New U.S. regulations allow financing of some exports to Cuba

The Obama administration announced new regulations Tuesday designed to further expand commerce with Cuba that include permission to finance licensed exports to the island -- except agricultural products.

The new regulations, which take effect Wednesday when they are published in the Federal Register, build on other sets of U.S. commercial and travel regulations released since the United States and Cuba announced Dec. 17, 2014 that they were working to normalize relations.

The amendments "send a clear message to the world: the United States is committed to empowering and enabling economic advancements for the Cuban people," said Treasury Secretary Jacob J. Lew.

In a conference call, a senior U.S. official said the steps taken by the U.S. government will have a much greater impact and benefit the Cuban people much more if the Cuban government takes steps to match and facilitate them.

While trying to support the Cuban people through expanded commercial activities, a senior U.S. official said that the United States continues to be concerned about Cuba's treatment of dissidents. "We will continue to push them on this issue," the official said.

Perhaps the most significant rule change is one that removes existing restrictions on payment and financing terms for authorized exports and reexports to Cuba. Most aspects of the embargo, however, remain in place.

In disappointing news for agriculture states, which have seen exports to Cuba fall since the rapprochement, the financing of agricultural exports is not included in the new regulations.

That's because such financing is prohibited by the Trade Sanctions Reform and Export Enhancement Act of 2000, said Augusto Maxwell, an international lawyer with Miami's Akerman law firm.

Prior to this rule change, exports to Cuba had to be paid in cash in advance or financing had to be arranged through third countries.

"The Obama Administration's one-sided concessions to Cuba further empower the regime and enable it with an economic windfall. These regulations are more proof that the Obama Administration's intent has never been to empower the Cuban people but rather to empower the Cuban government's monopolies and state-run enterprises," said Sen. Marco Rubio, (R-FL). "Our U.S. policy toward Cuba should be driven by our national security interests, securing greater political freedoms and defending the human rights of the Cuban people, none of which are advanced through Obama's latest concessions."

Regulations that will make it easier to implement a new civil aviation agreement reached between the United States and Cuba in December also were announced. The amendments allow blocked space, code-sharing and leasing arrangements with Cuban airlines.

Crews on such commercial flights also are authorized to temporary stay in Cuba.

The regulations also clarify and allow for expanded travel to Cuba within the 12 categories of travel already authorized for Americans who want to visit the island.

But a senior U.S. official emphasized that "tourism activities remain prohibited by statue."

The new set of regulations follow a trip by Commerce Secretary Penny Pritzker last fall

"Following the first ever U.S.-Cuba Regulatory Dialogue and my fact-finding trip to Cuba in October, we have been working tirelessly to maximize the beneficial impact of U.S. regulatory changes on the Cuban people," Pritker said.

She noted that allowed exports to Cuba will now include those intended to help in disaster preparedness and in support of education and agricultural production, such as pesticides, fertilizers and farm equipment. Exports related to artistic endeavors, food processing and public transportation also will be allowed.

Administration officials noted that U.S. exporters will still have to work through government importing agencies to get these products to the Cuban people, but said that exports that might end up in the hands of the Cuban police, military, or intelligence agencies or enterprises that primarily benefit the Cuban state are still prohibited.

The new rules also change the landscape for performances by U.S. artists in Cuba and those who want to run athletic or other competitions.

Organizers of amateur and semi-professional sports competitions and public performances will no longer need to seek prior approval from Treasury's Office of Foreign Assets Control. A requirement that profits from such events be donated to non-profit groups will be removed.

"That requirement made hosting premiere events on the island difficult. This should promote both performances and competitions in Cuba," Maxwell said.

This story was originally published January 26, 2016 at 1:48 PM with the headline "New U.S. regulations allow financing of some exports to Cuba ."