In recent months, the U.S. media has been full of images of President Obama’s visit to Cuba and statements about the Administration’s desire to radically change relations between the mainland and this island.
Despite some recent loosening of rules, there are still many legal and practical factors restraining commercial relations. As reported by The New York Times, President Obama said “I know the history, but I refuse to be trapped by it.” As of June 2016, the Cuba embargo is still in effect.
Accordingly, most transactions with the U.S. are still prohibited. However, recent regulatory changes by the Bureau of Industry and Security (“BIS”) and Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) have, among other items: loosened travel restrictions between the U.S. and Cuba; expanded Cubans’ access to U.S. financial institutions; and authorized exports of certain items to persons authorized by the Department of the Treasury to establish and maintain a business presence in Cuba. U.S. exporters, however, are still cautioned to carefully review whether their cargo is authorized for delivery to Cuba under U.S. export controls. In addition, the BIS has amended its regulations “to add a general policy of approval for certain exports and re-exports previously subject to case-by-case review and a policy of case-by-case review for exports and re-exports of items not eligible for license exception to meet the needs of the Cuban people.”
Items which are eligible for possible approval include telecommunications items, certain goods and software for human rights organizations, as well as some agricultural items, medicines and medical devices.
But the fact remains that there is still an overall embargo in place. There may be opportunities to do business in Cuba, but the rules are subject to change at any moment; and, depending upon the political climate in the U.S., it is very possible that reforms will stall. Before making significant investment, you must do your research. Also, the Cuban consumer market is not strong, and any transactions are likely to be heavily scrutinized by the authorities.