BIS, OFAC, State Issue Final Rules on Exports, Direct Transactions With Cuba
The Bureau of Industry and Security, the Office of Foreign Assets Control and the State Department are issuing final rules to add new requirements for exports to Cuba and for direct financial transactions with Cuban entities and subentities that State identifies on its Cuba Restricted List. Under its rule, BIS will generally deny applications for the export or re-export of items for use by those certain entities or subentities, unless such transactions are consistent with President Donald Trump’s June 16 memo charting the policy to restrict sales to certain Cuban entities. That directive expressly exempts exports of agricultural commodities, medicines and medical devices to Cuba made pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000, for example (see 1706190021). BIS is also amending its list of ineligible Cuban government officials in the Export Administration Regulations (EAR) to include certain additional individuals.
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BIS is also expanding the capability for certain exports to Cuba for private-sector uses. Currently, the BIS License Exception “Support for the Cuban People” (SCP) identifies certain types of items, such as tools and equipment, eligible for export or re-export to Cuba for use by the private sector to build or renovate privately owned buildings, in private-sector agricultural activities, or for use by private-sector entrepreneurs. The final rule will simplify and expand SCP by creating a single provision authorizing the export and re-export to Cuba of items designated as “EAR99” or controlled only for antiterrorism reasons on the Commerce Control List for use by the Cuban private sector for private-sector economic activities. The change will make some transactions currently requiring a BIS license eligible for a license exception, the agency said.
Eligibility for such exports will require the items to not be used to primarily generate revenue for the Cuban state or used to contribute to the operation of the state, including through the construction or renovation of state-owned buildings, BIS said. Specifically, BIS’s rule will expressly prohibit the use of the gift parcels and humanitarian donations (GFT) license exception to send gift parcels, as well as the use of the consumer communications devices (CCD) and SCP license exceptions for exports, to several listed officials of the Cuban government.
OFAC’s final rule will authorize all transactions ordinarily incident to the import into the U.S. or a third country of items previously exported from the U.S. to Cuba or exported or re-exported from a third country to Cuba, and will authorize the servicing and repair of such items, subject to certain conditions. Those conditions include those stipulating that they must have been imported into the U.S. or a third country either to service or repair them before export or re-export back to Cuba, or to return them to the U.S. or a third country. However, exports and re-exports of serviced, repaired or replacement items to Cuba must be separately authorized, in addition to any Commerce Department authorization that may be required, OFAC said.
The OFAC rule will also generally prohibit direct financial transactions with entities and “subentities” associated with the Cuban military, intelligence or security service or personnel, as listed by State. However, the rule will include certain exceptions on the direct financing prohibition for exports or re-exports of agricultural commodities, medicines or medical supplies, items to provide telecommunications and Internet services to Cubans, and items related to air and sea operations supporting “permissible travel, cargo or trade.” The ban also won’t apply to transactions related to commercial engagements involving direct financial transactions with an entity or subentity on State’s Cuba Restricted List if those arrangements were in place before the date the entity or subentity was added to the list, as published in the Federal Register, OFAC said.
The BIS and OFAC rules and additions to the State list will take effect Nov. 9. State will also consider the list during review of license applications submitted to BIS pursuant to the EAR, State said. The additions will include Cuban government ministries, state-owned holding companies and several hotels in Havana and elsewhere, among other entities. OFAC is making conforming edits to clarify transactions ordinarily incident to licensed transactions don’t include direct financial transactions with such entities and subentities if the applicable general or specific license “expressly exclude[s]” such direct financial transactions, OFAC said.
(Federal Register 11/09/17)