A New Latitude:
Charting a Course for Cuba
J. Scott Maberry
Sheppard Mullin Richter & Hampton LLP
smaberry@sheppardmullin.com
Momentum Events Webinar
January 6, 2015
© Sheppard Mullin Richter & Hampton LLP 2014
Topics
 Diplomatic relations
 “State sponsor” designation
 Travel and transactions
– Current status
– Proposed changes
 Steps to lifting sanctions
 Opportunities
 Resources
2
Diplomatic Relations
 1961-77:
 1977-2015:
 2015:
no mission
Interest Section
U.S. Embassy Havana
Photo: Wikipedia Commons
3
“State Sponsor” Designation
 Designated 1982
– Safe haven for ETA and
FARC members
– Harboring U.S. fugitives
 Effect
– Arms embargo
– Strict export controls
– U.S. economic aid ban
Joanne Chesimard
Wikipedia Commons
Joshua Hakken
Wikipedia Commons
4
“State Sponsor” Designation
Process
 Review support for acts of terror 6 months
 Determine if renounced use of terrorism
 Review ratification of anti-terrorism treaties
 Report to Congress (review only; 45 days)
 Recommend to President within 6 months
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Current Status: Business with Cuba
 Comprehensive economic embargo
 All transactions prohibited unless authorized
 Jurisdiction reaches non-U.S. subsidiaries
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Current Status: Business with Cuba
 General licenses
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Certain humanitarian gifts
Mail
Telecommunications services
Protection of IP
 Favorable licensing policy
– medical devices
– Food
– agricultural commodities
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Proposed Changes: Transactions
 New treatment of certain exports
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–
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Certain U.S. correspondent accounts
U.S. credit cards for authorized travel
Communications services, equipment
Communications infrastructure
 Nature of changes not yet announced
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Proposed Changes (Continued)
 General licenses
– non-U.S. subsidiaries of U.S. companies may engage
in certain transactions with Cuban individuals in third
countries
– Unblock accounts at U.S. banks of Cuban nationals
who have relocated outside of Cuba
– U.S. persons may participate in third-country
professional meetings and conferences related to
Cuba
 No measure is effective until regulations
amended
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Current Status: Travel to Cuba
 Travel prohibited unless authorized
 General licenses – strictly construed
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–
–
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–
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family visits
official U.S. government business
journalistic activity
professional research and meetings
full time schedule of educational activities
full time schedule of religious activities
telecom provider
incident to marketing or selling licensed ag/med goods
 Specific licenses: case by case
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–
–
–
–
–
public performances
support for the Cuban people
humanitarian projects
activities of private foundations or institutes
Incident to publishing
certain other
 Tourism travel prohibited
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Proposed Changes: Travel to Cuba
 Travel prohibited unless authorized
 General licenses expanded for 12 categories
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–
–
–
–
–
–
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family visits
official U.S. government business
journalistic activity
professional research and meetings
educational activities
religious activities
public performances
support for the Cuban people
humanitarian projects
activities of private foundations or institutes
Incident to publishing
certain other
 Specific licenses: case by case
 Tourism travel prohibited
11
Proposed Changes: Travel to Cuba
But can I bring back Cigars?
Money
$100
$0
Future
2004
1990
Time
Image: Wikipedia Commons
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Graphic: SMRH
Steps to Lifting Sanctions
 Executive
–
–
–
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Diplomatic relations
Executive Orders
Treasury regulations
Commerce regulations
 Legislative
– Antiterrorism and Effective Death Penalty Act of 1996
– Cuban Liberty and Democratic Solidarity (Libertad)
Act of 1996
– Cuban Democracy Act of 1992
– Sections 5 and 16 of the Trading With the Enemy Act
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Next Steps
 OFAC will amend the Cuban Assets Control
Regulations “in the coming weeks”
 Commerce will amend the Export Administration
Regulations
 No changes take effect until new regulations are
issued
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Next Steps
Congress may be ambivalent
Lithograph: J.L. Magee (1855)
Public Domain
15
What to Expect: OFAC
 “increase travel,
commerce,
communications and
private business
development”
Secretary of Treasury
Jacob Lew
Wikipedia Commons
 “promote positive
change for Cuba’s
citizens”
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Opportunities: Commercial Goods
“Will be authorized for export”
 certain building materials for private residential
construction
 goods for use by private sector Cuban
entrepreneurs,
 agricultural equipment for small farmers
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Opportunities: Financial Services
 U.S. institutions will be permitted to open
correspondent accounts at Cuban financial
institutions to facilitate the processing of
authorized transactions
 The regulatory definition of the statutory term
“cash in advance” will be revised to specify that
it means “cash before transfer of title”; this will
provide more efficient financing of authorized
trade with Cuba
 U.S. credit and debit cards will be permitted for
use by travelers to Cuba
18
Opportunities: Travel / Hospitality
 Travelers in the 12 categories “will be able to
make arrangements through any service
provider that complies with OFAC regulations
governing travel services to Cuba”
 General licenses will authorize provision of
travel services
19
Opportunities: Internet / Telecom
 Providers “will be allowed to establish the
necessary mechanisms” for commercial
telecommunications and internet services
 “Including infrastructure”
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Opportunities: Rule of Law
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U.S. investors want rule of law
Mutual incentives
U.S. policy (e.g. sectoral reforms) will reinforce
See LexisNexis / Atlantic Counsel Rule of Law
Business Principles
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Resources
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President Obama’s December 17, 2014 Speech
LinkedIn: U.S. Cuba Business Forum
GlobalTradeLawBlog.com
Corporate Counsel Summit
Cuba Opportunity Summit
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Upcoming Events
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Join Fellow Business Leaders and Corporate Counsel at two Forthcoming Cuba-Related Events
U.S. - Cuba Corporate Counsel Summit – March 2015, NYC
Legal, Regulatory & Compliance Focus
www.momentumevents.com/cuba-counsel
The Cuba Opportunity Summit: High-Velocity Growth – April 2015, NYC
Business, Strategy and Operations Focus
In Partnership with Knowledge@Wharton
www.knowledge.whartonevents.com/cuba
Register with the code WEBINAR200 for either event before Friday Jan 9th to receive a $200
discount.