Treasury and Commerce Departments relax Cuba rules for telecommunications providers, but FCC not yet on board
Mojitos, plantains and panatelas, here we come! Cuba has been re-opened for telecommunications transactions with U.S. companies . . . at least as far as two important agencies are concerned.
Back in April, President Obama directed the federal agencies that administer the longstanding U.S. embargo against Cuba to “reach out to the Cuban people” by liberalizing the rules governing telecommunications to and from Cuba. And while his directive seemed to suggest that things should change immediatamente, it took until July to get things largely teed up, and even then an unexplained last minute delay added two more months to the process. But in September, two of the federal agencies that have historically administered the U.S. embargo against Cuba – Treasury’s Office of Foreign Assets Control (OFAC) and Commerce’s Bureau of Industry and Security (BIS)—relaxed their regulations. As a result, U.S. companies may now: enter into transactions for telecommunications service to and from Cuba; build telecommunications facilities to Cuba; and export telecommunications-related goods to Cuba – all without the need to obtain specific approval in advance. And get this – the new rules authorize travel to Cuba that is incidental to these approved activities. Vamonos, amigos!!
Heads up, though. One communications-related agency has taken a more, er, languid approach to El Presidente’s directive.
The FCC continues to apply 16-year-old State Department criteria for authorizing U.S.-Cuba service, criteria which are more about Cold War Containment than 21st Century Reaching Out. Under the FCC’s current rules, telecommunications service to Cuba cannot be approved under the streamlined process for international telecommunications authority, but rather must be approved on a case-by-case basis. As far as the FCC is concerned, requests for such authority are also subject to certain restrictions established in 1993 by the State Department (e.g., operation within one year, limited equipment and services, and compliance with the FCC’s international settlements policy).
We hear that OFAC has been leaning on the Commission to get with the program, and there is some hope that that may happen in the near term. Until then, companies can still avail themselves of the OFAC and BIS regulations to begin the necessary negotiations and to send employees to Cuba for the purpose of advancing their projects.
The OFAC general license to provide telecommunications service is very broad. All transactions for the provision of telecommunications services between the U.S. and Cuba are authorized, as well as the provision of satellite radio or television, and implementing roaming service agreements with Cuban providers. Similarly, contracts with non-Cuban service providers and Cuban individuals for service to Cuban individuals are authorized. To provide these services under the new provisions, companies must notify OFAC within 30 days after commencing or terminating service to Cuba and must make semiannual reports showing any payments made to Cuba or a third country in connection with the service.
The BIS general license relates to exports. It allows companies to apply for case-by-case authorization to export or reexport all telecommunications items (including commodity, technology, or software) which are “necessary to provide efficient and adequate telecommunications links between the United States and Cuba”, including links through third countries and satellite links. (This eliminates the previous requirement that the items be commodities and part of an FCC-approved project).
While the new rules authorize a broad array of transactions relating to telecommunications services and goods, the terms governing telecommunications-related travel are less expansive. Travel transactions must be directly incidental to participation in professional meetings for approved purposes (such as marketing, sales, and performance related to telecommunications services contracts, or establishment of facilities). The traveler must be an employee of a U.S. telecommunications company and must keep to a “schedule of activities [that] does not include free time, travel, or recreation in excess of that consistent with a full work schedule.” For sales of telecommunications-related items under the BIS rule, travelers must comply with the above limitations and must submit 14-day advance notice to OFAC as well as a written report within 14 days of return. And of course, anyone looking into making deals in Cuba should do their homework regarding Cuban law, making sure to obtain all appropriate travel permissions through the State Department.
Taking a tip from Bing Crosby, Olga San Juan (“the Puerto Rican Pepperpot”), and Irving Berlin, we’ll see you in C-U-B-A, where we’re sure you’ll be “Havana” good time.