The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recently announced additional rule amendments intended to continue improving relations between the U.S. and Cuba by allowing even greater commerce and humanitarian efforts between the two countries. These new OFAC and BIS rules took effect last week.
- Conduct joint medical research projects with Cuban nationals and engage in additional activities in order to obtain U.S. Food and Drug Administration (FDA) approval for Cuban-origin pharmaceuticals. If persons subject to U.S. jurisdiction are successful in obtaining FDA approval for Cuban-origin pharmaceuticals, the new rules will also allow such persons to market, sell and distribute the pharmaceuticals in the U.S. However, any travel to or within Cuba in connection with these new medical authorizations must comply with OFAC’s existing general license for travel and incidental transactions for professional meetings and professional research in Cuba. Additionally, the Cuban sanctions might require specific BIS export licenses in order to export or re-export goods or technology to Cuba or to import Cuban-origin commodities into the U.S. in connection with the medical research allowed under the new rules.
- Enter into contingent contracts for transactions that would otherwise be prohibited by the Cuban export sanctions, provided that the performance of any such contingent contracts must be made expressly contingent upon receiving prior OFAC authorization or the authorization no longer being required. The contingent contract must also be subject to the approval of any other federal agencies that might impose licensing requirements over the transaction or the removal of such federal agencies’ licensing requirements. Previously, the rules only permitted these type of contingent contracts for transactions that would be potentially eligible for a BIS license, so the new rules significantly expand the scope of permitted contingent contracts.
- Transit cargo through Cuba on aircraft travelling to Cuba provided the aircraft has flown to Cuba for a purpose permitted under the rules and the cargo leaves with the aircraft upon its departure from Cuba, is not removed from the aircraft for use in Cuba or transferred to another aircraft or vessel while in Cuba (as we described here, OFAC, BIS and the U.S. Department of Transportation have now authorized daily flights between the U.S. and Cuba). These amendments are consistent with previous OFAC amendments that authorized similar cargo transit on sea vessels sailing through Cuba.
- Provide grants, scholarships or awards to Cuban nationals relating to scientific research or religious activities (prior to these most recent amendments, the rules only allowed grants, scholarships or awards for educational activities or for certain humanitarian projects).
Anyone subject to U.S. jurisdiction should carefully review the amended rules before traveling to Cuba or doing business with Cuba. Any travel to Cuba must comply with existing OFAC requirements and the rules continue to prohibit tourist travel under all circumstances. Exports or re-exports of goods or services to Cuba by persons subject to U.S. jurisdiction which are not permitted under the rules are subject to significant penalties. Husch Blackwell’s Cuba team will continue to closely monitor trade developments in Cuba. Please contact Linda Tiller, Cortney Morgan, David Agee or Grant Leach with any particular client needs or questions.