United States Department Of Commerce Reduces De-Minimis Level For U.S. Content In Exports To Cuba
/On 19 October 2019, the Bureau of Industry and Security (BIS) of the United States Department of Commerce published a final rule amending the Export Administration Regulations (EAR) to further restrict exports and reexports of items to the Republic of Cuba.
De Minimis Threshold: Pursuant to Section 734.4 of the EAR, foreign-made items located abroad are subject to the EAR under certain circumstances, including when they incorporate, or are bundled or commingled with, specified levels of controlled United States-origin commodities, software, or technology, by value.
With some exceptions for items for which there is no de minimis level, either a 10% de minimis rule or a 25% de minimis rule applies, depending upon the destination of the foreign-made products.
In 2015, the United States government rescinded the Republic of Cuba’s designation as a State Sponsor of Terrorism, making the country eligible for the more favorable 25% de minimis threshold.
The new rule means that a BIS license or an applicable license exception now is required to ship foreign-made items that contain greater than 10% United States-origin controlled content to the Republic of Cuba by value; for the Republic of Cuba, even EAR99 content is considered “controlled,” and thus the rule significantly limits the ability of foreign companies that rely on United States parts and components to do business with the Republic of Cuba.
