"Opportunities for US-Cuba engagement within the sanctions regime" (Source)
Generally, when reference is made to the U.S. sanctions regime aimed at Cuba, the dimension usually highlighted is the extensive catalog of prohibitions, which I have already discussed in other articles. However, it is unusual to find approaches that address the possibilities that the regime itself opens up for trade in goods and services between the two nations. I advance that they go more in the direction of allowing the movement United States -> Cuba than Cuba -> United States, as well as that the deterrent effect of the inflamed bilateral rhetoric, and perhaps a bit of ignorance or lack of activity from both sides of the aisle, don't contribute to the realization of agreements.
One problem with this issue is that people here and in the United States talk about this policy without ever having reviewed the enabling legislation, let alone the regulations that implement it. In that sense, there is a lot of post-truth and misinformation moving around, especially in the order of stating that there is no restriction. Everything I will expose is public on official U.S. Government websites, and in particular, I work with the Electronic Code of Federal Regulations, a marvelous tool that is updated by the Office of the Federal Register of the National Archives and Records Administration. Its content is unofficial but very reliable and indeed authoritative.
The legal framework that supports this policy is based on the following legislation: the Trading With Enemy Act of 1917 (TWEA) —which currently only applies to Cuba—, the Foreign Assistance Act of 1961, the Cuban Democracy Act of 1992, the Cuban Liberty and Democratic Solidarity Act of 1996, the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), and the Export Control Reform Act of 2018. Then, the essential regulations that implement it are described in the Cuban Assets Control Regulations (CACR), which OFAC administers on behalf of the Department of the Treasury, and the Export Administration Regulations (EAR), managed by the Department of Commerce's Bureau of Industry and Security.
In the CACR —codified in 31 CFR 515—, the essence of the prohibitive approach is in section 515.201, which prohibits any trade or financial link between the two countries. In the case of the EAR —codified in subchapter C of chapter VII of CFR's Title 15—, we find the key to that perspective in section 746.2, which in correspondence with the Export Administration Act of 1979 and the TWEA states that a license from the Department of Commerce is required to export or reexport "all items subject to the EAR to Cuba, including any release of technology or source code [emphasis added] subject to the EAR to a Cuban national", with certain exceptions that are the ones I am interested in dealing with in this report. Today I will only discuss OFAC, leaving for the next round the treatment of the licensing policy of the Department of Commerce.
OFAC's headquarters in Washington. Photo obtained via Wikimedia Commons (credited to APK) under CC BY-SA 3.0 license.
There are two types of licenses, which are authorizations either explicitly contained within the CACR (these would be the general licenses), or issued in correspondence with the authority provided in the regulations themselves (which are called specific licenses, because they enable a particular activity or the operations of a company or organization related to Cuba). When a natural or legal person subject to U.S. jurisdiction performs any operation that is directly contained in the CACR, it does not need to apply for any permit; the general license covers it. But to engage in any activity that is not authorized by a general license, they must apply for a specific license, which is usually not public.
Here I will refer to general licenses that contain authorizations whose scope includes the Cuban Government in a positive sense or that have a representative scope for residents in both countries and also that have been issued within the last ten years. Licenses, authorizations, and statements providing guidance on how flexible OFAC may or may not be in granting them, are available in Subpart E of the CACR.
Section 515.533 was introduced by the administration of Barack Obama in the last months of his second term —seven months after his historic visit to Havana—, and established as the most important aspect the authorization of all transactions related to the export of goods to Cuba from the United States or any other country as long as it has been authorized by the Department of Commerce, whose policy of authorizing exports to the Island I will introduce in a later post.
§ 515.533 Exportations from the United States to Cuba; reexportations to Cuba; importation and servicing or repair of certain items previously exported or reexported to Cuba.
(a) All transactions ordinarily incident to the exportation of items from the United States, or the reexportation of items from a third country, to any person within Cuba are authorized, provided that:
(1) The exportation or reexportation is licensed or otherwise authorized by the Department of Commerce under the provisions of the Export Administration Act of 1979, as amended (50 U.S.C. 4601–4623) (see the Export Administration Regulations, 15 CFR parts 730 through 774);
(2) The transaction is not a transaction between a U.S.-owned or -controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba;
(3) The transaction is not financed from any blocked account; and
(4) In the case of agricultural commodities, as that term is defined in 15 CFR part 772, only the following payment and financing terms are used:(i) Payment of cash in advance. For the purposes of this section, the term “payment of cash in advance” shall mean payment before the transfer of title to, and control of, the exported items to the Cuban purchaser; or
(ii) Financing by a banking institution located in a third country provided the banking institution is not a designated national, a U.S. citizen, a U.S. permanent resident alien, or an entity organized under the laws of the United States or any jurisdiction within the United States (including any foreign branch of such an entity). Such financing may be confirmed or advised by a U.S. banking institution.
