vessels used for such travel will also be authorized. License Exception Aircraft, Vessels, and Spacecraft (AVS) will authorize temporary sojourns to Cuba of certain categories of vessels. Eligible categories of vessels are cargo vessels for hire for use in the transportation of items; passenger vessels for hire for use in the transportation of passengers and/or items; and recreational vessels that are used in connection with travel authorized by the Treasury. License Exception AVS will authorize aircraft on temporary sojourn to remain in Cuba for up to 7 consecutive days and authorizes vessels on temporary sojourn to remain in Cuba for up to 14 consecutive days. Close relatives will be allowed to visit or accompany authorized travelers for certain additional activities. In the January changes, OFAC permitted close relatives to join visits related to official government business and certain educational activities, and to visit additional family members residing in Cuba. Close relatives now also will be allowed to visit or accompany authorized travelers for additional educational activities, journalistic activity, professional research, and religious activities, as well as activities related to humanitarian projects and activities of private foundations or certain research or educational institutes. For purposes of this provision, a close relative is defined as someone related to a person by blood, marriage, or adoption and who is no more than three generations removed from that person or a common ancestor with that person. All authorized travelers will be allowed to open and maintain bank accounts in Cuba in order to access funds for authorized transactions while in Cuba. Telecommunications & Internet-Based Services Enhancing the free flow of information to, from, and within Cuba, and better providing efficient and adequate telecommunications services between the United States and Cuba: Persons subject to U.S. jurisdiction will be allowed to establish a business presence in Cuba, including through joint ventures with Cuban entities, to provide certain telecommunications and internet-based services, as well as to enter into licensing agreements related to, and to market, such services. Persons subject to U.S. jurisdiction will be allowed to import Cuban-origin mobile applications into the United States and to hire Cuban nationals to develop them. An existing authorization for the provision of services related to certain consumer communications devices exported to Cuba will be expanded to authorize services related to additional types of items authorized by Commerce, and to add training related to the installation, repair, or replacement of those items. 1/3

