Banking and financial services
Communications
Trade with Cuba
Extraterritorial application of embargo
Personal remittances
Travel
Review of designation as state sponsor of terrorism
On December 17 2014 President Obama announced that the United States and Cuba would renew diplomatic relations. As part of this deal, certain US sanctions against Cuba and Cuban nationals will be lifted or eased. In the coming weeks, the Treasury Department will amend the Cuban Assets Control Regulations and the Commerce Department will amend the Export Administration Regulations to implement the president's announcement. The embargo remains unchanged until the regulations are amended. The amendments are expected to authorise the following activities.
Banking and financial services
US institutions will be permitted to open correspondent accounts at Cuban financial institutions, thereby facilitating financial transfers between the two countries. In addition, travellers to Cuba will be permitted to use US credit and debit cards.
Financing trade to Cuba will also be made easier. Currently, authorised sales to Cuba (mostly agricultural and medical sales) must be financed by cash in advance or by third-country banks. The definition of 'cash in advance' will be liberalised to mean 'cash before transfer of title', which will facilitate such trade.
The amended regulations will authorise commercial exports of certain items, including consumer communication devices, related software, applications hardware and services, and items for the establishment and update of communications-related systems. Telecommunications providers will also be allowed to establish the necessary infrastructure and other mechanisms in Cuba to provide commercial telecommunications and internet services.
The amendments will authorise the export to Cuba of certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs and agricultural equipment for small farmers. For imports, US citizens returning from Cuba will be allowed to import $400 worth of goods from Cuba, but no more than $100 worth of tobacco and alcohol products.
Extraterritorial application of embargo
The amendments will rein in the extraterritorial application of the Cuba embargo. Specifically, US foreign subsidiaries will be permitted to provide services and engage in financial transactions with Cuban nationals in third countries. Accounts in US banks of Cuban nationals who have relocated outside of Cuba will be unblocked. US nationals will be allowed to participate in meetings and conferences related to Cuba in third countries. Finally, foreign vessels will be allowed to enter the United States after engaging in certain humanitarian trade with Cuba.
The president has indicated that permitted remittance levels will increase from $500 to $2,000 per quarter. In addition, donation remittances for humanitarian projects, support for the Cuban people and support for the development of private businesses in Cuba will no longer require a specific licence.
The travel ban to Cuba will be relaxed through the issuance of 12 general licences, covering 12 categories of travel:
- family visits;
- official governmental business;
- journalistic activities;
- professional research and meetings;
- educational activities;
- religious activities;
- public performances, clinics, workshops, athletic and other competitions and exhibits;
- support for the Cuban people;
- humanitarian projects;
- activities of private foundations or research or educational institutes;
- export, import or transmission of information or informational materials; and
- certain export transactions that may be considered for authorisation under existing regulations and guidelines.
Review of designation as state sponsor of terrorism
The secretary of state will review Cuba's designation as a state sponsor of terrorism. This designation results in certain restrictions, including a ban on US foreign assistance to Cuba, a ban on defence exports to Cuba and certain controls over the export of dual-use items to Cuba.
Although this announcement signals a significant change in US policy, a complete lifting of the Cuba embargo will require congressional action.
For further information on this topic please contact Lisa Crosby, Andrew Shoyer, Robert Torresen orLindsay Bourne at Sidley Austin LLP by telephone (+1 202 736 8000), fax (+1 202 736 8711) or email ([email protected],[email protected], [email protected] or [email protected]). The Sidley Austin LLP website can be accessed at www.sidley.com.
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