President Trump’s Cuba Policy Changes Have Limited Practical Impact – For Now

President Trump announced just before the weekend that he will reinstate certain travel and commercial restrictions related to Cuba that had been eased under the Obama Administration. While President Trump declared that he was “canceling the last administration’s completely one-sided deal with Cuba,” it does not appear that the announced changes will affect the majority of sanctions easing measures implemented by President Obama. 

The practical impact of the changes announced by President Trump relates to two primary areas: 

• Restricting Certain Individual Travel to Cuba: The authorization currently permitting U.S. persons to travel to Cuba for individual “people-to-people” exchanges, which allows U.S. persons to design their own itineraries and travel to Cuba independently, will be revoked. This subcategory of authorized travel has been a popular method for U.S. persons to visit Cuba since its implementation by President Obama. White House officials have alleged that U.S. travelers are abusing this authorization to circumvent the U.S. ban on tourist travel. U.S. persons still will be permitted to travel to Cuba for “people to people” exchanges, but only as part of an organized group, and significant restrictions and requirements will apply. 

• Restricting Transactions with Cuba Military-Controlled Entities: U.S. companies and other U.S. persons (including authorized travelers to Cuba) will be prohibited from engaging in any transactions that involve the Cuban military, intelligence or security services – most notably including Grupo de Administración Empresarial (GAESA), an entity controlled by the Cuban military that is known to have significant interests in the Cuba tourism and other sectors. The U.S. State Department will be publishing a list of entities with which transactions generally will be prohibited. 

President Trump does have the ability to further roll back changes implemented under the Obama Administration, though he has not indicated an interest in doing so at this time (potentially due to the adverse impact on U.S. businesses that have been engaging in activities with Cuba). It is not known whether the full scope of changes to be implemented will cover additional areas. If President Trump’s announcement is any guide, it appears that a number of areas in which restrictions were eased under President Obama will remain unaffected, including authorizations related to: various types of travel to Cuba; the provision of air and ship services; exports of telecommunications, environmental and other items; and increased remittances to Cuban nationals. For additional information regarding the scope of sanctions that were eased under the Obama Administration, please see our prior OnPoints from January 2016, September 2015 and December 2014. 

Notably, the changes announced by President Trump – and any other changes – will not be effective until implementing regulations have been drafted and adopted by the U.S. Treasury Department (and potentially other agencies). In anticipation of the changes, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Frequently Asked Questions regarding the impact of President Trump’s announcement. 

According to President Trump, U.S. sanctions against Cuba will not be lifted until all political prisoners are freed, freedoms of assembly and expression are respected, all political parties are legalized, and free and internationally supervised elections are scheduled. As the majority of U.S. sanctions against Cuba are statutorily required by the Helms-Burton Act, Cuban Democracy Act and other legislation, Congressional approval would be required to lift the embargo on Cuba or further ease sanctions in any substantive way beyond the measures implemented under the Obama Administration. 

Dechert will continue to provide up to date information regarding the sanctions. We will be pleased to assist with providing assessments regarding current and prospective sanctions risk, and with obtaining government authorizations and licenses where appropriate.