Top 5 Things to Know About the Cuba Sanctions

Top 5 Things to Know About the Cuba Sanctions

Whitney - November 30, 2017

Top 5 Things to Know About the

Cuba

Sanctions

 

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced significant amendments to the

Cuba

n Assets Control Regulations (CACR) and Export Administration Regulations (EAR). These changes, coupled with the arrangement recently announced by the Departments of State and Transportation allowing scheduled air service between the United States and

Cuba

, will significantly increase the ability of U.S. citizens to travel to

Cuba

and directly engage with their citizens.

 

Regarding trade and commerce, there are several benefits and new business opportunities that can result from the relaxation of the

Cuba

n sanctions, but there are still several things you must remember before trading with

Cuba

. Below, DHL has compiled the top 5 things you need to know when it comes to international trade and

shipping

with

Cuba

.

 

1. There are still sanctions in place

There have been multiple regulatory changes that “relax” existing

Cuba

sanctions, but the underlining law that imposes the embargo is still in place. Most transactions between a U.S. person or business and

Cuba

are prohibited except where there is a clear exception or a general license. More information can be found on the Office of Foreign Assets Control (OFAC) website.

 

2. There are new business opportunities, but it is important to remember they need to benefit the

Cuba

n people

There is a lot of potential for trade with the change in the sanctions, but U.S. companies need to show that their activity benefits the

Cuba

n people and not just the

Cuba

n government. It’s permissible to work through

Cuba

n government channels or distribution networks as long as the end beneficiaries are the

Cuba

n people or

Cuba

n private enterprises.

 

3. Screening is still required

When involved in transactions in

Cuba

, U.S. companies need to screen the parties involved, ensuring they know who the end users are. There are still prohibitions around U.S. entities doing business with certain entities and individuals in

Cuba

. It is important to know all the parties involved in trade deals and the ultimate recipient of any product or service.

 

4. There are two relevant licensing agencies, and they do not always align

There are two primary licensing agencies for doing business in

Cuba

: the Bureau of Industry and Security (BIS) for commodities; and Office of Foreign Asset Control (OFAC) for travel, services, and financial transactions. Many of the changes to the sanctions address the export of specific groups of commodities by BIS; however, there has not been the same relaxation on services from OFAC. For example, OFAC did create a new general license that allows travel directly related to the export of commodities authorized by BIS that may include installing, maintaining, or supporting equipment. However, a specific license from OFAC could still be required to actually perform the services. Similarly, OFAC allows travel to

Cuba

, but the commodities being brought in may require a license from BIS unless it qualifies under an EAR license exception. You should carefully review the requirements of both agencies.

 

5. The

Cuba

n government may still be an issue

The relaxation of the sanctions only addresses the U.S. side of the transaction. This does not mean that the

Cuba

n government will allow the same transactions. A great example is the relaxation on gift exports that is now allowed from the U.S. to

Cuba

; however,

Cuba

restricts the import of many of these shipments.

Cuba

has still not revised many of its own regulations restricting trade with the U.S., so it’s important to be aware of both countries’ requirements.

 

 

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