In my opinion, this is the most flexible area in the whole legal framework of the sanctions regime. In general, the issue of telecommunications has been considered strategic, and the Cuban Democracy Act of 1992 cemented that character in response to the opportunity that legislators saw to promote a backlash in the political commitment of Cubans toward the Government, based on more direct and intense communication with those living in the United States (today, more than from there, this critical character emerges from the reach of the Internet and social networks).
Obama doubled this bet when he arrived at the White House, and even more in the brief "thaw" in relations. Perhaps the best way to demonstrate that there is consensus on keeping this aspect of the sanctions regime extremely flexible —which also makes the subversive efforts discussed here viable in an integral manner— is that the hawks of the Trump era focused on the Cuba issue, such as John Bolton or Mauricio Claver-Carone, did not touch it. Let's see how the issue is configured in subsection 515.542 of the CACR.
§ 515.542 Mail and telecommunications-related transactions.
(a) All transactions, including payments, incident to the receipt or transmission of mail and parcels between the United States and Cuba are authorized, provided that the importation or exportation of such mail and parcels is exempt from or authorized pursuant to this part.
(b) All transactions, including payments, incident to the provision of telecommunications services related to the transmission or the receipt of telecommunications involving Cuba, including the entry into and performance under roaming service agreements with telecommunications services providers in Cuba, by persons subject to U.S. jurisdiction are authorized. This paragraph does not authorize any transactions addressed in paragraphs (c) or (d) of this section, nor does it authorize the entry into or performance of a contract with or for the benefit of any particular individual in Cuba.
(c) All persons subject to U.S. jurisdiction are authorized to enter into, and make payments under, contracts with telecommunications service providers, or particular individuals in Cuba, for telecommunications services provided to particular individuals in Cuba, provided that such individuals in Cuba are not prohibited officials of the Government of Cuba, as defined in § 515.337 of this part, or prohibited members of the Cuban Communist Party, as defined in § 515.338 of this part. The authorization in this paragraph includes payment for activation, installation, usage (monthly, pre-paid, intermittent, or other), roaming, maintenance, and termination fees.
(d) General license for telecommunications facilities. Transactions, including payments, incident to the establishment of facilities, including fiber-optic cable and satellite facilities, to provide telecommunications services linking the United States or third countries and Cuba, including facilities to provide telecommunications services in Cuba, are authorized.
(e) Persons subject to U.S. jurisdiction are authorized to enter into licensing agreements related to services authorized by paragraphs (b) through (d) of this section, and to market such services.
[...]
(h) For purposes of this section, the term “telecommunications services” includes data, telephone, telegraph, internet connectivity, radio, television, news wire feeds, and similar services, regardless of the medium of transmission, including transmissions by satellite.
Section 515.547 authorizes transactions related to the involvement of U.S. scientists with their Cuban counterparts in conducting medical research. This already has concrete results, such as the collaboration between the Cuban Molecular Immunology Center and the Roswell Park Comprehensive Cancer Center based in New York (below I refer to a promotional video of this relevant fact, followed by what is legally conceived in referred section). In addition, it enables persons subject to U.S. jurisdiction to carry out any transaction necessary to obtain U.S. Food and Drug Administration approval of Cuban pharmaceuticals products.
§ 515.547 Certain transactions related to medical research and Cuban-origin pharmaceuticals; research samples.
(a) Persons subject to U.S. jurisdiction are authorized to engage in all transactions incident to joint medical research projects with Cuban nationals.
(b) Persons subject to U.S. jurisdiction are authorized to engage in all transactions incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban-origin pharmaceuticals, including discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals.
(c) Persons subject to U.S. jurisdiction are authorized to engage in all transactions incident to the marketing, sale, or other distribution in the United States of FDA-approved Cuban-origin pharmaceuticals, including the importation into the United States of Cuban-origin pharmaceuticals.
U.S. tourism to Cuba is prohibited right now by TSRA, which implies that the President has no authority to modify this measure. But Americans may travel to the Island if they fall into one of twelve categories introduced in section 515.560. It seems to me that just referring to the titles gives the gist of who applies in each case. Remember that it is not necessary to request permission from OFAC for any activity included in any of the licenses I have been describing, including travel.
