trade policy

Effective May 23, 2016, the U.S. State Department revised its policy and terminated the embargo that had previously prohibited any exports to and imports of lethal arms and related material from Vietnam. President Obama announced this change in policy during a visit to Hanoi, Vietnam. Under the new policy, U.S. persons and other individuals or business entities subject to the Arms Export Control Act (AECA) may now apply for a license to export lethal defense articles and defense services to Vietnam or temporarily import the same from Vietnam. The Directorate of Defense Trade Controls will then review any license applications on a case-by-case basis.

Shortly before President Obama’s upcoming visit to Cuba, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) have released new rule amendments in order to permit increased travel, financial transactions and trade between the two countries.

These amended rules remove the sponsoring organization requirement from OFAC’s general license allowing “people to people” travel to Cuba. As a result, U.S. persons may now to travel to Cuba much more easily on their own accord under the “people to people” program. However, persons doing so must still must maintain a full-time schedule of meaningful interactive activities, keep appropriate documentation and satisfy other requirements. Travel to or within Cuba for tourism purposes remains prohibited.

As tensions between Cuba and the United States continue to thaw, President Obama made a historic announcement today – the U.S. and Cuba will reopen embassies in each other’s capitals. This could prove a watershed moment in the push to normalize relationships between the two countries. Estimates are that the embassies will open by month end, with Secretary of State John Kerry traveling to Cuba for the official opening. This development echoes White House Press Secretary Josh Earnest’s response to his first ever question taken from a Cuban reporter last May – that the White House hoped the two countries would reopen embassies.

 On June 24, the Senate approved the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, granting President Obama trade promotion authority, or TPA. The passage of this “fast-track” authority enables the President to leverage greater support during the upcoming negotiations for the Trans-Pacific Partnership (TPP) by guaranteeing that the trade agreement to be finalized by the 12-nation pact will be sent to Congress for approval without permitting lawmakers to amend the treaty.

The U.S. Department of State rescinded Cuba’s designation as a State Sponsor of Terrorism today.  While the rescission of Cuba’s designation eliminates a major hurdle in restoring diplomatic ties with Cuba, the U.S. trade embargo against Cuba remains in effect, including its restrictions on investment, trade, and travel with Cuba.  Congress has the sole authority to lift the trade embargo.

Rescission of Cuba’s designation as a State Sponsor of Terrorism, however, will affect companies and individuals the following ways:

While Iran has taken center stage in current foreign policy discussions, Congress and the Administration are keenly aware that Cuba is on deck. Following President Obama’s historic meeting with Cuban President Raúl Castro and his announcement of intent to remove Cuba from the list of states that sponsor terrorism, members of Congress have responded by introducing bills both supporting and opposing the President’s policies, including:

The Miscellaneous Tariff Bill (MTB) process provides importers relief from duties on an item-by-item basis, up to $500,000 annually. On April 16, 2015, Senators Rob Portman (R-OH), Claire McCaskill (D-MO) and Pat Toomey (R-PA) introduced bipartisan legislation proposing to reform the MTB process. Many companies consider the new legislation a much overdue step that assists…

On April 16, several pieces of key legislation were introduced that set the stage for a Bipartisan, Bicameral International Trade Package.  Senators Orrin Hatch (R-UT) and Ron Wyden (D-OR) along with Congressman Paul Ryan (R-WI) introduced long-awaited trade legislation to reauthorize Trade Promotion Authority (TPA) and renew several trade preference and liberalization programs.  TPA expired in 2007 and is necessary for the Obama Administration to move forward and conclude the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership negotiations.

On March 24, 2015, the Office of Foreign Assets Control (OFAC) updated the Specially Designated National (SDN) List by removing 59 companies, individuals, and vessels previously blocked under the Cuban Assets Control Regulations.  The companies removed include those from the United States, Panama, and Cuba.  The SDN List is maintained by OFAC and identifies certain individuals and companies that are owned or controlled by or act on behalf of targeted countries or terrorist groups.  U.S. citizens and permanent residents are generally prohibited from doing business with individuals or companies appearing on the SDN List.

After more than a half-century, the U.S. has finally taken steps toward normalizing its relations with Cuba. In a series of executive actions on December 17, 2014, President Obama announced changes to existing regulations that will ease sanctions against Cuba.

U.S. and Cuban officials will meet on February 27, 2015 at the State Department to continue talks of restoring ties and ending the embargo. Likely sticking points will be the opening of a U.S. Embassy in Havana, Cuba’s continuing appearance on the U.S. list of countries that support and sponsor terrorism, the potential return of Guantanamo Bay to Cuba, and U.S. support for Cuban political dissidents.

The executive actions alone however offer various opportunities for U.S. and Cuban businesses. This is particularly true in industries such as telecommunications and agriculture where technological and scientific advances could lead to improved infrastructure and increased production.