BIS Issues New Restrictions On Exports And Re-Exports To Cuba

On October 21, 2019, the Department of Commerce's Bureau of Industry and Security (BIS) issued amendments to the Export Administration Regulations (EAR) to further restrict certain exports and re-exports to Cuba. These new amendments change BIS' licensing policy on exports and re-exports related to aircraft and vessels; lower the de minimis threshold at which foreign-made items being re-exported to Cuba are subject to BIS controls; impose new restrictions on an existing license exception for the export and re-export of donated items and items for telecommunications infrastructure; and remove an exception for free promotional items. These additional restrictions further implement the Trump administration's "maximum pressure" campaign with regard to Cuba for what the administration deems to be the country's problematic behavior in Venezuela and internal human rights abuses. The changes purport to target the Cuban government and Communist Party, as opposed to the Cuban people.

As related to the aviation sector, the amendments establish a policy of denial for license applications for leases of aircraft to Cuban state-owned airlines. The amendment replaces BIS' current general policy of approval for such licenses. Going forward, BIS will revoke all licenses previously granted for such leases within seven days of the rule's publication (i.e., seven days from October 21, 2019). Additionally, aircraft leased to or chartered by Cuban nationals or state sponsors of terrorism will be ineligible for License Exception Aircraft, Vessels and Spacecraft (AVS), which authorizes the export and re-export to Cuba of aircraft under certain circumstances. License applications for the export or re-export of aircraft or vessels leased to or chartered by, or on the behalf of, the Cuban government, including state-owned airlines or other enterprises, will be subject to a policy of denial, while applications for leasing and/or chartering aircraft or vessels to nationals of Cuba will considered pursuant to 15 C.F.R. § 746.2(b), under which BIS could review such applications on a case-by-case basis.

The amendment will also lower the amount of US-origin content that foreign-made items may incorporate without being subject to US export jurisdiction when being re-exported to Cuba, pursuant to the EAR's de minimis rule. The Obama administration had increased the de minimis threshold for Cuba from 10 percent to 25 percent as part of its effort to ease trade restrictions...