Monday, July 6, 2015
Havana Day Dreamin'? Doing Business In Cuba
For many businesses, Havana is not just a dream anymore, and many companies are beginning to actively explore and pursue new opportunities in Cuba.
The longstanding embargo of Cuba, restrictions imposed by the Trading With The Enemy Act, and the placement of Cuba on the list of State Sponsors of Terrorism have all limited any business activity by American companies with Cuba. With the recent loosening of travel and trade licensing requirements, new market opportunities for many companies in Alabama and around the U.S. have opened up, with more opportunities on the horizon.
Though limited by legislative mandates, the Executive Branch acting through the Office of Foreign Assets Control (OFAC) has discretion regarding the issuance of licenses for trade with Cuba. The first of these licensing changes occurred in 2000, when under the Trade Sanctions and Reform Export Enhancement Act, exports of food, agricultural, medical and humanitarian related products were approved. Following this change, Alabama businesses exported large quantities of chickens annually to Cuba, as well as peanut products, syrup, soy bean oil, utility poles and other lumber products.
Since the President's December 17, 2014 announcement of the broadening of relations with Cuba, OFAC has promulgated new regulations allowing for increased trade in multiple areas, including:
- Expanded Exports of Goods and Services to Cuba's private sector-this new authorization allows for the export of building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for farmers.
- Telecommunications-transactions incident to the provision of telecommunications services, including entry and performance under roaming service agreements with telecommunication service providers in Cuba, are authorized, with some limited exceptions.
- Banking/Credit Cards-U.S. financial institutions will be permitted to open correspondent accounts at Cuban financial institutions to support permitted financial transactions. Using of U.S.-issued credit and debit cards has been authorized, but merchant relationships in Cuba are extremely limited.
- Travel-though tourist travel will still not be permitted, general OFAC licenses will be available for twelve enumerated categories. Notably, travel related transactions incident to the conduct of market research, commercial marketing, sales negotiations, or a company delivering or servicing items consistent with the export licensing policy are authorized.
Although the Cuban market is small by many standards, it represents an area of market growth, which may be attractive to many companies. Maynard Cooper & Gale is well positioned to assist companies interested in exploring business opportunities in Cuba. The firm has worked extensively with officials in the Cuban Special Interest Section in Washington, D.C. and developed relationships with academicians, community leaders and officials in Cuba, who may be called on to assist in business dealings with the country.