Export Administration Regulations – Duane Morris on Cuba, Puerto Rico & the Caribbean

September 19, 2018 by Jose A. Aquino

Effectiveness of Licensing Procedures for Agricultural Commodities to Cuba

The Bureau of Industry and Security (BIS) is requesting public comments on the effectiveness of its licensing procedures for the export of agricultural commodities to Cuba. The comments must be in writing and received by October 17, 2018. BIS requests that the comments be as specific as possible.

The comments will be considered by BIS in developing its biennial report to the Congress on the operation of the licensing system for the preceding two-year period, as required by the Trade Sanctions Reform and Export Enhancement Act of 2000. The report must include the number and types of licenses applied for, the number and types of licenses approved, the average amount of time elapsed from the date of filing of a license application until the date of its approval, the extent to which the licensing procedures were effectively implemented, and a description of comments received from interested parties. The biennial report is for the two-year period from October 1, 2016 through September 30, 2018.

BIS is an agency of the United States Department of Commerce that implements U.S. Government sanctions against Cuba and certain other nations. BIS administers and enforces the Export Administration Regulations (EAR), which regulate the export of commercial commodities, including the exports of agricultural commodities to Cuba.

All the comments will be made available for public inspection and copying. Material that the author does not want to be made public should not be submitted to BIS.

Additional information on BIS procedures and previous biennial reports are available at http://www.bis.doc.gov/index.php/policy-guidance/country-guidance/sanctioned-destinations/13-policy-guidance/country-guidance/426-reports-to-congress.

Jose A. Aquino (@JoseAquinoEsq on Twitter) is a special counsel in the New York office of Duane Morris LLP, and a member of the Duane Morris Cuba Business Group. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys

January 25, 2017 by Jose A. Aquino

FIRST LEGAL CARGO FROM CUBA IN MORE THAN HALF-CENTURY ARRIVES IN THE U.S.

Yesterday, the first legal cargo from Cuba in more than 50 years arrived in the United States. Two containers containing 40 tons of artisanal charcoal arrived by sea at Port Everglades in Fort Lauderdale. The charcoal, made from Cuban marabu, produces a highly efficient burning charcoal.

Once in the United States, the charcoal will be packaged in 33-pound bags under the brand name Fogo. The charcoal will be sold to restaurants and online directly to consumers. Cuban marabu charcoal has excellent heating qualities, it does not produce sparks, and burns long and clean, making it desirable for restaurant pizza and bread ovens.

Cuban marabu is made from an invasive woody plant from Africa that is considered a nuisance in Cuba. The marabu charcoal is produced by private, worker-owned cooperatives. The charcoal is sold by the cooperatives to a local packager, which sells it on to state-run export firm CubaExport. Products of cooperative farms in Cuba can be exported to the United States under the exemptions to the U.S. embargo permitted by President Obama.

The Obama Administration eased restrictions on imports of goods and services from private Cuban entrepreneurs in early 2015. The new regulations set forth a list of goods that are prohibited from being exported to the U.S., such as livestock, food products, ammunition, metals and minerals. Other products are eligible for export if they were produced by private Cuban entrepreneurs and are not on the list of prohibited items.

October 17, 2016October 17, 2016 by Jose A. Aquino

Obama Administration Promotes Expanded Opportunities With Cuba.

On Friday, October 14, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) issued new amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). OFAC is the federal agency responsible for enforcement of U.S. international economic sanctions. BIS is the federal agency responsible for developing export control policies, issuing export licenses, and prosecuting violations.

The Obama Administration is making these amendments in further support normalizing bilateral relations with Cuba. The objective of the new rules is to facilitate greater engagement between the United States and Cuba across multiple sectors. The OFAC and BIS regulations were previously amended on January 16, June 15, and September 21, 2015, and January 27 and March 16, 2016 to implement President Obama’s policy to further engage and empower the Cuban people.

“President Obama’s historic announcement in December 2014 charted a new course for a stronger, more open U.S.-Cuba relationship,” said Treasury Secretary Jacob J. Lew. “The Treasury Department has worked to break down economic barriers in areas such as travel, trade and commerce, banking, and telecommunications. Today’s action builds on this progress by enabling more scientific collaboration, grants and scholarships, people-to-people contact, and private sector growth. These steps have the potential to accelerate constructive change and unlock greater economic opportunity for Cubans and Americans.”

“These amendments will create more opportunities for Cuban citizens to access American goods and services, further strengthening the ties between our two countries,” said U.S. Secretary of Commerce Penny Pritzker.

