Making sense of the new regulations on travel and business with Cuba

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Under new regulations, U.S. citizens are barred from doing business with the recently refurbished Mariel Container Terminal and other entities linked to Cuba’s military, intelligence and security services. Photo by Jon Braeley.

Now that the Trump administration has implemented its long-awaited regulations on travel and business with Cuba, U.S. companies and travelers have more clarity on how to advance – or scrap – their plans for the island.

The Trump administration says the new sanctions prevent U.S. businesses and travelers from disproportionately benefitting Cuba’s military, intelligence and security forces at the expense of the island’s burgeoning private sector. They essentially have two core components.

First, U.S. citizens are prohibited from conducting direct financial transactions with 180 entities linked to Cuba’s military, intelligence and security services. The entities include hotels, tourism groups, marinas, beverage brands, stores, as well as the port and special economic development zone in Mariel. Airlines, cruise lines and other U.S. companies that were already operating in Cuba before the new sanctions were implemented won’t be interrupted, the Treasury Department said.

Second, U.S. citizens are no longer allowed to visit Cuba on individual “people-to-people” non-academic educational exchange programs, which allowed travelers to set their own itinerary of activities. Leisure travelers must now visit the island with organized tour groups that have their own representative accompanying the trip.

“We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people,” Treasury Secretary Steve Mnuchin said in a statement.

The new rules undoubtedly create more obstacles for businesses and travelers. But renewed clarity on Cuba is appreciated by many, especially those who have tracked Donald Trump since he first promised to “reverse” the Obama administration’s “one-sided” deal more than a year ago as a presidential candidate.

“The new rules are a welcome development because they remove the uncertainty and afford predictability for businesses, and they allow for robust transactions to continue on the island,” said Pedro Freyre, the international practice chair at Akerman, a law firm whose clients include U.S. companies operating in Cuba.

Now that there is a path forward, U.S. businesses and travelers are eager to learn what activities are still legal in Cuba, as well as how the Trump administration will enforce the new sanctions.

A Royal Caribbean cruise ship enters Havana Harbor. U.S. cruises to Cuba are still authorized under the new regulations. Photo by Royal Caribbean International.

What’s still allowed

Despite his insistence, Trump did not “cancel the last administration’s completely one-sided deal with Cuba,” as he vowed to do in Miami on June 16. Besides the restrictions on individual “people-to-people” travel and conducting business with military-linked entities, most of the Obama administration’s policy remains intact.

On travel, the 12 categories for authorized visits to Cuba are mostly unchanged, though the “educational activities” category now requires U.S. citizens to use a tour group that has its own representative accompanying the trip. The Obama administration only authorized self-directed leisure travel in March 2016, so the new travel regulations mostly resemble what was allowed before then.

The Treasury Department also clarified what constitutes travel under the “support for the Cuban people” category. Travelers who use that category are encouraged to stay at private bed-and-breakfasts (casas particulares) and eat at private restaurants (paladares) while participating in a compulsory schedule of activities that “enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.”

Augusto Maxwell, the chair of Akerman’s Cuba practice, said the clarification allows “support for the Cuban people” to become the de facto category for self-directed travel. U.S. visitors will just need to spend their money at private businesses. However, the category hasn’t been strongly defined so travelers are encouraged to keep detailed records of their “meaningful” activities.

“So these self-directed travelers will no longer go on ‘people-to-people’ trips, but they will now go on ‘support for the Cuban people’ trips,’” Maxwell said. “I think over the next two or three months we are going to re-educate the public that you can still go to Cuba, and you just have to go and support the Cuban people.”

People who booked at least part of their Cuba travel before Trump’s June 16 policy directive announcement are also still allowed to take their planned trips, the Treasury Department said.

The prohibition on conducting transactions with the State Department’s list of 180 military-linked entities is more complicated, partly because of its various exemptions.

“Consistent with the Administration’s interest in avoiding negative impacts on American businesses and travelers, commercial engagements in place prior to the State Department’s listing of any entity or subentity will continue to be authorized,” the Treasury Department said.

U.S. cruises and commercial flights will continue, as well as “other types of contractual arrangements agreed to prior to the issuance of the new regulations.” That means U.S. agriculture exports to Cuba are still allowed despite the Mariel Container Terminal appearing on the list of prohibited entities. Unlimited remittances to Cubans who aren’t “prohibited officials of the Government of Cuba” will also continue in spite of FINCIMEX, the entity that handles cash transfer services such as Western Union, appearing on the State Department list.