44 8/19/2017 Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations License Exception Consumer Communications Devices (CCD) will no longer be limited to sales or donations. This change to License Exception CCD is intended to support other types of transactions, such as leases and loans of eligible items for use by eligible end-users. Commercial and Financial Transactions Refocusing sanctions so they do not prevent day-to-day transactions by Cuban individuals who are outside of Cuba: All persons subject to U.S. jurisdiction will be allowed to provide goods and services to individual Cuban nationals located outside of Cuba, provided there is no commercial exportation of goods or services to or from Cuba. Banking institutions will be able to open and maintain accounts for Cuban individuals for use while the Cuban national is located outside of Cuba, and to close such accounts. Physical Presence and Operations in Cuba Facilitating certain authorized activities involving Cuba: Persons subject to U.S. jurisdiction engaging in the following categories of authorized activities will be allowed to establish and maintain a physical presence, such as an office, retail outlet, or warehouse, in Cuba: news bureaus; exporters of certain goods authorized for export or reexport to Cuba by Commerce and OFAC, such as agricultural products and materials for construction or renovation of privately-owned buildings; entities providing mail or parcel transmission services or certain cargo transportation services; providers of telecommunications or internet-based services; entities organizing or conducting educational activities; religious organizations; and providers of carrier and certain travel services. These individuals and entities will also be authorized to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba. Support for the Cuban People Improving living conditions, strengthening civil society, and supporting independent economic activity by the Cuban people: License Exception Support for the Cuban People (SCP) will authorize certain exports and reexports of items to Cuba for use in establishing, maintaining, and operating a physical presence in Cuba. Eligible end-users of the items include certain persons providing telecommunications or internet-based services; establishing telecommunications facilities; providing travel or carrier services; organizing or conducting educational activities; or transporting authorized items between the United States and Cuba. License Exception SCP will no longer be limited to sales or donations. This change to License Exception SCP is intended to support other types of transactions, such as leases and loans of eligible items for use by eligible end-users. Certain temporary reexports from a foreign country to Cuba will be authorized by License Exception SCP when the items are for use in scientific, archeological, cultural, ecological, educational, historic preservation, sporting activities, or in the traveler s professional research and meetings. Previously, this provision was limited to temporary exports by persons departing the United States. Certain commodities and software for use in software development may be exported or reexported to eligible end-users in Cuba pursuant to License Exception SCP. License Exception SCP will authorize temporary exports and reexports to Cuba of additional categories of items, including certain tools of trade to install, service, or repair items; and certain commodities and software for exhibition or demonstration. Remittances Empowering Cubans with opportunities for self-employment, and in turn strengthening independent civil society: The limits on donative remittances to Cuban nationals other than prohibited Cuban Government or Cuban Communist Party officials, currently set at $2,000 per quarter, will be 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, will also be removed entirely. The unblocking and return of remittances that were previously blocked because they exceeded the then-applicable caps on periodic remittances, and of certain previously blocked funds transfers, will be allowed. Depository institutions will be allowed to maintain accounts for certain Cuban nationals present in the United States in a non-immigrant status, and will no longer be required to block such accounts if not closed before the Cuban national s departure. Access to such accounts will be limited to while the Cuban national is lawfully present in the United States, although the account may remain open while the Cuban national is not in the United States. The $250 monthly limit on payments from previously blocked accounts held in the name of such Cuban nationals will be removed to more adequately allow access to funds for living expenses. Remittances from Cuba and from Cuban nationals in third countries to the United States will be authorized by general license, and financial institutions will be allowed to provide related services. An expanded general license also will authorize additional remittances to Cuban nationals in connection with the administration of estates. This provision complements another general license authorizing all transactions incident to the administration and distribution of the assets of estates in which a Cuban national has an interest. Legal Services Updating the legal services provisions: OFAC s existing general license authorizing the provision of certain legal services to Cuba and Cuban nationals will be expanded to allow the receipt of payment for such services. Certain limitations will apply, related to payments from prohibited Cuban Government or Cuban Communist Party officials. Additionally, a new general license will authorize persons subject to U.S. jurisdiction to receive, and make payment for, certain legal services from Cuba or Cuban nationals. Civil Aviation Safety Supporting international aviation and passenger safety: A case-by-case review policy will apply to license applications for exports and reexports to Cuba of items to help ensure the safety of civil aviation and the safe operation of commercial passenger aircraft. Items that are to be reviewed pursuant to this policy include aircraft parts and components; software and technology related to safety of flight; air traffic control, aviation communications, and aviation weather related equipment; airport safety equipment; and devices used for security screening of passengers and baggage. Gift Imports Allowing certain gifts: Imports of merchandise from Cuba or Cuban-origin merchandise from a third country intended as gifts, excluding alcohol and tobacco products, will be allowed to be sent to the United States provided that the merchandise is not carried by a traveler, the value of the merchandise is not more than $100, and the item is a type and in quantities normally given as a gift. Educational Activities Increasing contact between American and Cubans and enhancing the free flow of information to, from, and among the Cuban people: 2/3

45 8/19/2017 Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations Under an expanded general license, additional educational activities involving Cuba and Cuban nationals, including the provision of standardized testing services and internet-based courses, will be authorized. Academic exchanges and joint non-commercial academic research with universities or academic institutions in Cuba will also be authorized. Travel-related transactions in connection with these activities will also be authorized. Ordinarily Incident Transactions Clarifying the scope of authorized transactions: OFAC is clarifying that the Cuba sanctions provisions that are already in place allow most transactions that are ordinarily incident and necessary to give effect to a licensed transaction. For example, certain payments made using online payment platforms are permitted for authorized transactions. Air Ambulances and Emergency Medical Services Facilitating access to emergency medical services: The provision of air ambulance and other related emergency medical services to travelers in Cuba will be authorized by general license, and a general license will clarify that the provision of nonscheduled emergency medical services to Cuban nationals in the United States is authorized. Humanitarian Projects Facilitating aid to the Cuban people in times of need and preserving Cuban history: The general license authorizing transactions related to specified humanitarian projects will be expanded to include disaster relief and historical preservation. Supporting Diplomatic Relations Supporting the reestablishment of diplomatic relations with Cuba in accordance with the President s announcement: OFAC is expanding the general license authorizing transactions with official missions of Cuba to the United States to include international funds transfers. ### 3/3

