In January, the U.S. government made a major shift in policy regarding its trade with Cuba. After 54 years of strict trade embargo enforcement, the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security (BIS) issued new rules to implement these revisions to the embargo.
As stated in the respective press releases, the policy changes are intended to engage and empower the Cuban people. This will be done by facilitating authorized travel to Cuba and certain related activities, facilitate the flow of information to, from, and within Cuba, and authorize certain limited activities related to trade with Cuba.
Most important to emphasize in this month’s column is that the U.S. embargo of Cuba remains in effect. There has been no lifting of that law. Most Cuba-related activities continue to be prohibited for those parties and entities that are subject to the jurisdiction of the United States. The revisions to the trade embargo enforcement are limited in nature and scope.
For example, the question that gets asked the most is if yachts can now visit the island. There is no change to the limitation on travel to Cuba for tourism. However, the policy amendments do authorize the following activities, subject to certain conditions:
Travel to Cuba must be authorized within one of the existing categories. These include: travel for family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation or transmission of information or information materials; and certain authorized export transactions.
The change in the embargo rules revised the type of travel license required. Previously, a specific license had to be obtained through application. The above types of travel are now authorized by general license.
Travel agents and airlines are now permitted to provide travel and carrier services without the need for a specific license from OFAC. U.S. insurance companies are permitted to provide travel coverage for authorized travel to Cuba.
Travelers are no longer subject to a per diem rate and there is no specific dollar limit on expenses.
In addition, travelers are now permitted to use U.S. credit and debit cards in Cuba. Visitors may also import up to $400 worth of goods (including up to $100 worth of alcohol or tobacco products) for personal use.
Newly authorized with the trade embargo revisions are allowances for telecommunication. Previously, it was illegal for U.S. entities or those under U.S. jurisdiction to provide commercial telecommunications services in Cuba or linking third countries and Cuba. This will allow visitors to stay in contact off-island.
Banks and financial institutions are now permitted to open correspondent accounts in Cuba to facilitate the processing of monetary transactions. The limits on remittances to Cuba have been raised and the dollar amounts for humanitarian projects, support for the Cuban people, and development of private business in Cuba are now generally permitted.
A clause in the new embargo revisions is the allowance for foreign-flagged vessels to enter the United States after engaging in certain trade with Cuba. This was previously not permitted.
However, it is unclear what types of vessels fall under this allowance. In addition, while the embargo rules have been revised, not all U.S. laws have kept in step. The Trading with the Enemy Act specifically prohibits certain transactions with Cuba. So while certain portions of the enforcement have been eased, the law remains in effect.
What about the response from Cuba? Do the people there favor these changes and expect an influx of yachts? An increase in visits is definitely foreseen. In speaking with several yacht agencies that operate in the Caribbean, they note an increase in construction at several marinas. Most notably, the Ernest Hemingway International Nautical Club near Havana is moving toward modernization and expansion of its facilities.
However, the infrastructure for yacht visits in Cuba remains poor. As reported by the Club’s commodore, there are no shipyards or nautical supply stores. High quality goods or sources for the same are non-existent. If a yacht were to visit Cuba, it would need to be nearly self-sufficient for the entire trip.
Not to be left out of the potential growth, surrounding islands are also preparing for the future growth. The Port Authority of Jamaica is developing plans to expand several marinas on the island, including the famous Errol Flynn Marina in Port Antonio. It anticipates this new cruising area to develop in similar fashion to the popular U.S. and British Virgin Islands region.
In addition, building on its success with its new yacht registry, the Maritime Authority of Jamaica has also developed a Memorandum of Understanding (MOU) with the Cuban government. The contents of the MOU provide yachts flagged with Jamaica to be given preferential treatment in Cuban waters. Similar to the U.S. cruising license, these yachts will, in principle, be allowed to cruise around Cuba without the need for multiple checks.
The port authorities in the Yucatan Peninsula of Mexico are also planning for new growth. Cancun is less than 100 miles from the western tip of Cuba, where several national parks and seashores are established.
We remain in the beginning stages of these changes and more are certainly on the way. Patience will be a necessary commodity as the revised bureaucracies are implemented and we discover the “new” island of Cuba.