Marriott International’s Starwood subsidiary is also still allowed to manage the Four Points by Sheraton in Havana – a property owned by the Cuban military’s Gaviota tourism group. U.S. customers can even continue staying at the hotel since it’s not included in the State Department list. Several Gaviota hotels managed by European hospitality companies weren’t as lucky.

“I think it would have been odd for the State Department to come out with a list that said Americans cannot stay at the only hotel managed by a U.S. company,” Maxwell said. “I think the clear message though, was that there will be no more of those. So Gaviota, which is a military-owned entity, is shut down for U.S. businesses.”

The various exemptions and the Treasury Department’s delayed rollout of the new sanctions allowed several U.S. companies to secure operational deals with Cuba at the buzzer. Rimco, Caterpillar’s dealer for Puerto Rico and the eastern Caribbean, earned approval on Nov. 1 to set up a dealer facility in the Mariel Special Economic Development Zone – one of the banned entities. John Deere also secured a deal to ship tractors to Cuba in November.

A traveler examines a shop in the recently refurbished Manzana de Gomez shopping center in Old Havana, which is off-limits to U.S. citizens. Photo by Jon Braeley.


It’s not clear how the Trump administration intends to enforce the new sanctions. The Departments of Treasury and State didn’t announce any new entry-exit requirements for U.S. travelers visiting Cuba. They also didn’t state whether any more staff members will be tasked with enforcing the new regulations.

The ban on U.S. businesses conducting transactions with entities on the State Department list is fairly straightforward. So is the distinction on which hotels are banned. But making sure private U.S. citizens don’t give money to any of the military-linked entities may be more difficult, especially since the State Department’s list includes entities such as soft drink manufacturers, rum producers, and retail stores.

“Certainly, trying to enforce the prohibition on doing business with a retail outlet in Old Havana is almost impossible,” said William LeoGrande, an American University professor and co-author of Back Channel to Cuba: The Hidden History of Negotiations Between Washington and Havana

LeoGrande said he expects travel agencies to handle some enforcement since they will be responsible for booking accommodations and scheduling activities. “The regulations actually say that if you go with a licensed travel provider, the expectation is that the travel provider keeps the records to assure you are obeying the regulations,” LeoGrande said.

Maxwell, for his part, characterized the enforcement of the new regulations as an “honor system.” He said U.S. authorities charged with enforcing sanctions are already busy with more pressing enemies such as ISIS.

Still, he said Americans who visit Cuba should keep records of their trip for more than five years. “You are subject to an audit for five years,” he warned.

Cuba regulations Jon Braeley

Tour groups gather in Old Havana’s Plaza Vieja. Photo by Jon Braeley.

Closing the book

The rollout of the new regulations happened against the backdrop of the unexplained injuries suffered by at least two dozen U.S. embassy workers and family members stationed in Havana. The sanctions could certainly weaken already fractured U.S.-Cuba relations. The State Department has labeled the bizarre incidents “attacks.” It retaliated by withdrawing most of its Havana embassy staff, expelling Cuban diplomats in Washington, and issuing a travel warning for the island.

Cuba has repeatedly denied involvement in an alleged sonic weapon attack. More recently, high-ranking Cuban officials have accused the U.S. of withholding information on the investigation and suggested the “attacks” didn’t happen.

LeoGrande says the Trump administration’s next action toward the island may be determined by what investigators learn about the mysterious events.

“It’s possible that could escalate to a point where the administration might put in place a second set of sanctions,” LeoGrande said. “But at least for the time being, the administration has wrapped up its Cuba policy, and I don’t expect them to revisit it anytime soon.”

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  1. Daily Briefing - December 6, 2017 - Cuba Trade Magazine - December 6, 2017

    […] Making sense of the new Cuba regulations: The new Cuba sanctions undoubtedly create more obstacles for U.S. travelers and businesses seeking to explore the island. But renewed clarity on Cuba is appreciated by many, especially those who have tracked Donald Trump since he first promised to reverse the Obama administration’s “one-sided” deal more than a year ago as a presidential candidate. Cuba Trade breaks down what’s still allowed under the new regulations and how the Trump administration expects to enforce the new rules. (Cuba Trade) […]