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U.S. Government Imposes Sanctions and Issues Joint OFAC/BIS Telecommunications Fact Sheet to Support Cuban Protests

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U.S. Government Imposes Sanctions and Issues Joint OFAC/BIS Telecommunications Fact Sheet to Support Cuban Protests

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During the past month, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) has issued three separate rounds of Specially Designated Nationals & Blocked Persons List (“SDN List”) designations in order to support protests in Cuba that began on July 11th. Further, OFAC and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a joint fact sheet describing existing OFAC general licenses (“GLs”) and BIS license exceptions that facilitate certain telecommunications equipment, software, and services exports to Cuba without prior approval by the U.S. government.

SDN Designations

Using its authority under the Global Magnitsky Act, OFAC added a total of five Cuban government officials and three Cuban government entities to the SDN List on July 22nd, July 30th, and August 13th. All property and interests in property of these SDNs that are or come within the U.S. or the possession or control of U.S. persons are blocked as of the below effective dates, and U.S. persons are generally prohibited from engaging in transactions involving such SDNs unless authorized by OFAC.

Entities:

-Brigada Especial Nacional del Ministerio del Interior (“SNB”) – Also known as the Boinas Negras or Black Berets, the SNB is a special forces unit under the Cuban Ministry of the Interior – Blocked July 22, 2021

-Policia Nacional Revolucionaria (“PNR”) – A police unit under the Cuban Ministry of the Interior – Blocked July 30, 2021

-Tropas de Prevencion (“TDP”) – Also known as the Boinas Rojas or Red Berets, the TDP is a military police unit of Cuba’s Revolutionary Armed Forces, which is commanded by Cuba’s Ministry of Revolutionary Armed Forces – Blocked August 13, 2021

Individuals:

-Lopez Miera, Alvaro – Minister of the Revolutionary Armed Forces of Cuba – Blocked July 22, 2021

-Callejas Valcarce, Oscar Alejandro – Director of the PNR – Blocked July 30, 2021

-Sierra Arias, Eddy Manuel – Deputy Director of the PNR – Blocked July 30, 2021

-Martinez Fernandez, Pedro Orlando – Chief of the Political Directorate of the PNR – Blocked August 13, 2021

-Sotomayor Garcia, Romarico Vidal – Chief of the Political Directorate of the Cuban Ministry of the Interior – Blocked August 13, 2021

OFAC’s “50% Ownership Rule” will also extend these blocking sanctions to any entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more of these newly designated SDNs.

Joint Fact Sheet: “Supporting the Cuban People’s Right to Seek, Receive, and Impart Information through Safe and Secure Access to the Internet”

Cuba remains comprehensively sanctioned by the U.S. government and most transactions between the U.S. and Cuba remain prohibited. However, in a jointly issued fact sheet dated August 11th, 2021, OFAC and BIS outlined existing OFAC GLs and BIS license exceptions available to exporters of telecommunications equipment, software, and services to Cuba under the Cuba Assets Control Regulations (31 CFR § 515.101, et seq., the “CACR”) and the Export Administration Regulations (15 CFR § 730.1, et seq., the “EAR”). The fact sheet serves as a reminder that despite the embargo on Cuba, there are certain avenues for trade that the U.S. government allows without any prior review, so long as there is strict adherence to the CACR and the EAR.  OFAC GLs highlighted by the fact sheet include:

-Exportation or reexportation of services incident to the exchange of communications over the internet, and installation, repair, or replacement services for certain described items. See CACR §§ 515.578, 515.533.

-Exportation or reexportation of telecommunications-related services and related payments. See CACR § 515.542.

-Transactions necessary to maintain a physical presence undertaken by various enumerated types of organizations such as news bureaus, educational organizations, religious organizations, humanitarian organizations, telecommunications services providers, and internet-based services providers. See CACR § 515.573.

-Provision of internet-based distance learning. See CACR § 515.565.

-Exportation or reexportation of information and informational materials (including of a commercial nature) so long as certain requirements are met. See CACR §§ 515.206(a), 515.545.

BIS license exceptions highlighted by the fact sheet include:

-Consumer Communications Devices (“CCD”). Authorizing the export and reexport of certain items such as mobile phones and modems to individuals and independent non-governmental organizations in Cuba. See EAR § 740.19.

-Items in Support of the Cuban People (“SCP”). Authorizing the export and reexport of certain EAR99-designated items and of certain telecommunications infrastructure items. See EAR § 740.21.

