Reed Smith Client Alerts

Authors: Leigh T. Hansson

Today the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security (BIS) further eased sanctions against Cuba with a host of new amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). Of special interest to the shipping industry is the issuance of a general licence that rolls back the so-called ‘180-day ban’- a prohibition on vessels calling at U.S. ports within the first 180 days after calling at a Cuban port.

Under the new general licence, non-U.S.-flag vessels are now authorised to call at U.S. ports, even if they have loaded or unloaded cargo in Cuba within the past 180 days, provided that the items carried to Cuba would be either: (1) classified as ‘EAR99’ under the EAR (i.e., items that are not controlled for export); or (2) controlled for export on the Commerce Control List only for anti-terrorism (AT) reasons.

This general licence expands considerably upon the more limited amendments to the 180 day ban implemented in March 2016. Under the March amendments, the ban was lifted only for vessels travelling under License Exception Aircraft, Vessels, and Spacecraft (AVS), which permitted vessels to carry U.S. cargo destined for third countries and stop temporarily in Cuba, provided the U.S. cargo was not unloaded in Cuba. See our March client alert. Generally, those vessels not using the AVS exception were still subject to the 180-day requirement and, unless specifically authorised, such vessels were blocked from calling at U.S. ports to load or unload cargo for 180 days after calling into Cuba.

While the March 2016 amendments improved somewhat the efficient use of vessels carrying cargo from the United States to Cuba and other countries, today’s broader repeal of the 180-day ban should open up many more new possibilities. For example, Container lines have the opportunity now to carry large volumes of cargo from Asia on neo-Panamax ships to the U.S. East Coast, using the PSA-operated terminal at Mariel, Cuba as a transshipment hub. In other words, where the general licence applies, it is now also possible to stop in Cuba and then go on to the United States.

OFAC and BIS are scheduled to publish the most recent amendments to the CACR and EAR in the Federal Register today. We recommend careful examination of the amended regulations before entering into any Cuba-related transactions.


Client Alert 2016-277