U.S. Clears Marriott to Engage in Business Development in Cuba

U.S. Clears Marriott to Engage in Business Development in Cuba

Company in Discussions to Pursue Hospitality Agreement

BETHESDA, MD and HAVANA, CUBA, March 20, 2016 – Marriott International, Inc. (NASDAQ:MAR) said today that the the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury has approved Marriott International’s application to pursue a business transaction in Cuba, and that the company is in discussions to develop a hospitality relationship with potential partners.  The announcement was made during President Obama’s historic trip to Cuba, marking the first time in more than 80 years a sitting U.S. president has visited the country.  Marriott President and Chief Executive Officer Arne Sorenson is traveling with U.S. Commerce Secretary Pritzker during the President’s visit to Cuba.

Marriott’s objectives in Cuba include entering the hospitality sector with Marriott brands, providing hospitality training for Cuban nationals, helping to generate new economic opportunities for businesses supplying the hospitality industry, and as a corporate citizen, supporting opportunities for youth, women and other communities in Cuba.    

Mr. Sorenson said, “We are gratified to receive permission from the U.S. government to pursue business opportunities in Cuba.  While there is still work to do before any agreement is reached, we are actively pursuing relationships in the hospitality sector. We have long been convinced that with the right frameworks in place, new economic opportunities, including dramatically expanded travel, abound in Cuba.  These could deliver real benefits to the Cuban people and also have the effect of bringing both Americans and Cubans closer together.”

Marriott International, Inc. (NASDAQ: MAR) is a global leading lodging company based in Bethesda, Maryland, USA, with more than 4,400 properties in 87 countries and territories.  Marriott International reported revenues of more than $14 billion in fiscal year 2015. The company operates and franchises hotels and licenses vacation ownership resorts under 19 brands, including: The Ritz-Carlton®, Bulgari®, EDITION®, JW Marriott®, Autograph Collection® Hotels, Renaissance® Hotels, Marriott Hotels®, Delta Hotels and Resorts®, Marriott Executive Apartments®, Marriott Vacation Club®, Gaylord Hotels®, AC Hotels by Marriott®, Courtyard®, Residence Inn®, SpringHill Suites®, Fairfield Inn & Suites®, TownePlace Suites®, Protea Hotels® and Moxy Hotels®. Marriott has been consistently recognized as a top employer and for its superior business ethics. The company also manages the award-winning guest loyalty program, Marriott Rewards® and The Ritz-Carlton Rewards® program, which together comprise nearly 55 million members. For more information or reservations, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.

Starwood To Manage Three Hotels In Havana

Starwood Hotels and Resorts Announces Groundbreaking Expansion to Cuba

March 19, 2016

Becomes First Hospitality Company to Obtain U.S. Treasury Department Authorization to Operate In Cuba

Signs Two Agreements and Letter of Intent to Open Hotels in Havana in 2016

HAVANA--(BUSINESS WIRE)-- Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”) (NYSE:HOT) today signed three new hotel deals in Cuba, marking the first U.S. based hospitality company to enter the market in nearly 60 years. This announcement follows receipt of authorization from the U.S. Treasury Department for Starwood to operate hotels in Cuba. Long-time Havana icon, Hotel Inglaterra, will join The Luxury Collection and Hotel Quinta Avenida will become a Four Points by Sheraton. Both hotels will undergo renovations before raising their new brand flags later in 2016. The Company also announced that it has signed a Letter of Intent to convert the famed Hotel Santa Isabel into a member of The Luxury Collection.

Thomas B. Mangas, Starwood’s Chief Executive Officer, said: “Starwood’s history of creativity, innovation, sustainability and being a first mover is core to who we are and what has made us a formidable competitor in the industry with a long, global lead. I am proud of our team who worked tirelessly to make today possible. With Cuba’s rich history, natural beauty and strong culture, there is no question the entire U.S. hospitality industry has watched Cuba with great interest, and we are thrilled to lead the charge and bring our sophisticated, high-end brands into the market at this inflection point.”

Kenneth S. Siegel, Starwood’s Chief Administrative Officer and General Counsel, added: “We are confident Starwood is the right partner to help write the next chapter of relations between Cuba and American business, and we moved quickly and enthusiastically to pursue opportunities following recent government actions. As we’ve seen throughout the world, our entry into new markets has a positive effect on local communities, preserving and protecting the culture and delicate ecosystems while improving employment opportunities, which were driving forces in our discussions.”

Hotel Signings

Jorge Giannattasio, Starwood’s Senior Vice President and Chief of Latin America Operations, said: “We are excited to add this sought-after destination to our growing Latin American and Caribbean portfolio, and offer our loyal guests more choice in this evolving market. Hotel conversions, like those we announced today, allow us to preserve history, architecture and culture while offering a unique branded experience. With our long-standing, locally based and highly experienced team in Latin America and the Caribbean, we look forward to welcoming guests to Cuba for many decades to come.”

Starwood has partnered with owner Gran Caribe to rebrand the renowned Hotel Inglaterra as a member of The Luxury Collection. A national landmark just steps from the Gran Teatro de La Habana in the heart of downtown Havana, the Inglaterra first opened its doors in 1875 and is home to the famed Gran Café el Louvre, which has hosted artists and travelers for over a century. Upon completion of the preservation and conversion projects later this year, the hotel will offer 83 rooms and reopen under The Luxury Collection banner.