Each of the above OFAC GLs and BIS license exceptions impose specific limitations, terms and conditions which must be complied with carefully. None of the above GLs or license exceptions would authorize a transaction involving an SDN or an entity controlled 50 percent or more by SDNs— specific licenses would be required under such circumstances. Additionally, depending on the specific facts and circumstances of a given activity, many of the above-listed OFAC GLs will prohibit direct financial transactions between persons subject to U.S. jurisdiction and persons listed on the U.S. State Department’s Cuba Restricted List.

The fact sheet also indicated that OFAC and BIS will provide favorable licensing treatment for activities benefiting the free flow of information to and from Cuba that are not otherwise authorized under the above-described OFAC GL’s and BIS license exceptions.  For OFAC’s licensing policy, the fact sheet states that “For prohibited transactions not otherwise authorized by OFAC general licenses, OFAC considers specific license requests on a case-by-case basis and will prioritize license applications, compliance questions, and other requests that may concern internet freedom in Cuba . . . OFAC has a favorable licensing posture towards specific license requests involving transactions that are ordinarily incident and necessary to ensure that the Cuban people have safe and secure access to the free flow of information on the internet.” Likewise, for BIS’s licensing policy, the fact sheet states that “A general policy of approval applies to [BIS] license applications for telecommunications items and internet-related items intended to improve communications to, from, and among the Cuban people (emphasis supplied).”

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Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell. She leads the firm’s International Trade & Supply Chain group.

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Tony Busch is an attorney in Husch Blackwell’s Washington, D.C. office.

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Archives, Global Trade Daily, International Trade

The Top Five International Trade Issues Under the New U.S. Administration

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After a tumultuous stretch of international trade wars and a global economic crisis courtesy of the pandemic, the U.S. has a new president directing trade policy. What can business leaders expect from a Biden presidency as far as strategies, relations with major trading partners, and the role of the U.S. in global trade for the next few years? Early indications are that the U.S. – China relationship will remain tense, but the Biden team approach in other areas will differ greatly from the previous administration. Global partners can expect a change in tone from Washington, and there are five issues which will stand out as major differences under Biden’s leadership:

Number Five: The U.S. will reengage with the World Trade Organization (WTO), which should lead to a substantial reduction in unilateral ‘trade wars’ and tit-for-tat tariff exchanges. Under Trump, the WTO was marginalized and hamstrung by U.S. policies, as the appellate body did not have enough judges to take any action on trade disputes. Under Biden, the U.S. will be an active participant in the WTO and will use the organization to bring pressure against China and other nations on issues such as illegal support to state-owned enterprises. There is still an urgent need to reform the WTO, but the new administration seems poised to jump in and push for improvements.

Number Four: Russia is in the crosshairs. The on-again, off-again political relations between the U.S. and Russia should switch firmly to ‘off’ for the foreseeable future, as Biden’s foreign policy team has already indicated grave concerns over Russia’s meddling in Belarus as well as its treatment of protestors and dissidents such as Alexei Navalny in Russia. Biden ordered an extensive intelligence review of Russia’s actions over the last few years and will likely use the results of that report to tighten sanctions on Putin’s inner circle through the Magnitsky Act or dramatically limit trade and transactions with Russian state-owned enterprises, such as the Trump administration did with Huawei and other Chinese companies.

Number Three: The UK faces an uphill climb on their eventual U.S. trade deal. PM Boris Johnson lost an ally when President Trump left office, and the relationship with President Biden will be cordial but arm’s length. Johnson is in a tough spot, as he would like to secure a trade deal quickly to bolster his post-Brexit polling numbers, but Biden’s team is focused on the domestic agenda and probably will not see a need to negotiate this before 2022. The only way to move this deal to the front burner is to offer the U.S. one or more of the concessions it has long desired – increased access to the NHS for the U.S. pharmaceutical industry, lowered trade barriers for food imports, or improved entry into the services industry in the UK.  None of these would be popular for British voters, but Biden’s trade representative will be well-positioned to insist on key concessions.

Number Two: Biden’s team has committed early in the presidency to implement a “worker-centered trade policy” and that will color all of the legislation and trade deals that his administration will touch.  The intent of the policy is to ensure that future trade deals (including any potential participation in the CPTPP) do not harm American workers by giving the U.S. market access to foreign goods that were produced by underpaid and under-protected workers.  The flip side of this approach should be easier U.S. market entry from countries with decent labor (and environmental) standards, as the administration formulates a way to preference the ‘right’ type of imports.