46 8/19/2017 Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations Press Center Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations 1/26/2016 Amendments Further Implement President Obama s Policy Related to Easing of Sanctions on Cuba WASHINGTON Today, the Department of the Treasury s Office of Foreign Assets Control (OFAC) and the Department of Commerce s Bureau of Industry and Security (BIS) are announcing new amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively. These amendments further implement the new direction toward Cuba that President Obama laid out in December The changes will take effect on January 27, 2016, when the regulations are published in the Federal Register. The new amendments are outlined below. Treasury Secretary Jacob J. Lew said, Today s amendments to the Cuban Assets Control Regulations build on successive actions over the last year and send a clear message to the world: the United States is committed to empowering and enabling economic advancements for the Cuban people. We have been working to enable the free flow of information between Cubans and Americans and will continue to take the steps necessary to help the Cuban people achieve the political and economic freedom that they deserve. Commerce Secretary Penny Pritzker said, Following the first ever U.S.-Cuba Regulatory Dialogue and my fact-finding trip to Cuba in October, we have been working tirelessly to maximize the beneficial impact of U.S. regulatory changes on the Cuban people. Today s Commerce rule builds on previous changes by authorizing additional exports including for such purposes as disaster preparedness; education; agricultural production; artistic endeavors; food processing; and public transportation. These regulatory changes will also facilitate exports that will help strengthen civil society in Cuba and enhance communications to, from and among the Cuban people. Looking ahead, we will continue to support greater economic independence and increased prosperity for the Cuban people, as we take another step toward building a more open and mutually beneficial relationship between our two nations. These amendments will remove existing restrictions on payment and financing terms for authorized exports and reexports to Cuba of items other than agricultural items or commodities, and establish a case-by-case licensing policy for exports and reexports of items to meet the needs of the Cuban people, including those made to Cuban state-owned enterprises. These amendments will further facilitate travel to Cuba for authorized purposes by allowing blocked space, codesharing, and leasing arrangements with Cuban airlines; authorizing additional travel-related and other transactions directly incident to the temporary sojourn of aircraft and vessels; and authorizing additional transactions related to professional meetings and other events, disaster preparedness and response projects, and information and informational materials, including transactions incident to professional media or artistic productions in Cuba. To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here. To see the Commerce regulations, which can be found at 15 CFR part 746, please see here. Effective January 27, major elements of the changes in the revised regulations include: Financing Removing financing restrictions for most types of authorized exports. Restrictions on payment and financing terms for authorized exports and reexports, except for agricultural commodities and agricultural items, will be removed, and U.S. depository institutions will be authorized to provide financing, including, for example, issuing a letter of credit for such exports and reexports. Currently, payment and financing terms for all authorized exports are restricted to cash-in-advance or third-country financing. Effective January 27, 2016, examples of permissible payment and financing terms for authorized non-agricultural exports and reexports will include: payment of cash in advance; sales on an open account; and financing by third-country financial institutions or U.S. financial institutions. OFAC is required by statute to maintain the existing limitations on payment and financing terms for the export and reexport of agricultural commodities and agricultural items. Exports Additional amendments to increase support for the Cuban people and facilitate authorized exports. Certain Additional Transactions Authorized. OFAC is expanding an existing general license to authorize certain additional travel-related transactions as are directly incident to the conduct of market research; commercial marketing; sales or contract negotiation; accompanied delivery; installation; leasing; or servicing in Cuba of items consistent with the export or reexport licensing policy of the Department of Commerce, provided that the traveler s schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule. Civil society. BIS will generally approve license applications for exports and reexports of commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba. News gathering. BIS will generally approve license applications for exports and reexports of commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public. Telecommunications. BIS will generally approve license applications for exports and reexports of telecommunications items that would improve communications to, from, and among the Cuban people. Agriculture. BIS will generally approve license applications for exports and reexports of certain agricultural items (such as agricultural commodities not eligible for a license exception; insecticides; pesticides; and herbicides). 1/2