§ 515.560 Travel-related transactions to, from, and within Cuba by persons subject to U.S. jurisdiction.
(a) The travel-related transactions listed in paragraph (c) of this section may be authorized either by a general license or on a case-by-case basis by a specific license for travel related to the following activities (see the referenced sections for the applicable general and specific licensing criteria):
(1) Family visits (see § 515.561);
(2) Official business of the U.S. government, foreign governments, and certain intergovernmental organizations (see § 515.562);
(3) Journalistic activity (see § 515.563);
(4) Professional research and professional meetings (see § 515.564);
(5) Educational activities (see § 515.565);
(6) Religious activities (see § 515.566);
(7) Public performances, clinics, workshops, athletic and other competitions, and exhibitions (see § 515.567);
(8) Support for the Cuban people (see § 515.574);
(9) Humanitarian projects (see § 515.575);
(10) Activities of private foundations or research or educational institutes (see § 515.576);
(11) Exportation, importation, or transmission of information or informational materials (see § 515.545); and
(12) Certain export transactions that may be considered for authorization under existing Department of Commerce regulations and guidelines with respect to Cuba or engaged in by U.S.-owned or -controlled foreign firms (see §§ 515.533 and 515.559).
I will only dwell on the categories that right now come closest to what we could call limited U.S. tourism in Cuba. These are Educational activities —especially for the people-to-people travel license— and Support for the Cuban People. In the case of the first one, the authorization is described in paragraph (b) of the mentioned category and makes it clear that travelers must comply with the restriction set forth in section 515.209, which applies in all cases.
(b) General license for people-to-people travel. The travel-related transactions set forth in § 515.560(c) and such additional transactions as are directly incident to educational exchanges not involving academic study pursuant to a degree program are authorized, provided that:
(1) The exchanges take place under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact;
(2) Travel-related transactions pursuant to this authorization must be for the purpose of engaging, while in Cuba, in a full-time schedule of activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities;
(3) Each traveler has a full-time schedule of educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba;
(4) An employee, paid consultant, or agent of the sponsoring organization accompanies each group traveling to Cuba to ensure that each traveler has a full-time schedule of educational exchange activities; and
(5) The predominant portion of the activities engaged in by individual travelers is not with a prohibited official of the Government of Cuba, as defined in § 515.337, or a prohibited member of the Cuban Communist Party, as defined in § 515.338.
(6) In addition to all other information required by § 501.601 of this chapter, entities sponsoring travel pursuant to the authorization in this paragraph (b) must retain records sufficient to demonstrate that each individual traveler has engaged in a full-time schedule of activities that satisfy the requirements of paragraphs (b)(1) through (5) of this section. Individuals may rely on the entity sponsoring the travel to satisfy their recordkeeping requirements with respect to the requirements of paragraphs (b)(1) through (5) of this section. These records must be furnished to the Office of Foreign Assets Control on demand pursuant to § 501.602 of this chapter.
In the case of the Support for the Cuban People category, the most interesting thing is the possibility it offers Americans to come to Cuba individually —something that Obama allowed in a very flexible way as part of the people-to-people trips— under the umbrella that they should promote independent activity to strengthen Cuban civil society, favoring above all lodging in private Airbnb-type hostels. Example # 1 presented to illustrate what type of activities a U.S. traveler may engage in to qualify for this category is very clear of the intent being sought.
§ 515.574 Support for the Cuban People.
(a) General license. The travel-related transactions set forth in § 515.560(c) and other transactions that are intended to provide support for the Cuban people are authorized, provided that:
(1) The activities are of:
(i) Recognized human rights organizations;
(ii) Independent organizations designed to promote a rapid, peaceful transition to democracy; or
(iii) Individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; and
(2) Each traveler engages in a full-time schedule of activities that:
(i) Enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities; and
(ii) Result in meaningful interaction with individuals in Cuba.
(3) The traveler's schedule of activities does not include free time or recreation in excess of that consistent with a full-time schedule.
One of the main sources of income for several Latin American countries is remittances from their emigrants, especially those living in the United States. The policy in this regard towards Cuba is described in section 515.570 and is one of the aspects of bilateral relations that the Biden administration did manage to return to the point where Obama had left off. Right now, in amount terms, there are no restrictions for a Cuban emigrant in the United States to send money to close relatives, or even for a U.S. citizen to send donations to Cuban nationals, with some exceptions in both cases on the recipient of the funds.
§ 515.570 Remittances.