The number one issue that will differ under the Biden administration is a desire to improve ties and trade opportunities with reliable partners. The tension with China will remain and potentially even deepen, but the Biden administration – stocked with committed ‘globalists’ – is going proactively tie other partners (especially fellow democracies) closer to the U.S. through increased trade and investment opportunities. Outside of North America, this will benefit Japan, South Korea, Australia, New Zealand, Israel and the European Union most of all. Rather than adjustments to existing trade deals (some of which, like the USJTA and USMCA, were just recently completed), the Biden administration will look to use bilateral investment deals to promote greater trade ties with trusted partners, especially in areas such as renewable energy and defense technology.

On the outside looking in will be Saudi Arabia, Turkey, Russia and other countries that will find in the Biden administration a trade team that is willing to substantively weigh human rights abuses and the dangers of populist leaders when assessing trade deals, money-laundering regulations, sanctions and access to the U.S. market and technology. While this shift in approach and tone will not immediately push international trade traffic into new patterns, it will lay the groundwork for a transition to more benign trade policies and less regulation for businesses working with preferred partners.  The foundations of global trade will shift just enough to push some companies, already weakened and weary by the pandemic recession, into a difficult scramble to quickly move operations and find new partners.

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Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company which offers market entry research, political risk assessment, and international negotiations assistance.  Mr. Samson is a former U.S. diplomat and international law advisor.

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Cuba Policy Under Biden: Change on the Horizon?

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After four years of Trump Administration efforts to increase sanctions on Cuba and reverse Obama-era efforts to normalize bilateral ties, the Biden White House last week announced its own plans to review Cuba policy and signaled that changes may soon be forthcoming.

“Our Cuba policy is governed by two principles. First, support for democracy and human rights – that will be at the core of our efforts. Second is Americans, especially Cuban Americans, are the best ambassadors for freedom in Cuba. So we’ll review the Trump administration policies,” said White House press secretary Jen Psaki during her January 28, 2021 daily news briefing.

While the full scope and timing of potential Cuba policy changes remain unknown, there are indications that the administration could move quickly to address issues affecting the Cuban American community, such as a de facto Trump-era ban on formal remittance flows to the Cuban people. Other steps may include removing some restrictions on U.S. travel to Cuba, as well as revisiting the Trump Administration’s final-hour January 11, 2021 decision to re-designate Cuba a State Sponsor of Terrorism.

The political landscape surrounding Cuba policy has shifted dramatically in recent years. Since 2017, the Trump Administration and its allies in South Florida sought to engage conservative Cuban American voters through aggressive measures to crack down on the Cuban government and strong anti-Castro messaging. Public polling in 2020, as well as Miami-Dade County vote tallies in the November presidential elections, indicate that the strategy was at least somewhat successful. Mr. Trump increased his share of Cuban American votes from 54 percent in 2016 to 56 percent four years later—amidst considerably higher turnout—and helped flip two key South Florida congressional seats in Republicans’ favor. These trends may impact Cuba policy outcomes under Mr. Biden if they heighten the perceived political costs of a return to engagement-oriented policies.

On the other hand, many of President Joe Biden’s senior White House foreign policy advisors and cabinet secretaries at the Departments of State, Homeland Security, Defense, and elsewhere, have tended to favor engagement-oriented approaches, premised on the belief that such policies better serve U.S. interests and promote positive changes in Cuba. First Lady Dr. Jill Biden’s October 2016 travel to Cuba—during which she met with diverse members of Cuban civil society—means that a member of the first family also has first-hand impressions of Cuba policy.

Historically, new presidential administrations have moved swiftly—typically within the first six months—to put their stamp on Cuba policy through executive actions. In April 2009, the Obama Administration issued its first actions by removing restrictions on family remittances and Cuban American travel to Cuba, and by expanding authorizations for U.S. telecommunications projects. In June 2017, the Trump Administration published National Security Presidential Memorandum 5 (”NSPM-5“), “Strengthening the Policy of the United States Toward Cuba,” which laid the foundation for its future Cuba policy actions.

While it seems likely that President Biden will take his own first Cuba policy steps sometime in the next few months by replacing NSPM-5 with a statement of his own administration’s priorities, how far he will go in reversing specific Trump-era restrictions is difficult to predict. However, U.S. companies with Cuba-related interests should get a better sense of the likely future contours of U.S.–Cuba relations soon and initial indications are that Cuba sanctions will become less restrictive under Biden than his predecessor.