Starwood has signed an agreement with Grupo de Turismo Gaviota S.A. , owner of Hotel Quinta Avenida in Havana’s Miramar district, to rebrand the hotel as Four Points by Sheraton Havana later this year. The hotel will cater to business travelers with approximately 186 rooms and state-of-the-art meeting facilities.

The Company also has signed a letter of intent with Habaguanex, owner of the famed Hotel Santa Isabel, to convert the nineteenth century colonial-style palace to a member of The Luxury Collection, pending U.S. Treasury Department approval. Situated on the Plaza de Armas and overlooking Havana Harbor, the Santa Isabel will offer Starwood guests a conveniently situated respite in the heart of Havana’s historic city center, with 27 rooms, including 11 suites.

Steps to Groundbreaking Announcement

On December 17, 2014, President Obama announced plans to normalize diplomatic relations between the United States and Cuba, and in August 2015, the U.S. Embassy in Cuba was reestablished. Then, last month, the U.S. and Cuba signed an agreement that provides U.S. airlines the opportunity to operate up to 110 daily roundtrip flights, which would resume commercial airline service between the two countries for the first time in more than 50 years and promises to vastly increase the number of Americans traveling to Cuba.

Keith Grossman, Senior Vice President and Deputy General Counsel of Starwood, concluded: “Through our discussions and due diligence, it became clear that Starwood was the right choice for its unique approach to hospitality, sustainability and design that would enrich the local communities and enhance the guest experience. We plan to cultivate local talent, provide career enriching opportunities, and locally source art, décor, food, and materials to ensure we deliver authentic experiences.”

Starwood was advised by D17 Strategies, a consulting firm providing strategic counsel to clients seeking to carry out Cuban trade, investment, travel, and exchanges permitted under new U.S. regulations.

About The Luxury Collection® Hotels & Resorts

The Luxury Collection® brand is comprised of world-renowned hotels and resorts offering unique, authentic experiences that evoke lasting, treasured memories. For the global explorer, The Luxury Collection offers a gateway to the world's most exciting and desirable destinations. Each hotel and resort is a unique and cherished expression of its location; a portal to the destination's indigenous charms and treasures. Originated in 1906 under the CIGA® brand as a collection of Europe's most celebrated and iconic properties, today The Luxury Collection brand is a glittering ensemble, set to exceed 100 of the world's finest hotels and resorts in more than 30 countries by the early 2016. All of these hotels, many of them centuries old, are internationally recognized as being among the world's finest. For more information and new openings, visit theluxurycollection.com or follow Twitter, Instagram and Facebook.

About Four Points

Four Points is travel reinvented. With over 200 hotels in nearly 40 countries, Four Points meets the needs of the everyday traveler and offers guests exactly what they need on the road. Four Points combines timeless style and comfort and an authentic sense of the local as well as genuine, always-approachable service, all around the world. To learn more, visit www.fourpoints.com/experience. Stay connected to Four Points on facebook.com/fourpoints.

About Starwood Hotels & Resorts Worldwide, Inc.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with nearly 1,300 properties in some 100 countries and approximately 188,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Tribute Portfolio™, Four Points® by Sheraton, Aloft®, and Element®, along with an expanded partnership with Design Hotels™. The Company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood.

DHS To Expand Airport Gateways To Cuba

WASHINGTON—The Department of Homeland Security will publish a regulation in the Federal Register Monday, March 21, which includes a change to current travel regulations regarding flights to and from Cuba. As part of this regulatory change, U.S. Customs and Border Protection will immediately remove Subpart O from the current regulations in 19 CFR Part 122.

Under Subpart O, only CBP-approved airports could accept flights traveling to or from Cuba. Airports hoping to accommodate travel to or from Cuba were required to submit a written request to CBP for approval. The written request was required even if the airport already had clearance for international flights.

Besides removing 19 CFR Part 122, Subpart O, the regulatory change also makes adjustments to other provisions which mentioned Subpart O. Flights to and from Cuba are now subject to the same legal requirements under Title 19 as other international flights.

All passengers arriving from Cuba must still complete their immigration and customs inspections prior to being admitted into the United States.

Additionally, the removal of Subpart O of 19 CFR Part 122 does not have any impact upon any other federal agency, carrier or traveler requirements that may be relevant for flights to and from Cuba. An internal review of CBP’s regulations showed no benefits to the agency by continuing to enforce 19 CFR Part 122, Subpart O.

The interim final rule is effective immediately, although CBP will receive public comments on the rule through April 20, 2016.  Public comments can be submitted and viewed on Regulations.gov.

The U.S. Department of State and the U.S. Department of Transportation signed an arrangement with Cuba in February 2016 aimed at re-establishing scheduled flights between the U.S. and Cuba.

For further information, visit DHS.gov.

Does The Obama Administration Want Regime (Behavior) Change? Yes, It Does.

Does The Obama Administration Want Regime Change? Yes, It Does.

The Obama Administration may not specifically want “regime change” to be defined as seeking to replace those who are in the leadership of the Republic of Cuba, but the President does want to change the behavior of those guiding the country of 11.3 million citizens ninety-three miles south of Florida.

