White House To Ease Cuba Embargo: Historic Announcement May Open New Opportunities For U.S. And Multinational Corporations

On December 17, 2014, President Obama announced steps to ease the 54-year old embargo on Cuba and begin to restore diplomatic relations. Although the full extent of easing has yet to be determined, this historic policy shift may open new opportunities for U.S. and multinational corporations. With several different laws governing the Cuba embargo, however, companies will need to carefully monitor developments within the Administration and Congress to determine the actual scope of authorized activities.

Presidential action will proceed on two fronts. In the coming weeks, the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") will revise the Cuban Assets Control Regulations ("CACR") () while the Commerce Department will revise the Export Administration Regulations ("EAR"), which governs the export of most U.S.-origin goods. In addition to these amendments, the proposed changes will also occur through new general licenses issued under the CACR and EAR. At this juncture we anticipate changes in five key areas:

Banking & Financial Services. The amended CACR will facilitate travel between Cuba and the United States by permitting the use in Cuba of U.S. credit and debit cards. U.S. banks also will be able to open correspondent accounts at Cuban financial institutions. Following the model used for the easing of financial sanctions on Burma, OFAC will likely issue interim general licenses under the CACR while diplomatic negotiations with Cuba proceed. Travel & Tourism. OFAC will issue new general licenses under the CACR built on existing authorizations for cultural, educational, and humanitarian exchanges, and other specified types of travel in Cuba. Notable examples include family visits, professional research and professional meetings, and travel related to the import or export of authorized goods and services. The result will be twelve distinct licenses authorizing Cuba travel and certain related transactions. Exports & Imports. Pending amendments to the CACR and EAR will facilitate direct trade in carefully delimited areas, such as for exports of building materials for private residences and agricultural equipment for Cuban farmers. The proposed changes will also allow companies that currently export agricultural and medical products to Cuba to conduct transactions directly through U.S. financial institutions rather than third-party foreign banks. Technology & Telecommunications. A combination of general licenses and amendments...