Akerman will continue to provide updates on significant Cuba policy developments—as well as any changes to federal regulations—in the coming months.

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By Matthew D. Aho, Pedro A. Freyre, and Augusto E. Maxwell at Akerman.  This Akerman Practice Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Practice Update without seeking the advice of legal counsel. Prior results do not guarantee a similar outcome.

Archives, Global Logistics, Global Trade Daily, News, Ocean Ports, Rail, Trucking

Port Manatee to Develop New Intermodal Hub

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Palmetto, FL – Port Manatee is developing an international intermodal trade hub to assist companies from throughout the world in advancing production, distribution and other business activities, including innovative global supply chain solutions.

“As the closest US deep-water seaport to the expanding Panama Canal, Port Manatee is drawing increased interest,” said Carlos Buqueras, Port Manatee’s executive director.

The new hub, he said, “will provide locally and internationally headquartered companies alike with a landing platform for capitalizing upon Port Manatee’s unique position in the global marketplace.”

Companies from across Europe, Latin America, the Caribbean and Asia are expected to be among those companies with operations in the new Port Manatee Intermodal Center.

Firms currently engaged in – or seeking to take part in – trade with Cuba are to be a “particular focus,” said Buqueras, adding that both outbound and inbound overseas trade mission programs are being organized “to further boost the effectiveness” of the new hub.

“The international trade hub will be good for global commerce and good for Port Manatee, while enhancing economic benefits to Manatee County,” Buqueras said.

Port Manatee is a multipurpose deepwater seaport at the entrance to Tampa Bay, Florida, that serves bulk, breakbulk, container, heavy-lift, project and general cargo customers.

06/11/2014

 

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A US Trade Mission to Cuba! What Would Che Say?

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WASHINGTON, DC – The US Chamber of Commerce (USCOC) has just wrapped up a week-long trade mission to Cuba to get a first-hand look at changes in Cuba’s economic policies, develop a better understanding of the country’s current business environment and the state of its private sector.

The mission was led by USCOC President and CEO Thomas J. Donohue, who was joined by Steve Van Andel, chairman of the U.S. Chamber’s Board of Directors and of Alticor Corporation, and Marcel Smits, CFO of the Cargill Corporation and other mission members for meetings with a number of entrepreneurs, private cooperatives, government officials, academics, and religious leaders.

The mission’s findings, he said, will be reported “to lawmakers, our members, and the American business community.”

The USCOC has long advocated normalizing US-Cuba relations, including a lifting of Washington’s 50-year embargo, pointing to Cuban President Raul Castro’s efforts to jump-start the country’s stagnant economy with a series of unprecedented economic reforms.

Despite the fact that the island opened to limited foreign capital in 1995, Cuba has actually seen a significant drop in foreign investment and sluggish economic growth over the past decade. The economy grew by only 2.7 percent last year, far below the government’s goal of 7 percent.

While almost half-a-million Cubans have obtained licenses to operate small, private businesses, Cuba’s economy is still seen as highly centralized, inefficient and over regulated.

In March, the country’s National Assembly responded by unanimously approved what Castro called a “modernization bill” aimed at radically liberalizing the Communist-run island’s foreign investment rules.

Among other provisions, the new investment law slashes taxes on profits from 30 percent to 15 percent; gives new investors eight years of exemption from paying taxes; speeds-up the approval process for foreign investors; provides added legal protection for foreign investors; and cuts taxes on investments in most sectors to 15 percent, although special conditions will be set for investment in natural resources.

Before the trade mission left for Havana, Donahue told the media that, “We want to learn more about these reforms, determine if they have brought about real and lasting changes, and find ways to encourage Cuba’s budding private sector.”

The trade mission, the first to Cuba by the USCOC in 15 years, drew sharp criticism from the Cuban community in the US, which accuses the Castro regime of continuing to persecute political opponents in violation of international law.

Senator Robert Menendez (D-New Jersey), chairman of the senate Foreign Relations Committee, said in a press interview that political opponents continued to be arrested “without justification” in Cuba and that “such conditions hardly seem an attractive opportunity for any responsible business leader.”

Havana, he added, “unjustifiably jails foreign business leaders and breaks international labor standards” and that he “questions the merits of engaging a government controlling almost all the country’s economic activity.”

06/02/2014