Businesses ramping up to do business in Cuba will have new complications to deal with. Trade and commerce opportunities opened under the Obama administration face new restrictions under President Trump. The new strategy was outlined in a June 16 Presidential memorandum.

“I will seek to promote a stable, prosperous, and free country for the Cuban people,” President Trump wrote. “To that end, we must channel funds toward the Cuban people and away from a regime that has failed to meet the most basic requirements of a free and just society.”

Actions set forth in the memorandum reverse course on policies established under the previous Obama Administration intended to ease in business relationships with the island nation, including restricting certain financial transactions and travel.

The President’s policies were detailed in a “fact sheet” that accompanied the memorandum.

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, it says.

“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 guidance says.

The policy enhances travel restrictions to better enforce the statutory ban on 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 reaffirms 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 memorandum directs the Treasury and Commerce Departments to begin the process of issuing new regulations within 30 days. The policy changes will not take effect until those departments have finalized their new regulations, a process that may take several months. 

A question raised at a press briefing (with administration officials who were not to be named) may offer slight guidance to companies seeking business opportunities in Cuba: “I met an Ohio electrical company owner who is looking to sell transformers to Cuba?  Their electrical infrastructure is in shambles. Would that person’s business with Cuba now be curtailed in any way?”

“Only if they want to sell to the military, intelligence or security services, the White House official said.

What’s the President’s message to American businesses that had hoped to see an opening of the Cuban market?

“We tell them that we also very much want to see that kind of expansion of commercial interaction with Cuba, and that's entirely up to Raul Castro and his regime. It’s entirely up to Raul Castro to make that happen,” the official said.

In the meantime, the Treasury Department has issued Q&As to provide additional detail on the impact of the policy changes on American travelers and businesses.

How will Treasury’s Office of Foreign Assets Control 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.

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: does not involve academic study pursuant to a degree program; and 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.

Does the new policy affect how persons subject to U.S jurisdiction may purchase airline tickets for authorized travel to Cuba?

No. The new policy will not change how persons subject to U.S. jurisdiction traveling to Cuba pursuant to the 12 categories of authorized travel may purchase their airline tickets.

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 services.

As a result, the restrictions on certain transactions in the new Cuba policy will not limit the ability to send or receive authorized remittances.

How will U.S. companies know if their Cuban counterpart is affiliated with a prohibited entity or sub-entity in Cuba?

The State Department will be publishing a list of entities with which direct transactions generally will not be permitted. Guidance will accompany the issuance of the new regulations.

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 identified by the State Department generally will not be permitted. Guidance will accompany the issuance of the new regulations.

 

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