Trump’s New Cuba Policy: Not Much Change in Substance
President Seeks to Target Trade With Government Entities, But Includes Broad Exceptions
With his announcement on Friday of a new United States policy toward Cuba, President Donald Trump attempted to walk a fine line between continued engagement with and support for the Cuban people while strengthening the existing US embargo with respect to entities controlled by the Cuban government and military.
But the presidential memorandum includes many exceptions to the rule prohibiting business with official entities, leaving little change in substance from the policy enacted by former President Barrack Obama.
Much has been made of supposed changes Trump made to policies with regard to US travel to Cuba. The fact is that these policies remain unchanged from those pursued by the Obama administration. Obama allowed—and Trump continues to allow—travel by Americans to Cuba who fall into 12 categories, including educational travel, professional exchanges, family visits, humanitarian and religious activities, as well as those traveling to establish or operate businesses allowed by regulation. Obama never allowed pure tourist travel to Cuba, and that included travel related to the business of tourism. These policies continue under Trump.
The Trump policy tightens the Obama requirements for educational travel by demanding that it be conducted under the auspices of a recognized educational institution and that the tour “engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.” These requirements are stricter than those that prevailed under Obama, under which individuals could travel to Cuba to, for example, take a course on Cuban jazz.
The Trump policy makes clear that US travelers to Cuba will be subject to enhanced audits of records showing their activities were consistent with those allowed under the regulations. Record keeping was also a requirement under Obama; the Trump policy appears to suggest that it was loosely enforced. Trump’s approach would not effect the ability of US airlines and cruise lines from providing scheduled services to Cuba, as they already do, following the Obama regulations.
The president’s executive memorandum also clarifies that the embargo against Cuba remains in effect and will be enforced. This, too, is a continuation of the Obama policy. Companies that played fast and loose with the embargo under Obama had to pay, as was the case with CGG Services, which last year agreed to pay $614,250 to settle a case brought against it for violating the Cuban embargo. The company, which provide services, spare parts, and equipment for oil and gas exploration and seismic surveys, delivered goods to vessels operating in Cuban waters.
Where the Trump policy diverges from Obama’s is in the area of doing business with entities controlled by the Cuban government or military. The Obama sought to maximize the exposure of Cuban people and businesses to their US counterparts in order to promote civic and economic reform in Cuba, even if the government took a cut of the proceeds.
The Trump policy seeks to “End economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies or personnel at the expense of the Cuban people.” But that policy has more holes in it than a slice of Swiss cheese.
The presidential memorandum directs the Secretary of State to “identify the entities…that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel…”
The memo then goes on to say that “direct financial transactions with those entities” shall be prohibited except where the Secretary of the Treasury or the Secretary of Commerce, in coordination with the Secretary of State, determines they are consistent with the policy set forth in section 2 of the memorandum and, among other things, support programs to build democracy in Cuba; concern air and sea operations that support permissible travel, cargo, or trade; support the acquisition of visas for permissible travel; support the expansion of direct telecommunications and internet access for the Cuban people; support the sale of agricultural commodities, medicines, and medical devices to Cuba as permitted by law; or relate to sending, processing, or receiving authorized remittances.
Section 2 of the memorandum states that the president’s policy (among other things) supports “efforts to support the Cuban people through the expansion of internet services, free press, free enterprise, free association, and lawful travel” and “advancing Cuban human rights; encouraging the growth of a Cuban private sector independent of government control;… supporting United States agriculture and protecting plant and animal health; advancing the understanding of the United States regarding scientific and environmental challenges; and facilitating safe civil aviation.”
In other words, transactions involving official Cuban government agencies like Grupo de Administracion Empresarial (GAESA), a holding company operated by the Cuban military, will be permitted if it promotes the policy objectives outlined above, including, for example, promoting internet access for the Cuban people.
Where does that leave a hotel like Havana’s Four Points Sheraton, which opened last year in partnership with GAESA? Hard to say. Maybe they can argue for an exception if they provide free Wi-Fi to their guests and employees.
Bottom line: The new Trump policy on Cuba doesn’t change much of Obama’s breakthrough last year.
Properly Insure Your Small Business for Natural Disaster
Download the FREE Global Trade Magazine APP!