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Insight: Cuba Sanctions

Cuba: US sanctions

Member Advisory

Applicability: Shipowners and Charterers

The nature of the relationship between Cuba and the US dates back to the some of the most intense periods of the cold war era. A recent thaw in relations has led to some changes and further raised the prospect of a possible further liberalisation of existing sanctions, but members are well advised to consider the full picture before deciding to develop their trade in this direction.

The Association is grateful to Messrs. Freehill, Hogan & Mahar LLP for assisting with this update.

The development

The Office of Foreign Assets Control, of the US Treasury Department, has under 31 CFR 515, amended the Cuban Assets Control Regulations following Presidential action in December 2014.

These changes include the following:

  1. facilitation of travel to Cuba for authorised purposes
  2. facilitation of travel services
  3. authorisation of certain remittances
  4. interaction by US financial institutions with Cuban financial institutions
  5. liberalise certain activities with regards to telecommunications
  6. liberalise certain export activities

The note to the Final Rule of 31 CFR 515 is republished alongside this bulletin.

OFAC and US Bureau of Industry and Security announced further changes in their Cuba embargo regulations effective 21 September 2015. For the summary of these changes please see Freehill, Hogan & Mahar Client Alert dated 23 September 2015 published on this page.

Furthermore the Association is grateful to Freehill, Hogan & Mahar LLP for permission to republish their Client Alert on these developments.

US sanctions on Cuba

The US has had, for over 50 years, a number of restrictions in place that mainly affected the interaction between the US and Cuba including significant travel and other economic restrictions. While some of these are being liberalised, many are still in place.

The US had previously imposed a boycott of Cuba that affected third parties, too, and specifically the shipping industry.

On 14 October 2016 the US amended the Cuban Asset Control Regulations to ease the 180 Day Rule prohibiting vessels from calling at US ports for 180 days after leaving a Cuban port. If a foreign vessel calls at Cuba with cargo from a third country which would not be subject to the US Export Administration Regulations or Commercial Control List for anti-terrorism reasons, that vessel is not prohibited from thereafter calling at a US port. See Client update of 19 October 2016 for more information.

On 6 January 2017 OFAC has further clarified exemption to the 180-day rule in its FAQs, see Nos. 86-90.

Vessel is now exempt from the 180-day rule if, for example it is:

  • Engaging or has engaged in trade with Cuba authorized under the CACR, such as a vessel carrying goods from the United States that are licensed or otherwise authorized for export or reexport to Cuba by the US Department of Commerce pursuant to the EAR;
  • Engaging or has engaged in trade with Cuba that is exempt from the prohibitions of the CACR, such as a vessel carrying exclusively informational materials;
  • Engaging or has engaged in the export or reexport from a third country to Cuba of agricultural commodities, medicine, or medical devices that, were they subject to the EAR, would be designated as EAR99;
  • Carrying or has carried persons between the United States and Cuba or within Cuba pursuant to the general license for the provision of carrier services under the CACR or, in the case of a vessel used solely for personal travel (and not transporting passengers), pursuant to a license or other authorization issued by the Department of Commerce for the exportation or reexportation of the vessel to Cuba; or
  • A foreign vessel that has entered a port or place in Cuba while carrying students, faculty, and staff that are authorized to travel to Cuba pursuant to the general license for educational activities under the CACR.

Vessels carrying Cuban goods or passengers may not enter a US port, unless also expressly authorised to do so.

Risk management advice

Until there is a substantive legislative change, members need to continue proceed on the basis that a call to Cuba may have consequences with respect to future calls to US ports.

On a lighter note, it seems that it is now possible to enjoy Cuban cigars again, for those United States citizens that can comply with the present travel regulation regime (which still limits travel significantly).

Should members have a vessel specific enquiry they are asked to contact their usual Skuld business unit.

Disclaimer

The above article has been produced by or in co-operation with correspondents or other external sources and is reproduced here with their kind permission for general information purposes only. Reference is made to the Legal disclaimer governing use of this website.