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Alerts and Updates

New Cuba Sanctions Include Changes in Aircraft-Lease Licensing Policy, License-Exception Restrictions and a 10 Percent De Minimis Rule

October 23, 2019

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Currently, Cuba is the sole country on the Department of Commerce Country Chart E:2 for unilateral embargoes.

The White House issued new sanctions against Cuba on October 21, 2019, that include a ban on the export and lease of U.S. planes to Cuban state-owned airlines, citing the country’s support of the Maduro regime in Venezuela and its repression of the Cuban people. Currently, Cuba is the sole country on the Department of Commerce Country Chart E:2 for unilateral embargoes.

The Department of Commerce’s Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to carry out these sanctions by ending the general policy of approval for license applications relating to export or reexport aircraft leased to Cuban state-owned airlines. Such license applications will now be subject to a general policy of denial. See 84 Fed. Reg. 56,117-18 (Oct. 21, 2019) (to be codified at 15 C.F.R. § 746.2(b)(2)(v)). BIS will also revoke licenses within seven days through individual notifications to licensees pursuant to 15 C.F.R. § 750.8.

The new sanctions also make clear that aircraft and vessels are not eligible for the license exception for aircraft, vessels and spacecraft (AVS) if they are leased to or chartered by a national of Cuba or a national of a destination in Country Group E:1 (terrorist-supporting countries). Significantly, license exception AVS otherwise still authorizes the export or reexport to Cuba of certain aircraft on temporary sojourn, provided that all of the criteria under § 740.15(a)(3) are met.

In addition to the amendments pertaining to aircraft, the new sanctions also subject Cuba to the general 10 percent de minimis rule: Foreign-made items containing greater than 10 percent of U.S.-origin content cannot be reexported to Cuba unless a license from BIS is obtained or a license exception specified under the EAR can be utilized. Importantly, it must be remembered that there is no de minimis level for items specified under 15 C.F.R. § 734.4(a)-(b).

The new sanctions also make changes to the license exception for support for the Cuban people (SCP). Specifically, license exception SCP has been revised to make the Cuban government and Communist Party ineligible for certain donations; to remove an authorization for promotional items that generally benefits the Cuban government; and to clarify the scope of telecommunications items that the Cuban government may receive without a license.

The U.S. sanctions and prohibitions administered by the EAR and by the Cuban Assets Control Regulations (see 31 C.F.R. Part 515) range across a variety of export activities. U.S. companies and persons who violate these regulations may be subject to significant monetary penalties, and those who act wilfully in violation of these sanctions are subject to criminal prosecution by the Department of Justice.

For More Information

If you would like further information about this Alert, please contact Brian S. Goldstein, Michael E. Barnicle, Geoffrey M. Goodale, Jamie E. Brown, Keith J. Feigenbaum, any attorney in the International Practice Group, any attorney in the Transportation and Automotive Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.