President Obama’s December initiative to mend fences and open economic opportunities for the US in Cuba took a giant step forward on Thursday when OFAC released a series of actions easing US travel and business restrictions between the two neighbors. While Congressional approval is required to formally end the embargo, the new amendments are “all systems go” for opportunistic travelers.
The new rules take effect January 16, 2015, and demonstrate that government has been listening to American public opinion as well as protecting American economic interests in the hemisphere. A number of factors, including release of 53 prisoners held by Cuba, recent investments by China, exploration of investments by Russia and America’s rising number of Cuban Americans have facilitated Obama’s decision to enter a market filled with tourism and economic opportunity.
On December 17, 2015, the President identified 12 distinct types of travelers that would be entitled to enjoy facilitated travel to Cuba, without the cumbersome processing of licensing by travel providers. Yesterday, OFAC not only clarified who can travel freely but also the magnitude of the economic and travel adjustments that American tourists and businesses will now enjoy. For many travelers, the process just got a whole lot easier and we should expect huge increases in cultural and business exchanges. Tour providers will still play a role in American travel but many Americans will be able to plan and fulfill their travel experience independent of organized tours.
The 12 categories of authorized travel outside People-to-People tours are:
- Family visits
Professional research & meetings
“Support for Cuban People” activities
Private foundation research and activities
Import and export activities
Art and athletic activities, clinics, workshops
Other export transactions
For travelers that fall into any of these categories, travel to Cuba is easier and more efficient than ever, including in the era prior to Castro. With new direct flights from Pittsburgh and New York recently approved, and with Jet Blue, United Airlines and Delta Airlines in the wings, can direct flight to Cuban International Airports from major US cities like Chicago and Boston be far off? This would require a treaty between the two countries but Cuba is desperate for American tourists and trade.
14 Major Amendments
Careful not to overstep its Executive Order limitations, the White House was quick to dub the changes “amendments to existing restrictions.” While there remain issues for Secretary of State, John Kerry, regarding Cuba’s status as a terrorist state and bureaucratic approval by Cuba, OFAC identified 14 major areas of change in policy that are in place today.
1. Travel – All the 12 categories listed above and identified by the President on December 17, 2104, are excluded from special licensing and can travel to Cuba under general licenses as would be required anywhere else. Additionally, the current per diem limits are waved and Americans will be permitted to use credit cards, rather than carry cash or use foreign credit cards, while in country.
2. Travel and Carrier Services – Travel agents and airlines will not need and OFAC license to provide authorized travel and services to Cuba.
3. Insurance – Great news for American travelers! US insurance companies can provide health, life and travel insurance to Americans traveling to Cuba.
4. Import policy – Americans are permitted to bring $400 of imports back to the US. $100 of that amount can be allocated to alcohol and tobacco products.
5. Telecommunications – Under a new general license issued by OFAC, new telecommunications facilities will connect Cuba to the outside world and Cubans to Cubans. Under provisions approved by the Commerce Department, communications devices, software and the like can be exported. These provisions also apply to Internet communications.
6. Consumer Communications – Sales and donations of personal computers, mobile phones, televisions, memory devices, recording devices, related software will be permitted under the Commerce Consumer Communications Devices license exception, without licenses.
7. Financial Services – US-based depository institutions will now be permitted to open and maintain accounts at Cuban national financial institutions. This will facilitate credit Card transactions and expedite payments of other commercial transactions.
8. Remittances – With the exception of prohibited Cuban Communist Party officials and certain government officials, remittances to Cuban nationals are increased to $2,000 per quarter. Development of private businesses will generally be authorized without limitation. US travelers will be permitted to carry up to $10,000 in total family remittances.
9. Third-Country Effects – OFAC will “unblock” accounts for Cuban nationals who have relocated outside the country and permit US-controlled entities in third world countries to provide good and services to Cubans residing outside the country.
10. Small Business Growth – Certain financing and training for entrepreneurial and business endeavors, including private agricultural entities, in Cuba will be permitted. Furthermore, the State Department has published a list of approved imports on its website. Of course, Cuba art has long been in demand.
11. Cash in Advance – An important policy change relates to the “cash in advance” stipulation for exports that is now considered “cash before transfer of title to and control of.”
12. Support for Cuban People – Exports and re-exports pertaining to improving living conditions in Cuba and supporting Cuba’s private business sector, strengthening Cuba’s civil society and improving communication infrastructure and equipment are now permitted. Building materials, equipment, tools for construction and agriculture and that can advance private entrepreneurialism will be permitted for export.
13. Gift Parcels – Consolidated gift parcels for individuals will also be eligible for the same license exceptions as commercial parcels.
14. Liberalization of Licensee Application Review – Items that are deemed appropriate for environmental protection will receive the same leniency. This will pertain to products for international waters, air and coastlines.
Obviously, the amendments are expansive and encouraging. The Cuban government will most likely reign in some of the changes but this is a giant step forward for US-Cuba relations and for the Cuban people, housing, agriculture and commerce.