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Treasury eases restrictions on travel to Cuba Treasury eases restrictions on travel to Cuba
(about 7 hours later)
Americans will be allowed to travel to Cuba for individual “people-to-people” exchanges under new regulations announced Tuesday by the Treasury Department ahead of President Obama’s trip to the island this weekend. New rules loosening the U.S. embargo against Cuba will allow more Americans to travel there, expand the island’s access to the U.S. financial system, and permit Cuban athletes to play Major League Baseball in this country without having to defect.
Those previously wanting to visit Cuba were required to travel under a general license issued to organizations sponsoring authorized trips. Although visits purely for tourism remain prohibited, the new regulations shift the responsibility for legal trips to individuals who declare they will engage in “educational” purposes. They follow the signing of a new U.S.-Cuba commercial airlines agreement that is expected to bring the first U.S. flights to Cuba later this year. The regulations, announced Tuesday just days ahead of President Obama’s historic visit to Cuba, are the fifth and potentially most significant round of changes since Obama and Cuban President Raul Castro announced in December 2014 that the two countries would normalize relations. Diplomatic ties were re-established last summer after more than a half-century of estrangement.
[Obama to visit Cuba, just eight months after embassy reopens in Havana] Ben Rhodes, White House deputy national security adviser, cited “strong support” in this country for Obama’s use of his executive powers to dismantle as many financial and travel restrictions as possible until Congress agrees to lift the embargo. “We also know that our companies and our people are very interested in taking advantage of new opportunities to engage with and empower the Cuban people.”
The new regulations add to earlier rounds that have expanded travel and commerce since Obama and Cuban President Raúl Castro announced 15 months ago that they would normalize relations after more than half a century of estrangement. Diplomatic ties were reestablished in July. [With Obama’s visit, Cubans hope for home run in baseball diplomacy]
“Today’s amendments build upon President Obama’s historic actions to improve our country’s relationship with Cuba and its people,” Commerce Secretary Penny Pritzker said in a statement. “These steps not only expand opportunities for economic engagement between the Cuban people and the American business community, but will also improve the lives of millions of Cuba’s citizens.” Obama’s goal is to lock in the changed relationship before he leaves office, creating economic, diplomatic and cultural ties that will be difficult for a new administration to undo. Republican presidential candidates Sen. Ted Cruz (Tex.) and Sen. Marco Rubio (Fla.), both the sons of Cuban immigrants, have vowed to roll back the opening.
The new regulations also allow Cuban citizens not seeking to immigrate to this country to earn salaries in the United States, a move that essentially permits performers and other temporary visitors to be paid here in dollars. They also expand access to the U.S. financial system, allowing increased dollar transactions for Cuban businesses. GOP frontrunner Donald Trump has said, without elaborating, that he would get “a better deal with Cuba than Obama.” Republican leaders in Congress have refused to allow votes on a number of pending bills to lift the embargo and all remaining travel restrictions.
On the Democratic side, both Hillary Clinton and Sen. Bernie Sanders (Vt.) support Obama’s policy.
Obama arrives in Havana Sunday evening on the first visit by a U.S. president to Cuba in almost 90 years, and the first state visit ever. During his two-day stay, he will meet with Castro and with Cuban “civil society,” including political dissidents, and hold a roundtable with Cuban private sector entrepreneurs and U.S. business leaders, dozens of whom will travel there with him under the auspices of the U.S. Chamber of Commerce.
On Tuesday, Obama will attend a baseball game between the Cuban national team and the Tampa Bay Rays before leaving for a visit to Argentina.
Critics charge that the Castro government has done little to reciprocate U.S. gestures. While the number of political protests has been steadily rising, so has the government’s efforts to stop them. More than a thousand demonstrators have been detained each month since the beginning of the year, most of them held for several hours and some physically assaulted.
[White House sees Cuba visit as chance to consolidate gains. Critics see caving.][White House sees Cuba visit as chance to consolidate gains. Critics see caving.]
