Will the Obama Administration’s new rules open the floodgates to Cuba for American business next month or even next year? No. Full and fair free trade with Cuba won’t happen until Congress finally repeals Helms-Burton, the myopic and failed U.S. trade embargo.
To be sure, the new regulatory amendments put forth this month are an important and necessary step in the right direction. Building on the Administration’s historic first round of amendments relaxing embargo restrictions in January, the September changes create the most significant opening in decades for Americans seeking to do business in Cuba.
Cuba needs capital investment to fuel emerging industries and to help build competitive infrastructures. The embargo’s continuing restrictions on partnerships with Cuban entities in many sectors impede such investment and frustrate U.S. policy goals rather than advance them.
American business executives contemplating opportunities in the Cuban marketplace would do well to study the regulations in the wake of these revisions. They should understand the full potential breadth of the regulatory windows that have been created, as well as identify for themselves and U.S. policymakers and regulators those issues ripe for further regulatory change. This regulatory evolution includes not just the continuing review and amendment of existing Treasury and Commerce regulations, but, as importantly, the bio-feedback process taking place every day at the Office of Foreign Assets Control as regulators examine pending license applications on a case-by-case basis, granting licenses that create important precedents and laying the foundations for further timely expansion. Indeed, in part, the new regulations codify the evolution of the licensing process.
Even if dealing in areas of business that appear circumscribed, smart companies can tap the regulations to begin cultivating ties, identifying investment opportunities, and, in certain cases, even building physical offices or launching joint ventures with Cuban companies.
Among the more compelling new rules are:
• A variety of U.S. businesses – including telecom and internet services companies, travel companies, cargo and package delivery companies, and exporters of agricultural goods or building materials – are permitted to establish offices or warehouses in Cuba, hire Cuban nationals, and open bank accounts in Cuba;
• Telecom and internet services companies are allowed to enter into joint ventures or licensing agreements with Cuban companies or individuals;
• Travel companies may take authorized travellers directly between the United States and Cuba by ship and provide related lodging services; and
• U.S. businesses may purchase certain legal services from Cuban lawyers and law firms, and U.S. lawyers and law firms now can be paid for providing certain legal services to Cuban businesses and individuals.
Of course, opportunities for U.S. exporters and telecom companies are important, but these are not the only industries capable of strengthening the nascent Cuban private sector and furthering U.S. policy interests. First and foremost, Cuba needs capital investment to fuel emerging industries and to help build competitive infrastructures. The embargo’s continuing restrictions on partnerships with Cuban entities in many sectors impede such investment and frustrate U.S. policy goals rather than advance them. U.S. companies should be allowed to form joint ventures, not only for telecom projects, but for roads, utilities, and other infrastructure.
In addition, U.S. businesses should be permitted to partner with Cuban entrepreneurs and private cooperatives to boost their manufacturing and export capabilities and to infuse money into the Cuban economy. The Obama Administration should facilitate this process by increasing the list of Cuban goods eligible for import into the United States and working with Congress to remove the prohibitively high and punitive tariff rates on many such imports that, as a practical matter, act as a prohibition to their importation.
By continuing to relax embargo rules, the Obama Administration has created the greatest opportunity in decades for American executives seeking to do business in Cuba. But much more work remains to be done. The Administration should continue to build on these gains with further amendments relaxing restrictions on other industries capable of advancing U.S. goals in Cuba. And, eventually, Congress will do what it should and consign the embargo to the scrap heap of bad history.
Scott D. Gilbert, the managing director of Reneo Consulting LLC, is the attorney whose pro bono counsel helped free American aid worker Alan Gross from a Cuban prison – the event that triggered U.S.-Cuban rapprochement.