How Trump’s New Cuba Policy Will Affect American Businesses

Cruise-Ship-300x183U.S. business owners with dealings in Cuba were relieved after President Donald Trump outlined his new Cuba policy last week because it might not have a big impact on their ventures. Some have reportedly paused all business with the island until they see how Trump’s changes will be implemented and what new regulations they will require.

Lawyers who help corporations navigate the regulations and laws imposed by the embargo have been going through every detail of the memorandum Trump signed on June 16 as well as a White House fact sheet and the answers to some frequently-asked questions issued by the Office of Foreign Assets Control (OFAC) to get a feel of the new policy. That is all the lawyers have to go on until the new rules are written. Trump mandated that the writing process begin by next month.

“Until the regulations change, everything is status quo.” Yosbel Ibarra, an attorney on Greeberg Taurig’s Cuba practice team, told the Miami Herald.

Nobody can guess how long it will take to write the new regulations. The process won’t be an easy because it involves multiple government agencies and departments. U.S. corporations with proposals pending before the Cuban government will likely wait until the new regulations go into effect before signing any deals.

“The way corporations are, when they know rule-making is underway, they are always going to hold up until the regulations are written,” Robert Muse, a lawyer who specializes in U.S.-Cuba law, told the Herald. “They are not going to set themselves at the far end of the branch based on a Q&A from OFAC.”

The memorandum adds some important changes to U.S.-Cuba policy: it prevents U.S. companies from doing business with Cuban entities that are owned or controlled by the Cuban military and stops people-to-people trips to the island by individuals. Group travel in that category is still allowed, but travelers will be more closely policed to make sure they are not just traveling for tourism.

The ban on business dealings with enterprises controlled by the military is a significant change. The Cuban military conglomerate is believed to control 40 to 60 percent of the island’s economy, with large investments in retail operations, tourism, and logistics.

The military’s Gaviota Tourism Group, for instance, has business ventures with foreign partners in over 60 hotels and villas, including the newly opened Gran Hotel Manzana Kempinski in Havana and the Saratoga, which is popular with visiting businessmen from the U.S. and Congressional delegations.

Many U.S. companies have made deals with military entities, particularly in the hospitality industry and the transportation sector. The Trump administration has reportedly said it doesn’t want to hurt U.S. companies that engaged in lawful business with the island and those agreements will be grandfathered into the new policy.

The only American businesses that won’t feel any impact from the new regulations are airlines and cruise lines. Despite the military links to seaport and airport operations on the island, cruise lines can continue to call at Cuban ports and airlines can keep flying to the island nation’s airports.

Source: 6.22.17 How Trump’s New Cuba Policy Will Affect American Businesses.pdf