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Cuba’s Doors Begin To Open To U.S. Government Contractors

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On December 17, 2014, President Obama announced that the United States would establish diplomatic relations with Cuba and reduce the travel and trade restrictions that have been in place for more than five decades.  Today, the Department of the Treasury’s Office of Foreign Assets and Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) took the first steps toward making that a promise a reality.  OFAC and BIS each issued final rules to implement President Obama’s new Cuba policy.

BIS’s new rule amends the Export Administration Regulations (EAR) (15 C.F.R. Parts 730-774 ) to broaden an existing license exception regarding personal communications devices.  Additionally, the rule establishes a new license exception permitting a set of narrowly-described transactions designed to further civil society in Cuba.

OFAC’s new rule amends the Cuban Assets Control Regulations (CACR) (31 C.F.R. Part 515) to facilitate travel to Cuba for authorized purposes, the provision by travel agents and airlines of authorized travel services and the forwarding by certain entities of authorized remittances.  The rule also raises the limit on remittances to Cuba, allows U.S. financial institutions to open correspondent accounts at Cuban financial institutions and authorizes certain transactions with Cuban nationals outside of Cuba.  Additionally, the rule authorizes transactions that establish mechanisms to provide commercial telecommunications services linking third countries and Cuba in Cuba and allows persons subject to U.S. jurisdiction to provide additional services incident to internet-based communications and related to certain exports and re-exports of communications items.

Although these new rules are a significant step, there are several others that must be taken before U.S. government contractors can fully take advantage of the shift in U.S.-Cuba trade policy.  These steps include revisiting Cuba’s designation as a state sponsor of terrorism and publishing a list of independent Cuban entrepreneurs with whom the new OFAC rules permit trade.  U.S. government contractors interested in pursuing contracting opportunities in Cuba will  therefore need to carefully assess the amendments to the CACR and the EAR to determine the permissible scope of activities and transactions in Cuba and continue to monitor developments regarding the implementation of the President’s policy.