47 8/19/2017 Treasury and Commerce Announce Further Amendments to the Cuba Sanctions Regulations Civil aviation safety. BIS will generally approve license applications for exports and reexports of items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises. Meeting the needs of the Cuban people. BIS is creating a case-by-case licensing policy that will apply to exports and reexports of items to meet the needs of the Cuban people, including exports and reexports for such purposes made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people. o Examples of exports and reexports eligible for this licensing policy are items for: agricultural production; artistic endeavor (including the creation of public content, historic and cultural works and preservation); education; food processing; disaster preparedness, relief and response; public health and sanitation; residential construction and renovation; public transportation; and the construction of infrastructure that directly benefits the Cuban people (e.g., facilities for treating public water supplies and supplying energy to the general public). A general policy of denial will still apply to exports and reexports of items for use by state-owned enterprises, agencies, or other organizations of the Cuban government that primarily generate revenue for the state, including those in the tourism industry and those engaged in the extraction or production of minerals or other raw materials. Additionally, applications to export or reexport items destined to the Cuban military, police, intelligence and security services remain subject to a general policy of denial. Air Carrier Services Additional amendment to facilitate carrier service by air and with Cuban airlines. The entry into blocked space, code-sharing, and leasing arrangements to facilitate the provision of carrier services by air, including the entry into such arrangements with a national of Cuba, will be authorized. Travel Expanding authorizations within existing travel categories to facilitate travel to Cuba for additional purposes. Temporary Sojourn. Certain personnel who are operating or servicing vessels or aircraft will be authorized to engage in travel-related and other transactions in Cuba to facilitate the temporary sojourn of aircraft and vessels as authorized by the Department of Commerce in connection with the transportation of authorized travelers between the United States and Cuba. Information and informational materials. OFAC will authorize travel-related and other transactions directly incident to professional media or artistic productions of information or informational materials for exportation, importation, or transmission, including the filming or production of media programs (such as movies and television programs); music recordings; and the creation of artworks in Cuba by persons that are regularly employed in or have demonstrated professional experience in a field relevant to such professional media or artistic productions. OFAC will also be expanding an existing general license to authorize transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments. Professional meetings. OFAC will authorize by general license travel-related and other transactions to organize professional meetings or conferences in Cuba. The existing general license authorizes only attendance at such meetings or conferences. Public performances, clinics, workshops, athletic, and other competitions and exhibitions. Similar to the change to the professional meetings category, OFAC will authorize by general license travel-related and other transactions to organize amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC also will remove requirements that that U.S. profits from certain events must be donated to certain organizations and that certain events be run at least in part by U.S. travelers. Humanitarian projects. OFAC will expand the list of authorized humanitarian projects to include disaster preparedness and response. ### 2/2

48 8/19/2017 Fact Sheet on Cuba Policy whitehouse.gov the WHITE HOUSE Fact Sheet on Cuba Policy JUNE 16, 2017 AT 1:05 PM ET BY THE WHITE HOUSE President Donald J. Trump is changing the policy of the United States toward Cuba to achieve four objectives: 1. Enhance compliance with United States law in particular the provisions that govern the embargo of Cuba and the ban on tourism; 2. Hold the Cuban regime accountable for oppression and human rights abuses ignored under the Obama policy; 3. Further the national security and foreign policy interests of the United States and those of the Cuban people; and 4. Lay the groundwork for empowering the Cuban people to develop greater economic and political liberty. Summary of Key Policy Changes: The new policy channels economic activities away from the Cuban military monopoly, Grupo de Administración Empresarial (GAESA), including most travel-related transactions, while allowing American individuals and entities to develop economic ties to the private, small business sector in Cuba. The new policy makes clear that the primary obstacle to the Cuban people s prosperity and economic freedom is the Cuban military s practice of controlling virtually every profitable sector of the economy. President Trump s policy changes will encourage American commerce with free Cuban businesses and pressure the Cuban government to allow the Cuban people to expand the private sector. The policy enhances travel restrictions to better enforce the statutory ban on United States tourism to Cuba. Among other changes, travel for non-academic educational purposes will be limited to group travel. The self-directed, individual travel permitted by the Obama administration will be prohibited. Cuban-Americans will be able to continue to visit their family in Cuba and send them remittances. The policy rea irms the United States statutory embargo of Cuba and opposes calls in the United Nations and other international forums for its termination. The policy also mandates regular reporting on Cuba s progress if any toward greater political and economic freedom. The policy clarifies that any further improvements in the United States-Cuba relationship will depend entirely on the Cuban government s willingness to improve the lives of the Cuban people, including 1/2