A delegation of up to 30 senior business executives will accompany Obama on his trip to Cuba, the first by a U.S. president in almost 90 years, and the first state visit ever. The administration argues that the more opportunities it has to talk to the Cuban government, the more it can push its concerns. “Even as we pursue this opening between our people, between our governments, we will continue of course to have differences with Cuba on a number of issues, including human rights, which we will be pursuing directly,” Rhodes said.
He will leave late Sunday for a two-day visit that will include a meeting with Castro and with Cuban “civil society,” a roundtable with U.S. business leaders and Cuban entrepreneurs, and attendance at a baseball game between the Cuban national team and the Tampa Bay Rays. Obama will then travel to Argentina before returning to Washington late next week. On an economic level, Obama’s efforts to chip away at the embargo have so far left U.S. businesses disappointed at the slow pace of Cuban deal-making. There has been some progress, including an aviation agreement that is likely to result in commercial U.S.-Cuba flights by late summer.
Two U.S. companies — Alabama-based Cleber tractors and Florida Produce — have been approved by the Treasury Department to open plants in Cuba, although only Cleber has been approved by the Cuban government.
But overall, despite visits by dozens of U.S. official and business delegations over the past year, the Cubans have been concerned about the cost of doing business with U.S. companies, and remain suspicious of U.S. intentions.
Cuba, with a 2014 gross domestic product of $81 billion in 2014 and imports of only $14 billion in goods and services, “desperately needs massive flows of foreign investment,” said Richard E. Feinberg, a University of California professor who has written extensively on the Cuban economy. While a “modest” market for U.S. exports in the best of circumstances, an expanding Cuban economy “could make a real difference for many individual U.S. businesses,” he said.
Carlos Gutierrez, former U.S. Commerce Secretary and chair of the Chamber’s U.S.-Cuba Business Council, acknowledged the difficulties of doing business, saying that “it’s not easy to get to Cuba. You’ve got to get a visa, you’ve got to get the right people in the room, then at least go back a couple of times to fine tune the deal. It does take time.”
“But what I hear from companies is that when Cuba is fully open, we don’t want to be number three or number four” behind foreign competitors. “Companies want to be the first in,” Gutierrez said.
Many of the new rules announced Tuesday were promulgated in direct response to concerns expressed by U.S. business and the Cuban government, administration officials said.
Americans will now be allowed to travel to Cuba for individual “people-to-people” visits. Previously, they were required to travel with organizations granted Treasury Department licenses in 12 approved categories, including education, religion and culture. Although travel purely for tourism remains prohibited, the new regulations shift the responsibility for legal trips to individuals who declare they will engage in “educational” purposes.
[Americans can now plan their own pepole-to-people trips to Cuba, but what does that mean?]
Treasury retains the right to question travelers and demand documentation for up to five years after a trip, but in reality has rarely done so. “It’s basically the honor system on steroids,” John Kavulich, head of the U.S.-Cuba Trade and Economic Council, said of the new regulations. The change was partly driven, he said, by the need to “fill those planes” on the commercial airlines that will now fly into Cuba.
Non-immigrant Cubans can now be paid for work they do in the United States “without forcing them to defect,” according to Andrea Gacki, Acting Deputy Director of Treasury’s Office of Foreign Assets Control. While not directed to any particular profession, the measure responds to complaints from Cuba and Major League Baseball that Cuban players had to renounce their homeland before they could sign a contract to play here.
When the regulations go into effect Wednesday,U.S. banks will be allowed to process payments to and from Cuba through third countries, including in U.S. dollars, and to open accounts through which dollar remittances can be paid to Cuban residents.
“Restrictions on the dollar have always been a challenge for the Cubans and a challenge for the business community,” because the need to operate in a third currency has always “increased the cost of the transactions,” Kavulich said. Cuba is now expected to remove a 10 percent surcharge on all exchanges from dollars into Cuban currency on the island.
Separately, the Commerce Department has authorized cargo transit through Cuba, a measure that will allow companies such as FedEx to store in Cuba goods destined for onward delivery. Companies, such as airlines, authorized to have a presence in Cuba will now be allowed to set up offices there.
Finally, Commerce has authorized some Cuban exports to the United States, provided they come from the private sector.
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