It's a soft war… using visitors as the soldiers, commercial airlines as the air force, and cruise ships as the navy.  United States diplomats as the marines.

While President Obama's fifteen-month-and-counting commercially-focused five-act (thus far) regulatory drag race is not nearly at the finish line, there has been at least one significant parallel political shift by the government of Cuba- it has been forced to adapt to the materially impactful irreversible influence that the re-emerging middle class is having on Cuban society.  Approximately 10% of the Republic of Cuba’s official workforce of 5.1 million are registered as Licensed Entrepreneurs.

Reconstituting the middle class that was abridged as a result of the 1959 Revolution is a foundational fulcrum upon which much of President Obama's Cuba strategy has been based since December 2014.

While the government of Cuba commenced changes to the self-employed categories (201+) and acknowledged a need for a reduction in the government payroll prior to President Obama's initiatives announced in December 2014, there are now additional pressures from within for structural changes to the ideological foundation of the country. 

Ironically, these pressures are partly a result of Cuba's outreach in 2015 to the international community- Paris Club of Creditor Nations, governments, companies, financial institutions... because in order for those renewed and new areas of support to be repaid, Cuba must do more than reform the commercial and economic sectors of the country; it must aggressively reform and redefine the "Revolution."

In 2016 and beyond, the Revolution will be defined less by what is desired as by how much there is to spend to support it; the traditional sources of support, the USSR (long gone), Russia (lessening), China (retaining its connection), and Venezuela (lessening) are no longer reliable.  Important to note that the Russian Federation and China view somewhat their outreach to the Republic of Cuba as having a dual result- commerce and annoying the United States.

Cuba has looked as it does primarily because others paid for it... Those customers are no longer as interested and the customers that replaced them are investing for a return of cash, not slogans.

What does this mean for United States-based companies?  The government of the Republic of Cuba will create opportunities to “showcase” its “willingness” to engage with, respond to, the Obama Administration initiatives.  But, that showcase will be small to medium in size and it will be moveable and it will be breakable. 

There will be an effort by the government of the Republic of Cuba to retain the distance between aspiration and operation; by authorizing just enough on-the-ground activity so as to not to render dry the salivary glands of executives from United States companies; as the government of the Republic of Cuba requires those vocal abilities to advocate on their behalf in Washington for additional regulatory and statutory changes preventing an unrestricted North-to-South and South-to-North commercial landscape. 

The President's Schedule In Cuba

On Sunday, in the afternoon, the First Family will travel to Havana, Cuba. While in Cuba, the President will work to build on the progress we have made toward normalization of relations with Cuba - advancing commercial and people-to-people ties that can improve the well-being of the Cuban people, and expressing our support for human rights.

Later in the afternoon, the First Family will arrive in Havana, Cuba.

Following the First Family’s arrival, the President and the First Lady will meet with Embassy personnel and families.

Afterward, the President and First Lady will take a walking tour of Old Havana.

The First Family will remain overnight in Havana, Cuba.

On Monday, the President will participate in a wreath laying ceremony and take a tour of the Jose Marti Memorial. Later in the morning, the President will then take an official photo with President Raul Castro of Cuba and participate in an official welcoming ceremony at the Palace of the Revolution. Afterward, the President will hold a bilateral meeting with President Castro. In the afternoon, the President will take part in an event focused on entrepreneurships and opportunity for the Cuban people. In the evening, the President and First Lady will attend a state dinner at the Palace of the Revolution.

On Tuesday, the President will deliver remarks to the people of Cuba at the Gran Teatro de La Habana Alicia Alonso. Later in the morning, the President will meet with members of civil society. Following the President’s meeting, the First Family will attend a Major League Baseball exhibition game between the Tampa Bay Rays and the Cuban National Team at the Estadio Latinoamericano. Americans and Cubans share a love of baseball, and this is yet another powerful reminder of the kinship between our peoples as well as the progress we can achieve when we leverage those natural ties. In the afternoon, the First Family will depart Havana, Cuba and travel to Buenos Aires, Argentina where they will remain overnight.

California-Based Stripe To Provide U.S. Operational Access For Cuban Entrepreneurs

Atlas + Cuba

Patrick Collison on March 18, 2016

Since the 1960s, the U.S. has maintained a trade embargo with Cuba. Today, more than half a century later, many of these restrictions are gradually being lifted. At Stripe, we stand for increasing global commerce and enthusiastically support this action.

The embargo has many components, among the most significant being the Office of Foreign Asset Control’s restrictions on access to financial services by Cuban nationals. On Tuesday, these were some of the first restrictions to be relaxed by the White House. This removes one of the biggest impediments to Cubans participating in the global financial system.

It also removes one of the biggest barriers to entrepreneurship in Cuba. The restrictions on access to financial services have made it extremely tough for Cuban developers and founders to start new businesses or to work with U.S. investors or partners. Despite this, more than 70% of Cubans say that they’d like to start a business. In his upcoming historic trip—the first by a sitting U.S. president in 88 years—President Obama will meet Cuban entrepreneurs to learn "how we can help them start new ventures."

When the White House reached out to us about the role Stripe might play in this process, we jumped at the idea. As of today, Stripe Atlas will be available to entrepreneurs in one of the only countries it didn’t previously serve: Cuba.