49 8/19/2017 Fact Sheet on Cuba Policy whitehouse.gov through promoting the rule of law, respecting human rights, and taking concrete steps to foster political and economic freedoms. The policy memorandum directs the Treasury and Commerce Departments to begin the process of issuing new regulations within 30 days. The policy changes will not take e ect until those Departments have finalized their new regulations, a process that may take several months. The Treasury Department has issued Q&As that provide additional detail on the impact of the policy changes on American travelers and businesses. For more information on this policy see the below links to the relevant United States Government Departments: Department of Commerce, Department of State, Department of Treasury, Department of Homeland Security, and the Department of Transportation. HOME BRIEFING ROOM ISSUES THE ADMINISTRATION PARTICIPATE 1600 PENN USA.gov Privacy Policy Copyright Policy 2/2

50 UPDATED JULY 25, 2017 Department of the Treasury Office of Foreign Assets Control (OFAC) Frequently Asked Questions on President Trump s Cuba Announcement 1. How will OFAC implement the changes to the Cuba sanctions program announced by the President on June 16, 2017? Are the changes effective immediately? OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations. The Department of Commerce will implement any necessary changes via amendments to its Export Administration Regulations. OFAC expects to issue its regulatory amendments in the coming months. The announced changes do not take effect until the new regulations are issued. 2. What is individual people-to-people travel, and how does the President s announcement impact this travel authorization? Individual people-to-people travel is educational travel that: (i) does not involve academic study pursuant to a degree program; and (ii) does not take place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact. The President instructed Treasury to issue regulations that will end individual people-to-people travel. The announced changes do not take effect until the new regulations are issued. 3. Will group people-to-people travel still be authorized? Yes. Group people-to-people travel is educational travel not involving academic study pursuant to a degree program that takes place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact. Travelers utilizing this travel authorization must: (i) maintain a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba; and (ii) be accompanied by an employee, consultant, or agent of the sponsoring organization, who will ensure that each traveler maintains a full-time schedule of educational exchange activities. In addition, the predominant portion of the activities engaged in by individual travelers must not be with prohibited officials of the Government of Cuba or prohibited members of the Cuban Communist Party (as defined in the regulations). Once OFAC issues the new regulations, new individual people-to-people travel will not be authorized. 4. Will organizations subject to U.S. jurisdiction that sponsor exchanges to promote people-to-people contact be required to apply to OFAC for a specific license? No. To the extent that proposed travel falls within the scope of an existing general license, including group people-to-people educational travel, persons subject to U.S. jurisdiction may proceed with sponsoring such travel without applying to OFAC for a

51 Department of the Treasury Office of Foreign Assets Control (OFAC) specific license. It is OFAC s policy not to grant applications for a specific license authorizing transactions where a general license is applicable. Once the State Department publishes its list of entities and subentities with which direct transactions will not be authorized and OFAC issues its regulations, no new transactions, including travel-related transactions, may be initiated with these identified entities and subentities. Prior travel arrangements that may involve these entities or subentities will still be authorized. See FAQ How do the changes announced by the President on June 16, 2017 affect individual people-to-people travelers who have already begun making their travel arrangements (such as purchasing flights, hotels, or rental cars)? The announced changes do not take effect until OFAC issues new regulations. Provided that the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President s announcement on June 16, 2017, all additional travel-related transactions for that trip would also be authorized, including if the trip occurs after OFAC issues new regulations, provided the travel-related transactions are consistent with OFAC s regulations as of June 16, Once the State Department publishes its list of entities and subentities with which direct transactions will not be authorized and OFAC issues its regulations, no new transactions may be initiated with these identified entities and subentities. Prior travel arrangements that may involve these entities or subentities will still be authorized. See FAQ How does the new policy impact other authorized travel to Cuba by persons subject to U.S. jurisdiction? The new policy will also impact certain categories of educational travel as well as travel under support for the Cuban people, as set forth in the National Security Presidential Memorandum signed by the President on June 16, In addition, following the issuance of OFAC s regulatory changes, travel-related transactions with prohibited entities identified by the State Department will not be permitted, unless otherwise authorized by OFAC. Guidance will accompany the issuance of the new regulations. 7. Will persons subject to U.S. jurisdiction be required to apply to OFAC for a specific license to engage in Cuba-related travel and transactions consistent with the other authorized categories of travel? To the extent that proposed travel falls within the scope of an existing general license, persons subject to U.S. jurisdiction may proceed with such travel without applying to OFAC for a specific license. It is OFAC s policy not to grant applications for a specific license authorizing transactions where a general license is applicable. Once the State Department publishes its list of entities and subentities with which direct transactions will not be authorized and OFAC issues its regulations, no new transactions may be initiated with these identified entities and subentities. Prior travel arrangements that may involve these entities or subentities will still be authorized. See FAQ 8. 2

