On December 17, 2014, President Obama announced a "new course" in the United States' relationship with Cuba, including the re-establishment of diplomatic ties and the beginning of a roll-back in sanctions.
The White House issued a Fact Sheet setting forth planned changes, available here.
Overview of Cuba Policy Shift
Presently, the US sanctions against Cuba are among the most restrictive within the US sanctions regime, including a comprehensive trade embargo, a travel ban, restrictions on dealings with Cuban nationals anywhere located, and application of the sanctions to non-US subsidiaries of US companies, with very few and limited license exceptions. Following the successful exchange of prisoners on December 17, the White House announced its intent to liberalize the US sanctions policy towards Cuba, as well as to re-establish diplomatic relations severed in 1961.
The details of the White House plan will be fleshed out in the coming weeks as 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) implement changes in their respective regulations. OFAC administers the Cuban Assets Control Regulations; BIS administers the Export Administration Regulations. It is important to understand that until these regulatory updates are officially issued by OFAC and BIS, the sanctions remain in full effect until the regulations change.
Although a policy shift is underway, the White House has limited authority to implement changes on its own; a complete lifting of the embargo would require Congressional action. Also, the prohibition on the export and reexport of US origin goods, technology, and services will remain largely intact unless Congress authorizes a change. For now, it would be prudent to assume that the trade embargo will remain substantially in effect for the foreseeable future, absent a legislative change.
The most immediate areas of impact include: travel to Cuba, certain financial services, the application of US sanctions in third countries, telecommunications, exports of limited products, remittances to Cuba, and certain imports. Subject to the pending implementation, and assuming that Congress does not block the changes (as some in Congress are already threatening to do), below is a summary of what could be affected based on the President's announcement.
Trade Policy Changes Proposed by the White House
Travel to Cuba:
General licenses will be made available for all authorized travelers in the following existing categories: (1) family visits; (2) official business of the US government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.
Travelers to Cuba will have the ability to use US debit and credit cards to pay for expenses while in Cuba.
US financial institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions.
Application of Sanctions in Third Countries
US-owned or controlled entities in third countries will be generally licensed to provide services to, and engage in financial transactions with, Cuban individuals in third countries. Similarly to financial services, such a general license would not expand the ability to do business with Cuba or with persons in Cuba.
In addition, general licenses will unblock the accounts at US banks of Cuban nationals who have relocated outside of Cuba; permit US persons to participate in third-country professional meetings and conferences related to Cuba; and allow foreign vessels to enter the United States after engaging in certain humanitarian trade with Cuba, among other measures.
The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with the United States will be authorized. 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.
Telecommunications providers will be allowed to establish the necessary mechanisms, including infrastructure, in Cuba to provide commercial telecommunications and internet services, which will improve telecommunications between the United States and Cuba.
Exports to Cuba:
Items that will be authorized for export include "certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers." A more specific list of items likely will be published in the implementing regulations.
Remittances from US Persons to Cuba:
Remittance levels will be raised from $500 to $2,000 per quarter for personal remittances to Cuban nationals (excluding government and Communist party officials).
Donations for humanitarian projects, support for the Cuban people, and support for the development of private businesses in Cuba will no longer require a specific license.
Remittance forwarders will no longer require a specific license.
Licensed US travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined.
Further Potential Policy Shifts
The President has instructed the Secretary of State to review, and provide a report to the President within six months regarding Cuba's support for international terrorism.
If Cuba is removed from the list of countries that support international terrorism, exports and reexports to Cuba of the lowers level of US controlled goods and technology (i.e., EAR99 items) may become lawful.
As this summary shows, the changes that the President is empowered to make on his own authority will not yet lead to a dramatic expansion in business opportunities for US persons and companies (and companies owned by US persons) involving US origin goods or services. It is a promising start, but more significant changes, including Congressional legislation, likely will need to be made before business in or with Cuba will be unrestricted. But now is the time to start planning for change.