Both the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) have announced new amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR) that continue to build upon existing licenses and authorizations facilitating trade with Cuba. These amendments, effective October 17, 2016, enhance the flexibility of U.S. companies seeking to do business with Cuba or Cuban nationals across various sectors.
The amendments make changes relating to aviation, trade and export, infrastructure projects and pharmaceutical cooperation:
- Online Sales: BIS is amending License Exception SCP to authorize direct sales to individuals in Cuba by online retailers and others that sell eligible consumer products directly to end users. Items sold must be (a) controlled as EAR99 or for anti-terrorism (AT) reasons only on the Commerce Control List, (b) for the individual’s personal use or their immediate family’s personal use, and (c) not made to certain prohibited officials.
- Medical Research and Pharmaceutical Cooperation: OFAC is now allowing persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals, and to engage in transactions necessary to obtaining U.S. Food and Drug Administration (FDA) approval for Cuban-origin pharmaceuticals.
- Infrastructure Authorizations: OFAC is adding a new authorization to allow persons subject to U.S. jurisdiction to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining, and enhancing Cuban infrastructure, consistent with BIS licensing policy. This authorization may be used in support of projects related to public transportation, water management, waste management, non-nuclear electricity generation, electricity distribution sectors, hospitals, public housing, and primary and secondary schools.
- Aircraft Cargo Transit: BIS will expand License Exception Aircraft, Vessel and Spacecraft (AVS) to allow aircraft cargo to transit Cuba. License exception AVS previously authorized cargo on board a vessel to transit Cuba; the exception will now be expanded to also include cargo on board an aircraft. It should be noted that other conditions for use of license exception AVS remain. Specifically, cargo must depart with the vessel or aircraft at the end of its temporary sojourn to Cuba, cargo must not be removed from the aircraft or vessel for use in Cuba and must not be transferred to another vessel.
- Civil Aviation Safety Services: OFAC is creating a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft. The export and reexport of U.S.-origin items supporting these services, however, will still require a BIS license, with applications subject to a general policy of approval.
- Recordkeeping for Carriers and Travel Service Providers: OFAC will ease recordkeeping requirements for these entities, clarifying that in the case of persons traveling to Cuba under a specific license, the provider need only retain the traveler’s specific license number as opposed to a copy of the license itself.
- Travel Related Transactions: Among other changes, OFAC is removing the monetary value limitations on what authorized travelers (both U.S. and foreign) may bring back from Cuba as baggage, including the limitations on alcohol and tobacco products.
- Expanded Reexport Authorizations: OFAC will expand an existing general license, removing a limitation that U.S. companies may only reexport “100% U.S.-origin items” to Cuba, subject to certain requirements.
- Contingent Contracts Authorized: Similar to OFAC’s General License I for Iran, OFAC is adding a new general license (Section 515.534), allowing persons subject to U.S. jurisdiction to enter into contracts for transactions prohibited by the CACR, provided the contract is contingent on OFAC authorizing the underlying transaction or authorization no longer being required.