52 Department of the Treasury Office of Foreign Assets Control (OFAC) 8. How do the changes announced by the President on June 16, 2017 affect authorized travelers to Cuba whose travel arrangements may include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy? The announced changes do not take effect until OFAC issues new regulations. Consistent with the Administration s interest to avoid negatively impacting Americans for arranging lawful travel to Cuba, any travel-related arrangements that include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those travel arrangements were initiated prior to the State Department listing of the entity or subentity. Once the State Department adds an entity or subentity to the list, new direct financial transactions with the entity or subentity will not be permitted, unless authorized by OFAC. 9. How do the changes announced by the President on June 16, 2017 affect companies subject to U.S. jurisdiction that are already engaged in the Cuban market and that may undertake direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy? The announced changes do not take effect until OFAC issues new regulations. Consistent with the Administration s interest in not negatively impacting American businesses for engaging in lawful commercial opportunities, Cuba-related commercial engagement that includes direct transactions with entities and subentities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted after the issuance of new regulations by OFAC, provided that those commercial engagements were in place prior to the issuance of the forthcoming regulations. For example, businesses will be permitted to continue with transactions outlined in contingent or other types of contractual arrangements agreed to prior to the issuance of the new regulations, consistent with other CACR authorizations. 10. Does the new policy affect the means by which persons subject to U.S jurisdiction may purchase airline tickets for authorized travel to Cuba? No. The new policy will not change the means by which persons subject to U.S. jurisdiction traveling to Cuba pursuant to the 12 categories of authorized travel may purchase their airline tickets. 11. Can I continue to send authorized remittances to Cuba? Yes. The announced policy changes will not change the authorizations for sending remittances to Cuba. Additionally, the announced changes include an exception that will allow for transactions incidental to the sending, processing, and receipt of authorized remittances to the extent they would otherwise be restricted by the new policy limiting transactions with certain identified Cuban military, intelligence, or security 3

53 Department of the Treasury Office of Foreign Assets Control (OFAC) services. However, consistent with the President s policy announcement, changes will be made to the definition of prohibited members of Government of Cuba that may exclude certain persons from receipt of such remittances. 12. How will the new policy impact existing OFAC specific licenses? The forthcoming regulations will be prospective and thus will not affect authorized transactions under existing specific licenses, unless explicitly noted. 13. How will U.S. companies know if a Cuban counterpart is affiliated with a prohibited entity or subentity in Cuba? The State Department will be publishing a list of entities and subentities with which direct transactions generally will not be permitted. Guidance will accompany the issuance of the new regulations. The announced changes do not take effect until the new regulations are issued. 14. Is authorized travel by cruise ship or passenger vessel to Cuba impacted by the new Cuba policy? Persons subject to U.S. jurisdiction will still be able to engage in authorized travel to Cuba by cruise ship or passenger vessel. Following the issuance of OFAC s regulatory changes, travel-related transactions with prohibited entities and subentities identified by the State Department generally will not be permitted. Guidance will accompany the issuance of the new regulations. For more information on the National Security Presidential Memorandum visit: 4

54 THE EMBARGO AND BEYOND: LEGAL HURDLES TO DOING BUSINESS IN CUBA James M. Meyer Harper Meyer Perez Hagen O Connor Albert & Dribin LLP 201 S. Biscayne Blvd., Suite 800, Miami, FL Ph: Fax: jmeyer@harpermeyer.com

55 Main Impediments to Doing Business in Cuba Embargo Libertad (Helms-Burton) Act Unsettled Claims Country risk under current Cuban legal regime: the rule of law issue 2