Stripe Atlas is a new product for us—we announced it less than a month ago. It’s based on our belief that there exist individuals with the ability to be successful entrepreneurs everywhere and that the important tools for internet entrepreneurship should be available to everyone. With Atlas, we aim to offer best-in-class tools to founders no matter where they’re based—from Cambodia to (now) Cuba.

Thanks to Tuesday’s changes, we’ll be working as quickly as possible with our partners, including Silicon Valley Bank, to enable Cuban entrepreneurs to easily incorporate U.S. companies, set up U.S. bank accounts, and use Stripe to start accepting payments from customers around the world. There are more details in our guide about how it works.

Cuban entrepreneurs can apply for access immediately and we plan to send the first invitations soon. We’re also extending the Stripe Atlas network to Cuba and we’re delighted to start out by partnering with Merchise Startup Circle in Havana.

Since we announced Atlas, businesses from more than 185 countries have already applied for access. We’re excited to make that 186.

U.S. Coast Guard Removes Conditions Of Entry On Vessels Arriving From Cuba

March 17, 2016

U.S. Coast Guard Headquarters
Contact: Headquarters Public Affairs
Office: (202) 372-4630

US Coast Guard removes Conditions of Entry on vessels arriving from Cuba

WASHINGTON — The U.S. Coast Guard announced the removal of Conditions of Entry on vessels arriving from Cuba, Thursday.

Following a comprehensive assessment, the United States Coast Guard has determined that Cuba meets the International Ship and Port Facility Security (ISPS) Code requirements established by the International Maritime Organization (IMO) and has effective security measures in their ports. Vessels arriving to the U.S. are no longer required to employ additional security measures while in Cuban ports.

Conditions of Entry related to Cuban ports were originally imposed in 2008.

All U.S. immigration policies remain unchanged and the Office of Foreign Assets Control travel restrictions remain in effect. Furthermore, the governing regulations titled “Unauthorized Entry to Cuba” contained in 33 CFR 107.200 also remain in effect.

The full notice on the removal of these conditions of entry will be published in the Federal Register.

Have Consultants Become Tour Guides Rather Than Business Guides?

Have Consultants Become Tour Guides Rather Than Business Guides?

Does this sound familiar: Visits to the Ministry of Foreign Affairs, Ministry of Foreign Trade and Foreign Investment, Chamber of Commerce, Port of Mariel, and United States Embassy?

This is the most frequent itinerary that a proliferation of consultants has followed for their clients when visiting the Republic of Cuba.

An increasing number of individuals who are or have engaged in Republic of Cuba-related political advocacy (as sole proprietors, lobbyists, employees of not-for-profits, affiliated with educational institutions, etc.) or as professional researchers (for not-for-profit entities) have departed those venues to reinvent themselves as “Cuba consultants,” eager, for a price, to be engaged by individuals and entities that wish to visit the Republic of Cuba to identify commercial opportunities.

Some of the them are enticed by the knowledge that two United States governors spent US$25,000.00 in their respective taxpayer funds to pay a "Cuba Country Expert" at a not-for-profit organization when all of the expertise (and logistical support) was available at no cost through the government of the Republic of Cuba, Republic of Cuba government-operated entities, and other entities (for profit and not-for-profit).

The challenge for some of the newly-minted self-proclaimed Cuba consultants is they have no knowledge or have limited knowledge of the private sector and for many their ability to function within the Republic of Cuba is solely based upon having been a political advocate- so they need to maintain positive working relationships with their Republic of Cuba hosts which may diverge from the interests of their clients- who are generally visiting the Republic of Cuba once. 

Their relationships are often hostage to having never disagreed with, had to negotiate with, had to confront, made a public comment, prevailed in a decision that was disagreed with by the government of the Republic of Cuba.

These individuals have become tour guides; repeatedly introducing clients to the same representatives of the government of the Republic of Cuba with clients gaining questionable value. 

Of value to remember that the government of the Republic of Cuba is not supportive of consultants- as it prefers a straight line between it and a company rather than a triangle created by the insertion of a third-party.  That’s what the Embassy of the Republic of Cuba, with a Commercial Counsellor, located in Washington, DC, is officially designated to do for United States-based companies.

Of value to remember the tangible commercial results from the visits to the Republic of Cuba of more than four hundred representatives from United States companies, four United States governors, seventeen United States Senators, and thirty-three members of the United States House of Representatives who visited the Republic of Cuba in 2015 and thus far in 2016.

New U.S. Commerce Department Regulations

On December 17, 2014, the President announced a historic new approach in U.S. policy toward Cuba. This approach recognized that increased engagement and commerce benefits the American and Cuban people, and sought to make the lives of ordinary Cubans easier and more prosperous. On January 16, 2015, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to create License Exception Support for the Cuban People (SCP), which authorizes the export and reexport, without a license, of certain items to, among other objectives, improve the living conditions of the Cuban people (see 80 FR 2286). The rule also made other changes to license exceptions and licensing policy. Id.

On July 22, 2015, BIS published a rule implementing the May 29, 2015, rescission of Cuba's designation as a state sponsor of terrorism (see 80 FR 43314). That rule expanded certain license exception availability for exports and reexports to Cuba, including making general aviation aircraft eligible for temporary sojourns to Cuba.

