On October 14, 2016, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") announced a new liberalization in the U.S. embargo against Cuba.
The new amendments to the Cuban Assets Control Regulations ("CACR") (31 C.F.R. Part 515) and the Export Administration Regulations ("EAR") (15 C.F.R. Parts 730-744), which took effect on October 17, 2016, authorize certain transactions to provide additional opportunities for trade and commerce by streamlining certain authorizations; encourage scientific collaboration involving Cuban-origin pharmaceuticals and joint medical research; facilitate that medical research by authorizing certain grants and scholarships; improve living conditions for the Cuban people by expanding upon already existing authorizations for grants and humanitarian-related services; and authorize further travel and travel-related transactions.
Trade and Commerce
- Transactions incident to the exportation or reexportation of items: In clarifying an earlier general license that authorized the "reexportation of 100% U.S.-origin items to Cuba," the CACR now authorize all transactions ordinarily incident to the export of items from the U.S., or the reexport of items from a third country (including those items that are not 100% U.S.-origin items), to any person within Cuba as long as
- the export or re-export is licensed or otherwise authorized by BIS;
- the transaction is not one between a U.S.-owned or -controlled firm in a third country and Cuba for the export to Cuba of commodities produced in a country other than the U.S. or Cuba;
- the transaction is not financed from a blocked account;
- certain payment and financing terms are used for agricultural commodities.
- Repairing and servicing items previously exported to Cuba: The CACR now authorize all transactions ordinarily incident to the import into the U.S. or a third country of items previously exported from the U.S. to Cuba or exported or re-exported from a third country to Cuba, including servicing or repair of such items, as long as the items were exported or re-exported previously pursuant to BIS or OFAC authorization. However, a separate BIS or OFAC authorization is required to export serviced, repaired or replacement items to Cuba.
- Travel-related transactions incident to export or reexport of certain items: The CACR now authorize travel-related transactions ordinarily incident to the export or re-export of items and travel-related transactions incident to repairing and servicing items previously exported to Cuba.
- Contingent Contracts: The CACR now authorize persons subject to U.S. jurisdiction to enter into and engage in all transactions ordinarily incident to the negotiation of and entry into contingent contracts (i.e., executory contracts, executory pro forma invoices, agreements in principle, executor offers capable of acceptance such as bids or proposals in response to public tenders, binding memoranda of understanding, or any other similar agreement) for transactions that are prohibited by the CACR as long as the performance of any such contingent contract is made expressly contingent upon prior authorization from OFAC and any other relevant Federal agency.
- Consumer goods for personal use: The EAR now authorize the export or re-export of items eligible for License Exception Support for the Cuban People ("SCP"), to be sold directly to eligible individuals in Cuba for their personal use or their immediate family member's personal use under a license exception. License Exception SCP covers certain specified items intended to improve living conditions in Cuba, support independent economic activity, strengthen civil society and improve the free flow of information among the Cuban people.
- Medical Research: The CACR now authorize persons subject to U.S. jurisdictions to engage in joint medical research projects (both commercial and non-commercial) with Cuban nationals.
- Cuban-origin pharmaceuticals: The CACR now authorize transactions incident to obtaining approval from the U.S. Food and Drug Administration ("FDA") of Cuban-origin pharmaceuticals, including discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, and regulatory post-market activities. Additionally, the CACR now authorize the import into the United States, as well as the marketing, sale, or other distribution in the U.S., of FDA-approved Cuban-origin pharmaceuticals.
- Financial transactions: The CACR now authorize persons subject to U.S. jurisdiction who are engaged in the authorized activities outlined above to open, maintain, and close bank accounts at Cuban financial institutions, provided that those accounts are only used for authorized purposes.
- Grants, scholarships, or awards: The CACR now authorize grants, scholarships, or awards to a Cuban national for educational activities, certain humanitarian projects, scientific research, and religious activities.
- Cuban infrastructure-related services: The CACR now authorize persons subject to U.S. jurisdiction to provide services related to developing, repairing, maintaining, and enhancing Cuban infrastructure (e.g., public transportation, water and waste management, non-nuclear electricity generation, electricity distribution sectors, hospitals, public housing, and primary and secondary schools) that directly benefit the Cuban people in a manner consistent with BIS's export or reexport licensing policy.
Travel, Travel-Related Transactions, and Civil Aviation
- Eligible vessels to Cuba and certain vessel transactions: The EAR now authorize 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 OFAC to depart for Cuba under a license exception. In addition, the CACR now authorize certain vessel transactions, including waiving the restriction that prohibits foreign vessels from entering a U.S. port for purposes of loading or unloading freight for 180 days after calling on a Cuban port for trade purposes as long as the items in that vessel would be subject to the EAR and designated as EAR99 or controlled on the Commerce Control List for anti-terrorism purposes.
- Cuban-origin merchandise as accompanied baggage for personal use: The CACR now authorize persons subject to U.S. jurisdiction, who have traveled to Cuba in a manner consistent with the CACR and have acquired merchandise in Cuba, or who have acquired Cuban-origin items while traveling in a third country, to import that merchandise (including tobacco, such as cigars, and alcohol products, such as Cuban rum) into the U.S. as accompanied baggage regardless of its monetary value as long as it complies with normal duty and tax limits.
- Remittances: The CACR now authorize persons subject to U.S. jurisdiction to make remittances to third country nationals for travel by those nationals to, from, or, within Cuba as long as that third country national's travel would be authorized by a general license for a person subject to U.S. jurisdiction.
- Transit of cargo: The EAR now authorize cargo to transit Cuba as long as the aircraft is on temporary sojourn to Cuba pursuant to the EAR and as long as the cargo departs with the aircraft and has not been removed from the aircraft for use in Cuba or has not been transferred to another aircraft while in Cuba.
- Civil aviation safety-related services: The CACR now authorize persons subject to U.S. jurisdiction to provide civil aviation safety-related services to Cuba and Cuban nationals to promote safety in civil aviation and the safe operation of commercial aircraft.
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