56 Complex Spider-Webbing of US Laws Relating to Cuba Over Past 55 Years 3

57 Executive Orders Implementation of the Cuban Democracy Act (Effective Date - July 4, 1993) Statutes Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), 18 U.S.C. 2332d Cuban Democracy Act of 1992 (CDA), 22 U.S.C Sections 5 and 16 of the Trading With the Enemy Act (TWEA), 50 U.S.C. App. 5, 16 Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), 22 U.S.C Helms-Burton Act (To be discussed) Code of Federal Regulations 31 CFR Part Cuban Assets Control Regulations Federal Register Notices 81 FR 4583 January 2016 Amendments to the Cuban Assets Control Regulations 80 FR Sept Amendments to the Cuban Assets Control Regulations 80 FR January 2015 Amendments to the Cuban Assets Control Regulations 77 FR Amendments to the Cuban Assets Control Regulations 76 FR Amendments to the Cuban Assets Control Regulations 75 FR Amendments to authorize certain types of exportation 74 FR Amendments to the Cuban Assets Control Regulations 68 FR Amendments to the Cuban Assets Control Regulations 66 FR Exports of Agricultural Products, Medicines, and Medical Devices to Cuba, Sudan, Libya, and Iran; Cuba Travel-Related Transactions 4

58 Embargo At present, the embargo, which limits American businesses from conducting business with Cuban interests, is still in effect and is the most enduring trade embargo in modern history. It is administered under Cuban Assets Control Regulations (CACR) (31 CFR Part 515) CACR is managed by the Office of Foreign Assets Control (OFAC), which is involved in: Enforcing and administering economic & trade sanctions Terrorism & financial intelligence International narcotics traffickers, weapons of mass destruction, & other threats 5

59 Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 / Helms-Burton Act The embargo cannot be lifted until the claims are resolved 207(d) of the Libertad Act: Satisfactory resolution of property claims by a Cuban Government recognized by the United States remains an essential condition for the full resumption of economic and diplomatic relations between the United States and Cuba. Extended the territorial application of the initial embargo to apply to foreign companies trading with Cuba Penalizes foreign companies allegedly "trafficking" in property formerly owned by U.S. citizens but confiscated by Cuba after the Cuban revolution. The act also covers property formerly owned by Cubans who have since become U.S. citizens Foreign companies that do business in Cuba may be prevented from doing business in the U.S. Any non-u.s.(foreign) company that "knowingly traffics in property in Cuba confiscated without compensation from a U.S. person" can be subjected to litigation and may be barred from entry into the U.S. (Title III) 6

60 Marketplace Summary Prior policy of encouraging interaction vs. New policy discouraging relations Prior policies included more relaxed export controls and general authorization for acquiring licenses, particularly in the categories of civil aviation safety, telecommunications, agricultural items and commodities. President Trump announced changes to the Cuba Sanctions program intended to discourage relations with Cuba. The announced changes will not take effect until new regulations are issued. Some non-u.s. businesses have been doing business in Cuba since the 1990s - Spain: more than 200 Spanish firms operate in Cuba; estimated bilateral trade is $1.07 billion per year - Canada: pharmaceuticals, mining, hotels - Brazil: investment in Mariel port project, almost $700 million 7

61 New Policy & Amendments to OFAC December 17, 2014 Policy measures announced to further engage and empower the Cuban people Facilitated travel to Cuba for Americans Expanded U.S. sales/exports to Cuba Allowed U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate authorized transactions Authorized additional imports and certain transactions with Cuban nationals located outside of Cuba Allowed a number of other activities related to telecommunications, financial services, trade, and shipping January 16, 2015 BIS and OFAC published changes to licensing policy and license exceptions in the EAR September 21, 2015 BIS increased the number of license exception provisions Created a new Cuba licensing policy to help ensure the safety of civil aviation and the safe operation of commercial passenger aircraft Made the deemed export and deemed re-export license requirements for Cuba consistent with other sanctioned destinations 8

62 New Policy & Amendments to OFAC January 27, 2016 Removed financing restrictions for most types of authorized exports Increased support for the Cuban people and facilitate authorized exports Facilitated carrier service by air and with Cuban airlines Expanded authorizations within existing travel categories to facilitate travel to Cuba January 6, 2017 Further expanded travel regulation to facilitate travel to Cuba. People-to-People travel allowed without tour guide (self-reporting approved). Removed requirement for a specific license from OFAC for U.S. persons providing carrier services to, from, or within Cuba Removed temporary sojourn license requirement for aircraft remaining in Cuba for less than seven days June 16, 2017 (Announced by White House Pending Issuance of Amended Regulation) Will prohibit commerce with Cuban businesses related to the military and intelligence services Will tighten travel restrictions and require Americans to travel through a licensed tour company and be accompanied by a company representative See FAQ s updated July 25,2017 (attached) 9

