New regulations severely restrict US travel and trade

13 November 2017

The US government has published detailed amendments to its Cuba sanctions policy, tightening commercial relations, travel and trade with Cuba.

The regulations issued on November 8 by the US Departments of State, Treasury and Commerce, implement measures outlined by President Trump on June 16 this year in Miami (see Cuba Briefing June 19, 2017). They also follow from his Presidential Security Memorandum on ‘Strengthening the Policy of the United States Toward Cuba’ which reversed the direction of US relations with Havana.

In outline, the new regulations:

  • Ban persons subject to US jurisdiction from engaging in direct financial transactions with entities and sub-entities identified on a ‘Cuba Restricted List’;
  • List a wide range of entities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel;
  • include the Mariel special development zone and its container terminal and over 80 hotels, travel agencies, shops, facilities and products;
  • accept that US commercial activity in place prior to the listing of any entity or sub-entity will continue to be authorised, as will most previously arranged travel;
  • establish through the Bureau of Industry and Security (BIS) of the Department of Commerce a general policy of denial of applications for licenses to export or re-export items for use by entities and sub-entities on the Cuba Restricted List;
  • observe that BIS is simplifying and expanding its license exception that authorizes certain license-free exports to the Cuban private sector;
  • amend OFAC’s definition of the term ‘prohibited officials of the government of Cuba’ to include additional names; and
  • notes the restricted list will periodically be updated in the Federal Register and that some exemptions apply the new rules.

The new regulations change substantially US travel restrictions by ending individual people-to-people travel, and are intended, the US government says, to ‘improve’ the statutory ban on US tourism to Cuba. Specifically, they require:

  • All people-to-people non-academic educational travel be conducted under the auspices of an organisation subject to the US jurisdiction that specifically sponsors such exchanges to promote people-to-people contact;
  • All such travellers be accompanied by a person subject to US jurisdiction who represents the sponsoring organisation;
  • US citizens engaging in authorized educational travel to do so under the auspices of an organisation that is subject to US jurisdiction and are required to be accompanied by a person subject to US jurisdiction from the sponsoring organization, unless the traveller is the authorised representative;
  • Each traveller to engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba; and
  • Such activities to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from the Cuban authorities.

The new rules also make clear that the use of casas particulares, paladares, and purchases from cuentapropistas are considered authorised activities. However, US travellers will be expected to ‘engage in additional authorised support for (such) Cuban people activities’.

Among the eight pages of blacklisted enterprises are several Cuban rum companies, but not Havana Club. The listings also include the new Manzana de Gomez luxury shopping mall in Havana, many hotels in Havana and around Cuba, the tourism agencies Crucero del Sol and Gaviota Tours, a number of marinas and shops, and various manufacturers, for example of soft drinks.

The effect of the new regulations is seemingly designed to create enormous uncertainty and confusion for US citizens with regards to what is and is not allowed, about where to visit, what to say to whom, and where to eat, drink and sleep. This is because the listings of hotels and products, and the instructions on people to people contact appear idiosyncratic, and in some cases almost impossible to interpret responsibly. The only ‘safe’ mode of travel in future that is not subject to OFAC scrutiny will be by US cruise ships with onshore visits guided by and accounted for to OFAC by US citizens.

Although not stated, the most likely outcome of the new rules will be to end any hope by US companies for new business, unless they can prove they already have contractual arrangements in place. This includes companies such as Caterpillar and John Deere. The new regulations will likely exacerbate the already declining interest from US companies in doing business with Cuba, as demonstrated during the 2017 Havana International Fair (FIHAV), which saw the participation of just 13 US companies.

While it remains to be seen how closely the US Departments of State, Treasury and Commerce will enforce the regulations on US visitors and companies, the announcement of the regulations mark a significant roll-back from the normalization process initiated by President Obama, leaving Cuba-US relations at their lowest ebb since the George W Bush administration.

The original documents containing detailed guidance can be found at:
• https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_fact_sheet_11082017.pdf
• https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/275331.htm
• https://www.bis.doc.gov/index.php/policy-guidance/country-guidance/sanctioned-destinations/cuba
• https://www.federalregister.gov/documents/2017/11/09/2017-24448/amendments-to-implement-united-states-policy-toward-cuba

This is an extract from the Caribbean Council’s weekly editorially independent publication, Cuba Briefing, which provides in depth information on current economic, political and commercial developments in Cuba and news on events in Europe and the US that affect the region. Business people, academics, and those with a general interest in Cuba find it an invaluable tool for developing and maintaining knowledge and providing an insight into political, economic and commercial events in the region.

The publication is available internationally on a subscription-only basis.