US to reinstate certain actions against Cuba

On June 16, 2017, President Trump announced a policy framework for the re-imposition of certain US sanctions with respect to Cuba. In particular, the United States' new policy will restore certain restrictions with respect to American investments in the Cuban private sector and the ability to travel outside of pre-arranged groups for American visitors to Cuba. While many of the details will become apparent only as regulations are promulgated implementing President Trump's new policy, the announcement suggests that the Administration will execute only a partial shift from the previous Administration's loosening of Cuba sanctions.

While limited, the expected changes would nonetheless be significant:

• The return of sanctions which will prohibit "direct transactions" with the Cuban military monopoly, the Grupo de Administración Empresarial ("GPAES"), including most travel-related transactions, while allowing American individuals and entities to develop economic ties to the private, small business sector in Cuba.
• The return of restrictions on individual people-to-people travel by US persons. Travelers relying on the educational activities license will need to travel with a tour group that will ensure that they maintain a full-time schedule of educational exchange activities.

The limitation of prohibited dealings with GPAES to "direct transactions" will likely mean that the revised regulations will permit US businesses to sell their goods and services into Cuba to the extent currently authorized, so long as they are not contracting with or selling to GPAES.

Many other aspects of the previous Administration's Cuba sanctions policy are expected to remain intact, such as the ability to send remittances to family members in Cuba and the maintenance of diplomatic relations between the newly opened embassies in Havana and Washington, D.C.

The policy memorandum directs the Treasury and Commerce Departments to begin the process of issuing new regulations within 30 days. The policy changes will not take effect until those Departments have finalized their new regulations, a process that may take several months. OFAC will implement the Treasury-specific changes via amendments to the Cuban Assets Control Regulations. The Department of Commerce will implement any necessary changes via amendments to its Export Administration Regulations.

As questions remain about the new Administration's approach to Cuba, these issues merit continued attention. Herbert Smith Freehills' New York office continues to monitor developments in this area and will continue to release alerts as the policies are formalized.