On July 22, 2015, the Department of Commerce’s Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to implement the May 29, 2015 rescission of Cuba’s designation as a State Sponsor of Terrorism.
The United States continues to maintain a comprehensive embargo on Cuba, and licenses are required to export all EAR-regulated items to Cuba unless a license exception applies. However, BIS’s new rule eliminates anti-terrorism (AT) license requirements for Cuba and removes Cuba from Country Group E:1, i.e., terrorist-supporting countries. As a result, Cuba is now eligible for the 25% de minimis rule in the EAR that applies to most (i.e., non-sanctioned) countries. This means that generally, and subject to certain exceptions, a foreign-made item incorporating 25% or less controlled U.S.-origin content by value would not require an EAR license to be exported from a foreign country to Cuba. In contrast, prior to this new rule, parties seeking to export a foreign-made product from a foreign country to Cuba would have required an EAR license if that product was comprised of more than 10% controlled U.S.-origin content.
While Cuba continues to qualify for only a limited number of EAR license exceptions, the new rule makes Cuba eligible for parts of four license exceptions (License Exceptions RPL, GOV, BAG, and AVS) that were previously unavailable due to Cuba’s designation as a terrorist-supporting country. For example, Cuba is no longer subject to several special restrictions in License Exception AVS, covering aircraft on “temporary sojourn.” General aviation now qualifies for this exception in order to fly to Cuba, provided that all of the terms and conditions of the exception are satisfied.
BIS has also added conforming references in the regulations to Country Group E:2, which includes Cuba, to certain other EAR controls that formerly only applied to Country Group E:1, to ensure that these controls remain in place on Cuba consistent with the U.S. embargo.
To aid exporters, BIS has published a new Frequently Asked Questions guide covering key issues in the new rule. Stay tuned for additional changes to the export controls applicable to Cuba as U.S.-Cuba relations continue to evolve and progress.