63 The Issue of the Unsettled Claims Foreign Claims Settlement Commission Set up in 1971 under International Claims Settlement Act of 1949 to adjudicate U.S. claims against Cuba. Took evidence documentary proof, witnesses, expert witnesses 5,913 U.S. corporations and individuals have been awarded $1.9 billion worth of claims for factories, farms, homes and other assets With 6.0 percent annual interest, today those claims are worth $8 billion The U.S. State Department estimates an additional $2 billion or so in judgments awarded to plaintiffs who have sued the Cuban government in U.S. courts Cuban government has paid lump sum amounts to settle outstanding property claim to several foreign states, including Canada, France, Spain, and Switzerland Remaining property claimants against Cuban government consists of three groups: 1) U.S. National Claimants (Covered by Title V, International Claims Settlement Act of 1949) 2) Cuban Claimants Still in Cuba 3) Cuban Exile Community Claimants Because members of this group were nationals of Cuba when their property was expropriated, international law generally would not recognize their right of recovery Jurisdiction over their claims would reside within the Cuban judiciary The 2007 Creighton Report recommended establishing a Cuba-U.S. Claims Tribunal, by bilateral treaty or executive agreement. Such an agreement would have international legal capacity, as an arbitral body, to resolve outstanding property dispute issues between Cuba and the U.S. and the respective nationals thereof 10

64 The Importance of Resolving the Claims Under U.S. embargo law, claims must be resolved for the embargo to be lifted International law recognizes the right of American claimants to be compensated Remains to be seen how compensation can be effected, given Cuba s dire economic straits. But it is unlikely to be possible without outside help, in the form of loans from third countries or international organizations Compensation to the claimants must be addressed if Cuba wishes to assure potential foreign investors that their investments will be safe. On the contrary, unresolved claims may create a significant obstacle & pose a risk to U.S. companies investing in Cuba, to Cuban companies doing business in the U.S., and to an increased U.S. opening with Cuba. A bilateral system such as the U.S.-Iran accords to resolve property claims between foreign claimants and Cuba would be supported by international law 11

65 The Cuban Legal Regime & Rule of Law Foreign Investment Act of 1995 (Law No. 77), Sept. 5, 1995 Allowed for limited presence of foreign capital in Cuba Foreign Direct Investment (FDI) was limited and excluded sectors such as sugar and agriculture Law of Foreign Investment (Law No. 118), March 29, 2014 Offered wider participation of FDI in Cuba (excluding sectors of Health Services, Education Services and Military Services) Allowed FDI to participate in private legal economic structures with Cuban companies of Cuban capital ZED (Zona Especial de Desarrollo Mariel) Special Economic Development Zone to encourage and promote foreign investment Allows 100% investment 12

66 Are these amendments enough? General perception that amended laws do not go far enough to protect foreign investment Well-publicized and seemingly heavy-handed treatment of foreign investors in Cuba Cuban military runs the business in Cuba 13

67 Cuban Court of International Commercial Arbitration (CCACI) Main function supporting Cuban foreign trade and investment CCACI has jurisdiction over voluntarily submitted contractual or extra-contractual matters relating to (1) international commercial transactions, (2) JVs or FFCC in disputes involving Cuban individuals or entities and (3) parties to an AEIs or other form of joint businesses with participation of foreign capital CCACI is a signatory to both the New York and Geneva Conventions However, because CCACI rulings are not made in public, it has been difficult to gauge its performance and impartiality Investors fear CCACI bias in favor of Cuban state entities & are concerned over successfully collecting on awards should they prevail Lack of transparency and inability to verify which awards have been respected, what has been paid, what amount, and what types of transactions, making investors hesitant to invest 14

68 QUESTIONS? James M. Meyer Harper Meyer Perez Hagen O Connor Albert & Dribin LLP 201 S. Biscayne Blvd., Suite 800, Miami, FL Ph: Fax: jmeyer@harpermeyer.com