June 23, 2017

President Trump signals a tougher policy towards Cuba

On June 16, 2017, President Donald J. Trump announced a tougher US policy towards Cuba which includes new restrictions on commercial and tourism ties between the US and Cuba.

President Trump directed the Office of Foreign Assets Controls (OFAC) and Commerce Department to issue amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations, respectively, which regulate relations between Cuba and the US.  The announced changes to US-Cuba policy will not go into effect until the amended regulations are in place.

According to a “National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba”, the impending amendments will primarily impact US companies doing business with Cuba and individual tourism by US persons to Cuba.  The amendments will address the following commerce and travel-related transactions:

  • Commerce with Certain Cuban Business Enterprises: Under the new regulations, US persons will be prohibited from engaging in any business with state-run enterprises that have ties to the Cuban military.  According to the White House, this measure is designed to end “economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies or personnel” by restricting US commerce to “free Cuban businesses” only.
  • Travel by US Individuals to Cuba: The new regulations will also restrict people-to-people educational travel to Cuba to group travel only, and will ban the self-directed, individual travel that had been authorized by the Obama administration.  In addition, groups of US persons traveling to Cuba for educational purposes will be required to travel with a guide to “ensure that each traveler maintains a full-time schedule of educational exchange activities” with the Cuban people.  According to the White House, this measure is designed to “better enforce the statutory ban on United States tourism towards Cuba”.

Notably, the Trump Administration has specified that these new restrictions will not apply retroactively.  In other words, commercial activity with state-run Cuban enterprises and travel to Cuba currently underway and permitted under existing regulations will be permitted to continue.  This approach contrasts with the usual US practice of imposing sanctions with immediate effect regardless of how they might impact transactions already in progress.

OFAC has issued “Frequently Asked Questions on President Trump’s Cuba Announcement”, which, among other things, state that OFAC “expects to issue its regulatory amendments in the coming months.”  Thus, it seems that the regulatory action necessary to implement the new US-Cuba policy may not take place until this coming fall.