President Obama’s Dec. 17, 2014, announcement that the United States will re-establish diplomatic relations with Cuba after more than 50 years is a paradigm shift that offers some immediate opportunities for the trade community. However, the more meaningful step of removing the longstanding U.S. economic embargo against Cuba will have to be taken by Congress.

Over the past two months, the Obama administration has been busy doing what it can to ease restrictions with respect to Cuba. In particular, the departments of Commerce and the Treasury have amended their regulations as follows.

  • Imports of some goods and services produced by independent Cuban entrepreneurs are allowed
  • Exports of building materials and tools for construction of privately owned buildings, residences, businesses and places of worship, goods for private-sector Cuban entrepreneurs, and agricultural equipment for small farmers are allowed
  • Personal computers, mobile phones, televisions, memory devices, recording devices and consumer software may be exported to Cuba
  • More types of travelers may visit Cuba, including those involved in certain export transactions
  • Each authorized traveler may bring back up to $400 worth of goods, with a limit of $100 worth of alcohol or tobacco
  • U.S. credit and debit cards may be used in Cuba
  • Travel insurance may be issued
  • U.S. banks may operate in Cuba
  • Remittances of up to $2,000 per quarter are allowed
  • Some micro-financing projects will be allowed

However, deputy director of the Office of Foreign Assets Control, John Smith, has pointed out that “most transactions between the United States and Cuba — including most export, import and other activities — remain prohibited.” Smith added that OFAC will continue to enforce these prohibitions using all available tools and that persons traveling to or engaging in transactions involving Cuba will continue to be required to maintain records for five years, thereby allowing OFAC to access information relevant to possible enforcement actions.

In The Spotlight

While President Obama can restore diplomatic relations and make some changes to current federal agency policies, the ability to restore full economic ties with Cuba rests with Congress, and the possibility of such an outcome remains uncertain due to a variety of factors. One is the issue itself, as Cuba policy remains a highly divisive issue.

Many members of Congress, most notably several of Cuban heritage, expressed outrage at the idea of reversing course as long as Raul and Fidel Castro remain involved in running Cuba and believe such a policy shift is tantamount to U.S. approval of policies the U.S. has fought against for more than 50 years.

On the other hand, some lawmakers, including Sen. Jeff Flake, R-Ariz., and presidential hopeful Sen. Rand Paul, R-Ky., support the idea of a new approach and have been vocal about the need to establish relationships that could possibly lead to greater changes within Cuba. A number of bills aimed at facilitating that process, including some that would repeal the trade embargo, have been introduced in both the House and the Senate, including the United States-Cuba Normalization act of 2015 (H.R. 274), the Free Trade with Cuba Act (H.R. 403), the Export Freedom to Cuba Act (H.R. 634), the Promoting American Agricultural and Medical Exports to Cuba Act (H.R. 635), the Cuba Reconciliation Act (H.R. 735), the Freedom to Travel to Cuba Act (S. 299) and the Freedom to Export to Cuba Act (S. 491).

Another factor is the current state of politics in Washington. Democrats suffered substantial losses in both the House and Senate in last November’s elections. Both chambers are now in the hands of Republicans, who are not widely regarded as likely to cooperate with a Democratic president on much of anything. On the other side, many Republicans view the president’s actions on Cuba as a deliberate attempt to divide the Republican majority ahead of the presidential and congressional elections in 2016.

Thus, while the page has been turned, we have not yet come to the end of the chapter. The U.S. and Cuba are continuing to meet to discuss greater diplomatic cooperation and negotiate terms on various irritant issues. It remains to be seen if Congress will acquiesce to the desires of a few members or follow the president’s lead in launching a new phase in U.S. relations with Cuba.

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Nicole Bivens Collinson
About The Author Nicole Bivens Collinson
Nicole Bivens Collinson is a well-known international trade authority in Washington, DC and has over 25 years of experience in government, public affairs and lobbying. She leads Sandler, Travis & Rosenberg’s international trade and government relations practice.




www.strtrade.com


Talkback (1)

  • Guest (WT "Bill" McKibben)

    Permalink

    About time, if we can have relations with China, Burma, Viet Nam etc, etc, we can deal with Cuba

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