Among other things, the new amendments add and expand authorizations of transactions related to Cuban-origin pharmaceuticals and joint medical research, trade and commerce, civil aviation safety-related services, travel to Cuba, and humanitarian services designed to directly benefit the Cuban people. Some of the changes, which go into effect on October 17, 2016, are:

Cuban-developed pharmaceuticals will be able to gain approval by the US Food and Drug Administration (FDA). The FDA-approved Cuban-origin pharmaceuticals can be imported, marketed, sold and distributed in the United States.
Americans will be allowed to engage in joint medical research projects with Cuban nationals. Both non-commercial and commercial research projects will be permissible.
Americans engaged in approved health-related activities will be allowed to open and maintain bank accounts in Cuba for use in conducting the authorized busines
Americans will be permitted to enter into certain contingent contracts for trade with Cuba.
Americans who travel to Cuba will no longer be limited to bringing back goods worth up to $400, including $100 worth of tobacco and alcohol. OFAC is removing the monetary value limitations on what authorized travelers may import from Cuba into the United States. Normal limits on Americans’ importation of foreign products for personal use will apply to U. S. Citizens traveling from Cuba. OFAC is also removing the prohibition on Americans purchasing and bringing into the United States for personal use Cuban products obtained while traveling in third countries. Similarly, foreign travelers may bring Cuban-origin alcohol and tobacco products into the United States for personal use.
OFAC will waive the restriction prohibiting foreign vessels from entering a U.S. port for purposes of loading or unloading freight for 180 days after calling on a Cuban port for trade purposes.
BIS will generally authorize air cargo to transit Cuba. The amended regulations allow cargo aboard aircraft bound for destinations other than Cuba to transit Cuba under a license exception.
BIS will authorize exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use.
Americans will be allowed to provide civil aviation safety-related services to Cuba and Cuban nationals.

The Treasury regulations 31 Code of Federal Regulations (CFR), part 515, are available by clicking here. The Commerce regulations 15 CFR parts 730-774, are available by clicking here.

January 26, 2016 by Jose A. Aquino

U.S. ANNOUNCES NEW AMENDMENTS TO THE CUBA SANCTIONS REGULATIONS

Today, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced new amendments to the Cuba Sanctions Regulations. The amendments further advance President Obama’s policy of easing of sanctions on Cuba. The changes will take effect on January 27, 2016, when the regulations are published in the Federal Register.

U.S. Treasury Secretary Jacob J. Lew said: “Today’s amendments to the Cuban Assets Control Regulations build on successive actions over the last year and send a clear message to the world: the United States is committed to empowering and enabling economic advancements for the Cuban people. We have been working to enable the free flow of information between Cubans and Americans and will continue to take the steps necessary to help the Cuban people achieve the political and economic freedom that they deserve.”

U.S. Secretary of Commerce Penny Pritzker said: “Following the first ever U.S.-Cuba Regulatory Dialogue and my fact-finding trip to Cuba in October, we have been working tirelessly to maximize the beneficial impact of U.S. regulatory changes on the Cuban people. Today’s Commerce rule builds on previous changes by authorizing additional exports including for such purposes as disaster preparedness; education; agricultural production; artistic endeavors; food processing; and public transportation. These regulatory changes will also facilitate exports that will help strengthen civil society in Cuba and enhance communications to, from and among the Cuban people. Looking ahead, we will continue to support greater economic independence and increased prosperity for the Cuban people, as we take another step toward building a more open and mutually beneficial relationship between our two nations.”

The Department of Commerce summarized the new amendments as follows:

Financing

Removing financing restrictions for most types of authorized exports.

Restrictions on payment and financing terms for authorized exports and reexports, except for agricultural commodities and agricultural items, will be removed, and U.S. depository institutions will be authorized to provide financing, including, for example, issuing a letter of credit for such exports and reexports. Currently, payment and financing terms for all authorized exports are restricted to cash-in-advance or third-country financing. Effective January 27, 2016, examples of permissible payment and financing terms for authorized non-agricultural exports and reexports will include: payment of cash in advance; sales on an open account; and financing by third-country financial institutions or U.S. financial institutions. OFAC is required by statute to maintain the existing limitations on payment and financing terms for the export and reexport of agricultural commodities and agricultural items.

Exports

Additional amendments to increase support for the Cuban people and facilitate authorized exports.

Certain Additional Transactions Authorized. OFAC is expanding an existing general license to authorize certain additional travel-related transactionsas are directly incident to the conduct of market research; commercial marketing; sales or contract negotiation; accompanied delivery; installation; leasing; or servicing in Cuba of items consistent with the export or reexport licensing policy of the Department of Commerce, provided that the traveler’s schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule.
Civil society. BIS will generally approve license applications for exports and reexports of commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba.
News gathering. BIS will generally approve license applications for exports and reexports of commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public.
Telecommunications. BIS will generally approve license applications for exports and reexports of telecommunications items that would improve communications to, from, and among the Cuban people.
Agriculture. BIS will generally approve license applications for exports and reexports of certain agricultural items (such as agricultural commodities not eligible for a license exception; insecticides; pesticides; and herbicides).
Civil aviation safety. BIS will generally approve license applications for exports and reexports of items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises.
Meeting the needs of the Cuban people. BIS is creating a case-by-case licensing policy that will apply to exports and reexports of items to meet the needs of the Cuban people, including exports and reexports for such purposes made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people.
Examples of exports and reexports eligible for this licensing policy are items for: agricultural production; artistic endeavors (including the creation of public content, historic and cultural works and preservation); education; food processing; disaster preparedness, relief and response; public health and sanitation; residential construction and renovation; public transportation; and the construction of infrastructure that directly benefits the Cuban people (e.g., facilities for treating public water supplies and supplying energy to the general public).
A general policy of denial will still apply to exports and reexports of items for use by state-owned enterprises, agencies, or other organizations of the Cuban government that primarily generate revenue for the state, including those in the tourism industry and those engaged in the extraction or production of minerals or other raw materials. Additionally, applications to export or reexport items destined to the Cuban military, police, intelligence and security services remain subject to a general policy of denial.