On September 21, 2015, BIS published a rule to enhance support for the Cuban people (see 80 FR 56898). This rule expanded the scope of transactions that are eligible for License Exception SCP and made certain vessels on temporary sojourn to Cuba eligible for a license exception.

On January 27, 2016, BIS published a rule that amended the licensing policy in § 746.2 of the EAR to add a general policy of approval for certain exports and reexports previously subject to case-by-case review and a policy of case-by-case review for exports and reexports of items not eligible for License Exception SCP to meet the needs of the Cuban people, including exports and reexports made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people, subject to certain restrictions (see 81 FR 4580).

Today, BIS is taking this action in coordination with the Department of the Treasury, Office of Foreign Assets Control (OFAC), which is amending the Cuban Assets Control Regulations (31 CFR part 515).

This rule revises License Exception Aircraft, Vessels and Spacecraft (AVS) in § 740.15 to authorize transit through Cuban territory of cargo, laden aboard a vessel on temporary sojourn to Cuba, that is destined for other countries rather than require a license for that cargo to transit Cuban territory provided that such cargo departs with the vessel at the end of its temporary sojourn, does not enter the Cuban economy and is not transferred to another vessel while in Cuba. This change allows for efficient use of vessels that carry cargo from the United States to Cuba and to other countries and allows exporter carriers to select efficient routes. This rule also adds a note reminding readers to consult Coast Guard regulations on unauthorized entry into Cuban territorial waters.

This rule revises License Exception SCP to authorize export or reexport of EAR99 items and items controlled on the Commerce Control List only for anti-terrorism reasons for use by persons authorized to establish and maintain a physical or business presence in Cuba by the Department of the Treasury, Office of Foreign Assets Control pursuant to 31 CFR 515.573 or pursuant to a specific license issued by OFAC. Prior to this rule, License Exception SCP enumerated the activities for which OFAC had authorized such physical or business presence by general license. Simultaneously with the publication of this rule, OFAC is publishing an amendment to 31 CFR 515.573 to authorize additional persons subject to U.S. jurisdiction to establish a business and physical presence in Cuba. BIS's intent is to authorize by license exception the export and reexport of items needed to establish and maintain a physical or business presence in Cuba, to all persons authorized by OFAC to have such a presence. The simplest way to do this is to reference the applicable section in OFAC's Cuban Assets Control Regulations (“CACR”), i.e., 31 CFR 515.573 and specific licenses issued by OFAC rather than to revise the EAR to repeat any changes made to that CACR section.

This rule also revises EAR licensing policy regarding Cuba to adopt a policy of case-by-case review of license applications to export or reexport items that will enable or facilitate exports from Cuba of items produced by Cuba's private sector. BIS is adopting this policy to reinforce the Cuba case-by-case licensing policy adopted prior to this rule, which focuses on exports and reexports that would be used in ways that meet the needs of the Cuban people. Enabling or facilitating exports of items produced by the Cuban private sector, under certain circumstances will also help meet the needs of the Cuban people and is consistent with the Administration's policy of supporting the ability of the Cuban people to gain greater control over their own lives and determine their country's future. However, BIS will conduct the case-by-case review consistent with the policy standard set forth in § 746.2(b)(3)(i) of the EAR, which provides that “BIS generally will deny applications to export or reexport items for use by state-owned enterprises, agencies, and other organizations that primarily generate revenue for the state, including those engaged in tourism and those engaged in the extraction or production of minerals or other raw materials. Applications for export or reexport of items destined to the Cuban military, police, intelligence or security services also generally will be denied.”

This rule revises Note 1 to § 746.2(b)(3)(i) of the EAR, which describes a condition that will generally be included on licenses to prohibit reexport of the items authorized by the license or use of those items to enable or facilitate exports from Cuba. The revision makes clear that the condition applies to reexports from Cuba or uses that enable or facilitate exports from Cuba that primarily generate revenue for the state. BIS is making this change because enabling or facilitating exports of items produced by the Cuban private sector under certain circumstances will help meet the needs of the Cuban people and is consistent with the Administration's policy of supporting the ability of the Cuban people to gain greater control over their own lives and determine their country's future.

This rule revises § 736.2(b)(8) of the EAR, which prohibits shipments from transiting certain destinations, to explicitly state that the prohibition does not apply if a license or license exception authorizes the in-transit shipment.

This rule revises § 740.15(d)(6) of the EAR to authorize temporary sojourn to Cuba of a vessel carrying cargo destined to other countries provided that such cargo departs with the vessel at the end of its temporary sojourn to Cuba, does not enter the Cuban economy and is not transferred to another vessel while in Cuba.

This rule revises § 740.21(e) to remove the individual references to categories of persons authorized by OFAC to establish and maintain a physical or business presence in Cuba pursuant to 31 CFR 515.573, and to authorize exports and reexports to all such persons and to persons whose physical or business presence is authorized by a specific license issued by OFAC.Show citation box

This rule revises § 746.2(b)(3)(i), to add a paragraph (b)(3)(i)(D), which sets a policy of case-by-case review of items that will enable or facilitate export from Cuba of items produced by the Cuban private sector. It also revises Note 1 to clarify that the license condition described therein is intended to preclude use of items authorized by licenses bearing that condition from being reexported from Cuba or being used to enable or facilitate exports from Cuba that primarily generate revenue for the state.

BIS is making these changes to facilitate further support of and engagement with the Cuban people.

