Thawing of US-Cuba Relations: What to Expect Next?

On December 17, 2014, President Obama announced significant changes to U.S. foreign relations with Cuba. As noted in another ILG post by

Margaret Spicer, these changes reflect a new policy at the level of the U.S. Executive (the President). The sanctions imposed by U.S. Congress remain fully in place. In Washington DC’s politically-charged environment, US-Cubans and Republicans in Congress have been vocal about their opposition to any change in US-Cuban policy. Republicans assume control of both the House and the Senate in January, 2015.

So, what are the announced changes and what can we expect to happen next?

US-Cuba diplomatic relations re-established: High-level talks will begin in January, 2015 with the goal of re-establishing full diplomatic relations. President Obama announced plans to re-open a U.S. Embassy in Havana within a few months. Led by US-Cuban-American Senator Marco Rubio, opponents have threatened to block the required Senate confirmation of anyone nominated by President Obama as U.S. Ambassador to Cuba. US Congress also holds the purse strings and will need to fund the new Embassy. We will need to observe how much support these opponents will receive from other leading Republicans in the US Congress. Senator Bob Corker, incoming Chair of the Senate Foreign Relations Committee, has said only that he will be “examining the implications” of the policy change in the new Congress. Senator Orrin Hatch, presumptive new Chair of the Senate Finance Committee has issued a pro forma statement of opposition to the announcement. Representative Paul Ryan, incoming Chair of the House Ways & Means Committee (in charge of budgetary and trade issues in the House of Representatives) had, until 2007, voted to lift the embargo against Cuba. Senator Rand Paul (Rep.-KY) has been openly critical of Senator Rubio’s position. And Republican Senator Jeff Flake who flew to Havana to cement the prisoner exchange accompanying the deal, has been a vocal supporter of lifting the embargo. Flake and Paul both sit on the Senate Foreign Relations Committee. They, and others, will be heavily lobbied by US commercial interests lining up to take advantage of the announced policy and begin trade with Cuba.

In the event of a prolonged battle over funds and the nomination process, it is speculated that President Obama can take the interim step of scaling up the existing US Interests Section in Havana. Similarly, the Cuban Interests Section in Washington, D.C. will presumably be scaled up into an Embassy, headed by an Ambassador.

Increased travel and remittances to and small imports from Cuba: Travel to Cuba will still be restricted under the embargo. However, twelve categories of travelers currently authorized to travel to Cuba will no longer need to apply for permission (specific license) to do so:

  1. Family visits;
  2. Official business of the U.S. government, foreign governments, and certain intergovernmental organizations;
  3. Journalistic activity;
  4. Professional research and professional meetings;
  5. Educational activities;
  6. Religious activities;
  7. Public performances, clinics, workshops, athletic and other competitions, and exhibitions;
  8. Support for the Cuban people;
  9. Humanitarian projects;
  10. Activities of private foundations or research or educational institutes;
  11. Exportation, importation, or transmission of information or information materials; and
  12. Certain export transactions that may be considered for authorization under existing regulations and guidelines.

These travelers to Cuba will also be authorized to import up to $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined.

US persons sending remittances to Cuba will be allowed to send up to US$2,000 per quarter (up from $500) to Cuban nationals (except to certain officials of the government or the Communist party). Furthermore, they will no longer be required to obtain authorization (specific license) to do so.

Regulations: The US Office of Foreign Assets Control (OFAC) which regulates and issues the licenses will need to develop and introduce new regulations to support the use of general licenses which will remove the need to apply for a specific license for the above transactions. The general licenses will also authorize travel service providers and remittance forwarders to provide these services without having to themselves apply for a specific license.

Increased export of US goods and services: Specific agricultural and medicinal US goods can already be exported to Cuba. The new policy authorized the export of US building materials for private residential construction and private sector entrepreneurs, and of agricultural equipment for small farmers.

Regulations: OFAC/the US Department of Commerce will need to develop and introduce new regulations to support this policy change.

Increased banking transactions: US institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate and support the authorized transactions identified above. Traders will be able to use normal methods of payment for international transactions, such as letters of credit. This will remove the need to make cash payments for commercial transactions. Travelers to Cuba will be permitted to use their US credit and debit cards.

Regulations: OFAC/the US Department of Commerce will need to develop and introduce new regulations to support this policy change.

Application of US sanctions to third countries eased:  In an extra-territorial application of its Cuba policy, U.S. law sanctions not only US persons, but also non-US nationals who trade with Cuba. Under the new policy, the following transactions will be permitted without requiring authorization (specific license) from OFAC:

  • U.S.-owned or -controlled entities in third countries providing services to and engaging in financial transactions with Cuban individuals in third countries;
  • Participation by U.S. persons in third-country professional meetings and conferences related to Cuba; and
  • Entry by foreign vessels into the United States after engaging in certain humanitarian trade with Cuba.

Foreign Support for New Policy

The United States is the only country which has maintained this outdated cold war stance against Cuba. On October 29, 2014, the UN General Assembly had voted, (188 to 2) for the consecutive 22nd year, in support of a resolution urging an end to the US blockade of Cuba.

Not surprisingly, then, President Obama’s policy change announcement has received strong and enthusiastic support from US trading partners around the world. They include Canada, which helped to broker the breakthrough, the European Union, and Latin American and Caribbean partners. These countries all have well-established diplomatic and trading relations with Cuba. They also have an interest in seeing that the United States continues along the path toward normalizing relations with this island located 90 miles off its Florida coastline.

US flag (courtesy of wikipedia)

US flag (courtesy of wikipedia)

Cuban flag, courtesy of Wikipedia

Cuban flag, courtesy of Wikipedia

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4 thoughts on “Thawing of US-Cuba Relations: What to Expect Next?

  1. Pingback: Thawing of US-Cuba Relations: What to Expect Next? | Boyd For Congress

  2. Pingback: Thawing of US-Cuba Relations: What to Expect Next?Rich Sexton For Congress | RichSextonForCongress

  3. Pingback: Cuba’s Terror Designation – Major Shift or Symbolic Step? « IntLawGrrls

  4. Pingback: Trade Happenings « IntLawGrrls

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