(a) Family remittances authorized. Persons subject to the jurisdiction of the United States who are 18 years of age or older are authorized to make remittances to nationals of Cuba who are close relatives, as defined in § 515.339 of this part, of the remitter, provided that:
(1) The remittances are not made from a blocked source. Certain remittances from blocked accounts are authorized pursuant to paragraph (f) of this section;
(2) The recipient is not a prohibited official of the Government of Cuba, as defined in § 515.337, a prohibited member of the Cuban Communist Party, as defined in § 515.338, a close relative, as defined in § 515.339, of a prohibited official of the Government of Cuba, or a close relative of a prohibited member of the Cuban Communist Party; and
(3) The remittances are not made for emigration-related purposes. Remittances for emigration-related purposes are addressed by paragraph (e) of this section.
(b) Donative remittances to Cuban nationals authorized. Persons subject to the jurisdiction of the United States are authorized to make donative remittances to Cuban nationals, provided that:
(1) The remittances are not made from a blocked source;
(2) The recipient is not a prohibited official of the Government of Cuba, as defined in § 515.337, a prohibited member of the Cuban Communist Party, as defined in § 515.338, a close relative, as defined in § 515.539, of a prohibited official of the Government of Cuba, or a close relative of a prohibited member of the Cuban Communist Party;
[...]
This has not taken place on a great scale but is planned. Section 515.573 of the CACR authorizes certain persons subject to U.S. jurisdiction to establish physical and business presence in Cuba, with the possibility of leasing premises and employing Cuban or U.S. citizens. They may also open and maintain accounts in Cuban banking institutions. Paragraph (c) of the aforementioned subsection clearly describes the U.S. persons who may apply for this general license (I set forth an excerpt containing the cases of greatest impact, a logic that I have maintained in the above verbatim quotations from the CACR).
Persons authorized to establish physical and business presence. The following persons subject to U.S. jurisdiction may engage in the transactions authorized pursuant to paragraphs (a) and (b) of this section, provided that such transactions may only be engaged in to support transactions authorized by or exempt from the prohibitions of this part:
(1) Providers of telecommunications services authorized by § 515.542(b) through > (d) or persons engaged in activities authorized by § 515.542(e);
(2) Providers of internet-based services authorized by § 515.578(a) or persons engaged in activities authorized by § 515.578(c) or (e);
(3) Exporters of goods authorized for export or reexport to Cuba by § 515.533 or § 515.559 or that are otherwise exempt;
If you notice, there is a clear orientation to prioritize and make viable the flow of telecommunications and Internet services, giving them the possibility of settling even on Cuban soil. Having a business presence implies that they can engage in the following transactions: "establishing and maintaining subsidiaries, branches, offices, joint ventures, franchises, and agency or other business relationships with any Cuban national, and entering into all necessary agreements or arrangements with such entity or individual".
Finally, I reproduce an excerpt from the very broad section 515.578. It is another example of how strategic it is for the United States everything that has to do with the Internet and even the exchange and development of software related to Cuba. For example, there are few activities in which a Cuban can be hired directly by a person subject to U.S. jurisdiction, and the development of mobile applications is one of them. The importation of Cuban products into the United States, in general, is prohibited, and yet it is possible to export Cuban software to the land of George Washington.
§ 515.578 Exportation, reexportation, and importation of certain internet-based services; importation of software.
(a) Except as provided in paragraph (b) of this section, the following transactions are authorized:
(1) Certain internet-based services. The exportation or reexportation, directly or indirectly, from the United States or by a person subject to U.S. jurisdiction to Cuba of services incident to the exchange of communications over the internet, such as instant messaging, chat, and email, social networking, sharing of photos and movies, web browsing, blogging, web hosting provided that it is not for the promotion of tourism, and domain name registration services.
[…]
(d) Software. The importation into the United States of Cuban-origin software is authorized.
(e) Mobile applications.
(1) The importation into the United States of Cuban-origin mobile applications is authorized.
(2) The employment of Cuban nationals to develop mobile applications is authorized.
So far this first installment of a new approach to the relations between Cuba and the United States, in which I review the main opportunities for collaboration and commercial and social exchange between the two countries, based on licenses included in the sanctions regime itself, which is so often presented as an embargo —by those who oppose the Cuban government— and as a blockade —by those who support it—. My perspective is to avoid this battle to determine the correct denomination, although it is an interesting discussion from a legal point of view, and to focus on the effects and the concrete letter of that policy. I hope I have conveyed something new in this post, and I will be back very soon with the second part, which offers equally or even more interesting and novel data within the tense debate that the subject usually generates.
Edited with Canva.