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United States Postal Service Commences Operations To Cuba

United States Postal Service Resumes Mail Service to Cuba

First Direct Transportation of Mail Service to Cuba in More Than 50 Years

WASHINGTON — Today the United States Postal Service announced it resumed direct transportation of mail service with Cuba for the first time in more than 50 years.

"The U.S. Postal Service is pleased to participate in the historic direct transportation of mail service with Cuba," said Postmaster General and CEO Megan J. Brennan. "Moving letter mail and package volume directly between our countries will improve service for businesses and consumers."

The types of mail customers in the U.S. can send to Cuba include First-Class Mail International items, such as postcards and letter size envelopes, First-Class Package International Service items, Priority Mail International Flat Rate Envelopes and Priority Mail International Small Flat Rate Priced Boxes. A comprehensive list of mailing conditions to Cuba can be found in the International Mail Manual at: http://pe.usps.gov/text/imm/ce_017.htm#ep1416554.

NOTE: The three-times-per week flights carry up to 6,000 pounds and are operated by Fort Lauderdale-based IBC Airways using a Saab 340A aircraft

The Survey: What Some U.S. Company Representatives Think About Cuba

The Survey: What Some U.S. Companies Representatives Think About Cuba

From January 2015 through March 2016, the U.S.-Cuba Trade and Economic Council communicated with 437 individuals subject to United States law who work for United States-based companies and who had traveled to the Republic of Cuba since 17 December 2014.  

Of the 437, twenty-nine (29) confirmed that they had visited the Republic of Cuba, but would not discuss the commercial activities or opportunities for their company.  One hundred and thirty-seven (137) of the individuals identified as “self-employed” or “consultant.”  

The definition of “commercial opportunities” was exporting products to, importing products from, exporting services to, importing services from, and providing Direct Foreign Investment (DFI).

Survey participants consisted of large, medium and small publicly-held and privately-held companies; with a geographical imprint representing forty-seven states (excluding Alaska, Hawaii, and Arizona):

Accounting
Advertising
Agricultural Commodities
Airlines
Architectural
Automobile Manufacturing
Automobile Parts
Building Materials
Computer Services
Consumer Products
Employment
Energy
Exporting
Financial
Food product
Food Service
Franchise
Healthcare
Hospitality
Importing
Law Firms
Manufacturing
Mining
Printing
Publishing
Real Estate
Restaurants
Retail
Shipping
Supermarket
Transportation
Travel Agency
Truck Manufacturers
Waste Management
WND (Would Not Disclose)

Respondents in the following categories were most optimistic about opportunities for their respective areas: Law firms (81%), hospitality (77%), agricultural commodities (82%), food products (91%), consumer products (87%), restaurants (68%). 

1) Provide the number of visits by company representatives to the Republic of Cuba and the estimated expenditures (per person average US$1,985.00 for two-night visit: airfares, hotels, meals, incidentals, etc.; with single high reported as US$4,600.00):  
1- 88%
2- 8%
3- 2%
4- 1%
Would Not Disclose- 1%

2) For companies not having engaged with the Republic of Cuba, using a scale of one (1-lowest) to five (5-highest) the expectations by the company of engaging in meaningful (self-defined) commercial activities within the Republic of Cuba within two years:
1- 79%
2- 3%
3- 14%
4- 3%
5- 1%

3) For companies having engaged with the Republic of Cuba, using a scale of one (1-lowest) to five (5 -highest) the expectations of the company continuing meaningful (self-defined) commercial activities within the Republic of Cuba during the next two years:  
1- 2%
2- 0%
3-27%
4- 4%
5-67%

4) The respondents from companies that were not engaged with the Republic of Cuba were asked to, using a percentage, predict when their company expected to engage with the Republic of Cuba.  The following are the averages from the respondents:
2016- 3%
2017-8%
2018-10%
2019-12%
2020-11%
2021-10%
2022-4%
2023-3%
2024-3%
2025-10%
Never- 26%

5) The respondents whose companies had not engaged with the Republic of Cuba were asked to describe whether their visit to the Republic of Cuba had been worth the time and the expense, based upon their expectations:
Worth It- 18%
Not Worth It- 78%
No Answer- 4%

USPS Commences Deliveries To Cuba

United States Postal Service Resumes Mail Service to Cuba
First Direct Transportation of Mail Service to Cuba in More Than 50 Years

March 16, 2016

WASHINGTON — Today the United States Postal Service announced it resumed direct transportation of mail service with Cuba for the first time in more than 50 years.

"The U.S. Postal Service is pleased to participate in the historic direct transportation of mail service with Cuba," said Postmaster General and CEO Megan J. Brennan. "Moving letter mail and package volume directly between our countries will improve service for businesses and consumers."

The types of mail customers in the U.S. can send to Cuba include First-Class Mail International items, such as postcards and letter size envelopes, First-Class Package International Service items, Priority Mail International Flat Rate Envelopes and Priority Mail International Small Flat Rate Priced Boxes. A comprehensive list of mailing conditions to Cuba can be found in the International Mail Manual at: http://pe.usps.gov/text/imm/ce_017.htm#ep1416554.

http://www.cubatrade.org/blog/2015/12/11/usps-to-commence-operations?rq=USPS

USPS To Commence Operations
December 11, 2015

Press Release issued by the Cuban Delegation participating in the Negotiations to Re-establish Direct Postal Service between Cuba and US
 
MIAMI, December 11, 2015. On Thursday, December 10, the representatives of Cuba and the United States held a new round of talks on the re-establishment of direct postal service between both countries. The Cuban delegation was headed by José Ramón Cabañas Rodríguez, Ambassador of Cuba to the United States; and the US delegation was headed by Lea Emerson, Executive Director for International Postal Affairs at the United States Postal Service.

