Cuba Sanctions Are Changing - But Don’t Break Out the Cigars Yet - Global Trade Magazine
  April 14th, 2016 | Written by

Cuba Sanctions Are Changing – But Don’t Break Out the Cigars Yet

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  • Until differences over human rights are resolved some form of U.S. sanctions on Cuba will remain in effect.
  • Obama’s Cuba policy has resulted in a number of amendments to sanctions.
  • Although U.S. Cuba sanctions have been loosened, the remaining sanctions are still very broad.

Since President Obama has returned from his historic trip to Cuba, can American tourists now also travel to Cuba to enjoy mojitos and cigars on the beach?

While such idyllic tourist travel is still prohibited, the U.S. and Cuba are closer than they have been in decades. President Obama’s trip was designed to “extend the hand of friendship to the Cuban people” and end the remnants of the Cold War, but significant differences remain between the U.S. and Cuba regarding security, opportunity and human rights. Until those differences are resolved and the U.S. embargo is lifted, some form of sanctions will remain in effect.

President Obama’s visit to Cuba is his latest effort to further a policy designed to engage and empower the Cuban people. That policy already has resulted in a number of amendments to the sanctions found in the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR). Although the amendments are significant, the remaining sanctions under the CACR and the EAR are very broad, including the prohibition on tourist travel.

The latest amendments, made on the eve of President Obama’s trip, are intended to increase the ability of U.S. citizens to visit Cuba to engage with the Cuban people, expand trade and commercial activities, and further develop their private sector. The amendments include:

 

  • Authorizing additional categories of U.S. persons to establish a physical or business presence in Cuba, such as humanitarian organizations, private foundations, and educational institutions;
  • Allowing entities authorized to establish a physical or business presence in Cuba to export items used in relation to that presence; for example, now they can export pens and pencils for use in those authorized offices;
  • Making it easier to obtain a U.S. export license for items that enable or facilitate Cuba’s private sector exports;
  • Allowing U.S. persons to purchase and consume Cuban-origin items while in third countries;
  • Authorizing U.S. banks to open accounts for Cuban nationals in Cuba in order to receive authorized payments in the U.S. and remit payments back to Cuba;
  • Authorizing the importation into the U.S. of Cuban-origin software; and
  • Removing the requirement that people-to-people educational travel be conducted through a sponsoring organization; individuals may now travel so long as they meet the requirements.

 

By removing the requirement to conduct people-to-people travel through an organization, the amendments have made it cheaper and easier for U.S. citizens to travel to Cuba. But they must still keep detailed records that substantiate claims that they have maintained a full educational schedule. While these amendments relax the rules, significant sanctions still apply and companies remain broadly prohibited from engaging in transactions involving Cuba or exporting items subject to the EAR without a license or license exception.

Only time will tell whether President Obama’s visit will further encourage political and economic reforms within Cuba, regardless, all hope is not lost for those who long for mojitos and cigars. Even though tourism is still prohibited, if you are in Cuba for an authorized purpose, you can purchase and enjoy those legendary cigars and Cuban-made rum during your visit. And if you’re enjoying vacation time in a third country where Cuban cigars and rum are available, you can feel warm and fuzzy while consuming these products free from restrictions under U.S. sanctions.

Elsa Manzanares and Michelle Schulz are co-chairs of the International Trade group at Gardere Wynne Sewell LLP.


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