Air Carrier Services

Additional amendment to facilitate carrier service by air and with Cuban airlines.

The entry into blocked space, code-sharing, and leasing arrangements to facilitate the provision of carrier services by air, including the entry into such arrangements with a national of Cuba, will be authorized.

Travel

Expanding authorizations within existing travel categories to facilitate travel to Cuba for additional purposes.

Temporary Sojourn. Certain personnel who are operating or servicing vessels or aircraft will be authorized to engage in travel-related and other transactions in Cuba to facilitate the temporary sojourn of aircraft and vessels as authorized by the Department of Commerce in connection with the transportation of authorized travelers between the United States and Cuba.
Information and informational materials. OFAC will authorize travel-related and other transactions directly incident to professional media or artistic productions of information or informational materials for exportation, importation, or transmission, including the filming or production of media programs (such as movies and television programs); music recordings; and the creation of artworks in Cuba by persons that are regularly employed in or have demonstrated professional experience in a field relevant to such professional media or artistic productions. OFAC will also be expanding an existing general license to authorize transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments.
Professional meetings. OFAC will authorize by general license travel-related and other transactions to organize professional meetings or conferences in Cuba. The existing general license authorizes only attendance at such meetings or conferences.
Public performances, clinics, workshops, athletic, and other competitions and exhibitions. Similar to the change to the professional meetings category, OFAC will authorize by general license travel-related and other transactions to organize amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC also will remove requirements that that U.S. profits from certain events must be donated to certain organizations and that certain events be run at least in part by U.S. travelers.
Humanitarian projects. OFAC will expand the list of authorized humanitarian projects to include disaster preparedness and response.

The Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, can be seen here.

The Commerce regulations, which can be found at 15 CFR part 746, can be seen here.

November 3, 2015November 4, 2015 by Jose A. Aquino

Exporting Agricultural Goods to Cuba: Who do I sell to?

The newly relaxed U.S. regulatory controls for the export of goods to Cuba have been scrutinized by the media. Not much, however, has been said about Cuba’s framework for importing goods. Understanding the Cuban government’s regulatory framework is a first step for U.S. companies looking to do business in Cuba.

Generally, U.S. firms will not deal directly with the end user of the exported product. For example, exporting agricultural products is not about trading with independent farmers or businesses in the island but, instead, about negotiating and dealing with the Cuban government through the government-run food trading company known as the Empresa Comercializadora de Alimentos (ALIMPORT).

ALIMPORT is the Cuban government’s procurement agency for U.S. agricultural products. It is the only approved importer for U.S. food products such as wheat, fruits, vegetables and meat. U.S. firms must negotiate with, and deliver goods to, ALIMPORT, who then takes control of the imports at the Cuban point of entry, manages distribution throughout Cuba and coordinates payments. The United States Department of Agriculture’s report on Cuba notes that “the key difference in exporting to Cuba, compared to other countries in the region, is that all U.S. agricultural exports must be channeled through one Cuban government agency, ALIMPORT.”

February 4, 2015June 4, 2015 by Jose A. Aquino

New U.S. Policy Towards Cuba Put In Motion By Construction Of Church

The construction of Cuba’s first Roman Catholic Church since Castro came to power in 1959 may well be the first test of the new U.S. policy towards Cuba. The new church, with an expected capacity to accommodate at least 200 worshipers, is set to be built in Sandino, a small, secluded town in the province of Pinar del Rio. Most of the money for the church’s construction was raised by the St. Lawrence Catholic Church in Tampa, Florida. Father Tom Morgan, the vicar of St. Lawrence’s parish, told CNN that he was optimistic that recent changes in U.S. policy towards Cuba would permit his parish to send supplies and building materials to Cuba to help construct the new church.

The changes in Cuba policy mentioned by Father Morgan were put into effect by amending the Commerce Department’s Export Administration Regulations (EAR). On January 16, 2015, the EAR were amended to authorize the export and re-export of certain items to Cuba that are intended to improve the living conditions of the Cuban people. The new regulations permit the export of building materials, equipment and tools for use by the private sector to construct or renovate privately-owned buildings, including places of worship such as the proposed church being built in Sandino. Hence, the efforts of Tampa parishioners to build a church in an out-of the-way village in Cuba could be an early test of the President’s strategy of strengthening civil society in Cuba by supporting independent economic activity.

The new regulations also permit the sending of building materials to Cuba to build privately-owned residences, businesses and buildings for private sector social or recreational use. The U.S. Department of Commerce’s EAR, found at 15 CFR parts 730-774, can be read by clicking here.