U.S. Department of State Releases List of Cuban Goods and Services Now Eligible for Importation

February 25, 2015

As previously reported in our January 20, 2015 Client Alert, "U.S. Department of the Treasury and Department of Commerce Issue Rules Implementing Changes in U.S. Policy on Cuba," on January 15, 2015 the Office of Foreign Assets Control ("OFAC") at the United States Department of the Treasury released regulatory amendments to the Cuban Assets Control Regulations ("CACR"), 31 C.F.R. Part 515, helping to implement the historic changes to the Cuba sanctions regime that were announced by President Obama on December 17, 2014.[1]

These amendments addressed a wide range of economic activity, including, inter alia, travel to and from Cuba, personal remittances and certain other financial transactions, exports and imports, and access of Cubans to various Internet-based and telecommunications services.  The amendments primarily authorize by general license such activities which previously required case-by-case review and authorization from OFAC.  One of these amendments included a newly-added provision to the CACR, § 515.582, which opened the doors for the importation of certain Cuban goods and services by persons previously prohibited from doing so under the CACR. 

Specifically, § 515.582 provides that "[p]ersons subject to U.S. jurisdiction are authorized to engage in all transactions, including payments, necessary to import certain goods and services produced by independent Cuban entrepreneurs as determined by the State Department as set forth on the State Department’s Section 515.582 List, located at http://www.state.gov/e/eb/tfs/spi/."  At the time of the publication of OFAC’s amendments to the CACR, the State Department had not yet released the Section 515.582 List of authorized goods and services, leaving this amendment temporarily without any functional applicability. 

On February 13, 2015, the State Department published the Section 515.582 List and provided additional guidance on the contours of this new authorization.[2]

The Section 515.582 List

Referencing the Harmonized Tariff Schedule ("HTS") of the United States, the State Department set forth a negative list of specific categories of goods that are not authorized for importation.  Any goods that fall under one of the following enumerated categories are still prohibited for importation.  However, any goods produced by independent Cuban entrepreneurs that do not fall under one of the following enumerated categories are now eligible for importation:

• Section I: Live Animals; Animal Products

• All chapters
• Section II: Vegetable Products
  • All chapters
• Section III: Animal or Vegetable Fats and Oils and their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes
  • All chapters
• Section IV: Prepared Foodstuffs; Beverages, Spirits, and Vinegar; Tobacco and Manufactured Tobacco Substitutes
  • All chapters
• Section V: Mineral Products
  • All chapters
• Section VI: Products of the Chemical or Allied Industries
  • Chapters 28-32; 35-36, 38
• Section XI: Textile and Textile Articles
  • Chapters 51-52
• Section XV: Base Metals and Articles of Base Metal
  • Chapters 72-81
• Section XVI: Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles
  • All chapters
• Section XVII: Vehicles, Aircraft, Vessels, and Associated Transportation Equipment
  • All chapters
• Section XIX: Arms and Ammunition; Parts and Accessories Thereof
  • All chapters[3]

The State Department noted that the $400 monetary limit set forth in § 515.560(c)(3) of the CACR for travelers bringing back goods from Cuba as accompanied baggage would not apply for any goods now authorized for import under § 515.582.

In addition to transactions related to the importation of goods, § 515.582 also authorizes all transactions necessary for the importation of any service supplied by independent Cuban entrepreneurs.

Independent Cuban Entrepreneurs

An important limitation on the authorization granted by § 515.582 is that any allowable goods or services must be produced or supplied by "independent Cuban entrepreneurs," and importers must obtain documentary evidence that demonstrates this status.[4]  The term "independent Cuban entrepreneurs" is not yet defined by the State Department or in the CACR, although the State Department provided some limited guidance for what type of documentary evidence might be sufficient, including "a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled in whole or in part by the Cuban government."[5]

Interestingly, the wording of § 515.582 appears to attach this requirement to the goods or services being imported, and not necessarily to the person exporting the goods and services.  In the case of goods, it is an open question as to what extent § 515.582 authorizes transactions related to the importation of goods from a third party provided that the goods were originally produced by an independent Cuban entrepreneur. 

Authorized Importers – "Persons Subject to U.S. Jurisdiction"

Section 515.582 authorizes all "persons subject to U.S. jurisdiction" to import the allowable Cuban goods and services.  Under the CACR, this term is defined to include:

(a) Any individual, wherever located, who is a citizen or resident of the United States;

(b) Any person within the United States [];

(c) Any corporation, partnership, association, or other organization organized under the laws of the United States or of any State, territory, possession, or district of the United States; and

(d) Any corporation, partnership, association, or other organization, wherever organized or doing business, that is owned or controlled by persons specified in paragraphs (a) or (c) [above].[6]

This definition is notable in that, unlike many other sanctions programs administered by OFAC, the Cuba sanctions have been applied to cover foreign subsidiaries of U.S. companies (paragraph (d) above) in addition to the more traditional coverage of U.S. sanctions which apply only to "U.S. persons," a term generally defined only to include paragraphs (a)-(c) above.[7]  Thus § 515.582 is careful to note that it eases the import restrictions on the broader base of entities generally restricted under the CACR.

   [1]   Client Alert, Gibson, Dunn & Crutcher LLP, U.S. Department of the Treasury and Department of Commerce Issue Rules Implementing Changes in U.S. Policy on Cuba (Jan. 20, 2015), http://www.gibsondunn.com/publications/Pages/US-Dept-of-Treasury-and-Dept-of-Commerce-Issue-Rules-Implementing-Changes-in-US-Policy-on-Cuba.aspx; see also Client Alert, Gibson, Dunn & Crutcher LLP, U.S. Government Takes First Step Toward Normalizing Relations with Cuba; Restores Diplomatic Ties and Eases Trade Sanctions (Dec. 18, 2014), http://www.gibsondunn.com/publications/pages/US-Government-Takes-First-Step-Toward-Normalizing-Relations-with-Cuba.aspx.

   [2]   See U.S. Dep’t of State, Fact Sheet U.S. Department of State Section 515.582 List (Feb. 13, 2015), available at http://www.state.gov/e/eb/tfs/spi/cuba/515582/237473.htm.

   [3]   U.S. Dep’t of State, The State Department’s Section 515.582 List (Feb. 13, 2015), available at http://www.state.gov/e/eb/tfs/spi/cuba/515582/237471.htm?utm_source=15-0219+Thursday&utm_campaign=15-0210+Daily+Bugle&utm_medium=email.

   [4]   See U.S. Dep’t of State Fact Sheet, supra note 2.

   [5]   Id.

   [6]   31 C.F.R. § 515.329.

   [7]   See, e.g., definition of "U.S. Person" in the Syrian Sanctions Regulations, 31 C.F.R. § 542.319.