Both delegations agreed to re-establish direct postal service between the two countries through the implementation of a Pilot Plan for the transportation of mail which will become effective within the next few weeks, with the hope of eventually institutionalizing it on a permanent basis in the future.

After more than five decades without this important service, the direct transportation of mail and postal packages between Cuba and the United States will be available to the citizens of both countries on a date to be announced further on, once the discussion of the technical, operational and safety aspects required for its implementation is completed.

During the meeting, the Cuban delegation set out examples evidencing the impact that the implementation of the US blockade has had on the transactions carried out by Grupo Empresarial Correos de Cuba.

The talks were held in a respectful, professional and constructive ambiance (Cubaminrex).

Cruise Ships Are The New Battleships

When United States President Calvin Coolidge arrived to the Republic of Cuba in January 1928, he was aboard the battleship USS Texas.....

In March2016, President Barack Obama will arrive to the Republic of Cuba aboard Air Force One, a Boeing-747 four engine jet aircraft.

Soon, the government of the Republic of Cuba will authorize passenger cruise ships to transport from the United States to the Republic of Cuba individuals subject to United States law who are visiting under one of the twelve categories of permissible travel.

The imagery that was a battleship in 1928 has been replaced by the imagery of what a passenger cruise ship is today..... a Trojan horse of not full of uniformed soldiers, but full of sometimes uniquely-dressed individuals armed with smart phones, cameras, plenty of money, a desire for conversation, a desire to influence, a desire to support, a desire to see what may not be sustainable.... they are still soldiers.... and they will arrive by cruise ship, the new battleship.

Expect Obama Administration To Increase From US$400.00 To US$800.00 In Items Travelers May Bring From Cuba

Currently, the U.S. Customs and Border Protection authorizes United States residents returning from abroad to be entitled (generally) to a duty-free exemption of US$800.00 on items accompanying them.

For United States residents returning from the Republic of Cuba, that value is US$400.00 and up to US$100.00 worth (retail value in the Republic of Cuba) of tobacco products (up to 100 cigars) and rum.

Expect the Obama Administration before 20 January 2017 to increase the exemption to US$800.00 so as to harmonize with general duty policies.

CBP Public Notice on Process for Imports from Cuba Importing Commercial Goods from Cuba

Commercial imports authorized under § 515.582 of the Cuban Assets Control Regulations (CACR),  Importation of Certain Goods and Services Produced by Independent Cuban Entrepreneurs, must comply with all current U.S. Customs and Border Protection (CBP) and other U.S. Government agency requirements.  For the import of commercial goods, such as for retail sale in the United States, CBP generally requires a customs informal entry for goods valued under $2,500, and a formal entry for goods exceeding $2,500.  Under the 2015 Harmonized Tariff Schedule of the United States (HTSUS), Cuba is a Column 2 country, and is therefore subject to specific duty rates.

Importing Goods for Personal Use from Cuba

Imports by authorized travelers of goods produced by independent Cuban entrepreneurs are subject to the following:

31 C.F.R. § 515.582 authorizes importations of goods produced by independent Cuban entrepreneurs, as set forth on the State Department’s Section 515.582 List without a limitation on the value of the goods.  However, these goods are still subject to the applicable provisions of the HTSUS.  Imports by private individuals authorized under § 515.582 of the CACR are allowed an $800 exemption from customs duties in accordance with the HTSUS, if the goods are for personal use.  The first $1,000 above that $800 will be assessed duty at rate of 4%, pursuant to the HTSUS.  The $800 exemption and the application of the 4% duty rate for the first $1,000 above the $800 exemption will be multiplied by the number of qualified family members traveling.  So, for example, a qualified family of three would be eligible for a $2,400 exemption from duty, and the $3,000 above that would receive a 4% duty rate.  Please be aware that CBP may deem goods accompanying passengers in excess of these values as a commercial shipment and treat them according to the commercial procedures in the above paragraph.

Imports by authorized travelers of goods other than those authorized 31 C.F.R. § 515.582 are subject to the following:

For goods other than those authorized by 31 C.F.R. § 515.582, as described above, the CACR imposes specific limitations on the value of goods that may be imported.  The value of merchandise purchased or otherwise acquired in Cuba that is imported as accompanied baggage under § 515.560 of the CACR cannot exceed $400 per person, of which no more than $100 of the merchandise may consist of alcohol or tobacco products (or a combination thereof), and provided that the merchandise is imported for personal use only.  The importation of Cuban origin information and informational materials is exempt from the prohibitions of the CACR, as described in 31 C.F.R. § 515.206.

Concerning the $100 of alcohol or tobacco products limit, travelers must comply with all applicable laws and regulations.  This includes the HTSUS limitations on personal exemptions
and rates of duty extended to nonresidents and returning residents on quantity and value restrictions to alcohol and tobacco products.  Imports of alcohol and tobacco quantities over the limits listed below and up to $100 will be assessed the 4% flat rate pursuant to the HTSUS. Alcohol and tobacco over the $100 limitation will be detained or seized, depending on the mitigating circumstances.

HTSUS Duty Free Exemptions for Alcohol and Tobacco:

Not Returning Resident

Articles imported by or for the account of any person arriving in the United States who is not a returning resident thereof:

9804.00.25      Not over 50 cigars, or 200 cigarettes, or 2 kilograms of smoking tobaccoor a proportionate amount of each, and not over 1 liter of alcoholic beverages, when brought in by an adult nonresident for his own consumption.

9804.00.30      Not exceeding $100 in value of articles (not including alcoholic beverages and cigarettes but including not more than 100 cigars) accompanying such person to be disposed of by him as bona fide gifts, if such person has not claimed an exemption under this subheading (9804.00.30) within the 6 months immediately preceding his arrival and he intends to remain in the United States for not less than 72 hours.     

9804.00.40      Not exceeding $200 in value of articles (including not more than 4 liters of alcoholic beverages) accompanying such a person who is in transit to a place outside United States customs territory and who will take the articles with him to such place.

Returning Resident

Articles imported by or for the account of any person arriving in the United States who is a returning resident, has attained the age of 21, after having remained beyond the United States for a period of not less than 48 hours, for his or her personal or household use, but not imported for the account of any other person nor intended for sale, if declared in accordance with regulations of the Secretary of the Treasury and if such person has not claimed, an exemption under subheadings 9804.00.65, 9804.00.70 and 9804.00.72 within 30 days preceding his arrival, and claims exemption under only one of such items on his arrival:

9804.00.80      Articles (including not over 50 cigars, or 300 cigarettes, or 2 kilograms of smoking tobacco or a proportionate amount of each, and not over 1 liter of alcoholic beverages), reasonable and appropriate, and intended exclusively, for the bona fide personal use of, and (except for articles consumed in use) to be taken out of the United States by, any person arriving in the United States who is leaving a vessel, vehicle or aircraft, engaged in international traffic, on which he or she is employed, with the intention of resuming such employment.

CLICK HERE TO VIEW CUSTOMS FORM

Unilever Reports That A JV In Cuba Could Wait Up To 720 Days For Payments

London, United Kingdom-based Unilever (2015 revenues approximately US$73 billion), is an Anglo-Dutch multinational consumer goods company co-headquartered in Rotterdam, Netherlands, and in the United Kingdom.  Its products include food, beverages, cleaning agents and personal care products.

On 22 January 2016, Unilever reported plans to "invest in Mariel, Cuba’s Special Development Zone. Partnering with state-owned company Intersuchel, we will build a $35 million homecare factory to open in 2017.  Cuba has a new overseas investor in its Mariel Special Development Zone and a new joint venture to celebrate.

Unilever and state-owned firm Intersuchel have signed a deal which will see the formation of a new company, Unilever-Suchel S.A. and a $35 million investment (equivalent to €32.3 million) in a personal and homecare factory which is set to open in 2017.

The factory will manufacture some of our top-selling personal and homecare international brands, including Sedal shampoo, Rexona deodorant, Omo detergent, Lux soap and Close-Up toothpaste. Unilever will take a 60% stake in the venture, and Intersuchel will hold 40%. The factory is expected to generate 300 direct jobs.

Unilever will invest in Mariel’s Special Development Zone, which allows foreign and domestic companies to trade and invest with fewer regulations and is designed to encourage overseas investment.

The signing ceremony for the joint venture was attended by Dutch Foreign Trade Minister Lilianne Ploumen, Ana Teresa Igarza, General Director of the Mariel Special Development Zone, Fabio Prado, President of Unilever Mexico & Greater Caribbean and Pedro Fraga, President of Intersuchel S.A."

Unilever reported that a company in a joint venture with a Republic of Cuba government-operated entity that expects to market the products of the joint venture to Republic of Cuba government-operated companies, need to be prepared to accept up to 720 days for account receivables.  Unilever reports that its operations have had a maximum wait of 180-days to receivable a payment.

New OFAC Regulations (effective 16 March 2016)

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 515

Cuban Assets Control Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations to further implement elements of the policy announced by the President on December 17, 2014 to engage and empower the Cuban people. Among other things, these amendments further facilitate travel to Cuba for authorized purposes, expand the range of authorized financial transactions, and authorize additional business and physical presence in Cuba. These amendments also implement certain technical and conforming changes.

CLICK HERE FOR TEXT

New OFAC Regulation Benefits MLB Players; Performers & Teachers Too

New OFAC Regulation Benefits MLB Players; Performers and Teachers Too

A changes to the Cuban Assets Control Regulations (CACR), announced yesterday and effective today, issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury was primarily to benefit Republic of Cuba nationals who will sign contracts with Major League Baseball (MLB) teams.

The new regulation stipulates that salary and other compensation may be paid to a Republic of Cuba national by an entity subject to United States law provided that the payments are not subject to a “special tax assessment” by the government of the Republic of Cuba. 

Since the government of the Republic of Cuba had regulations governing outside income prior to the issuance of the OFAC regulation, and as the regulations are not "category specific," the new OFAC regulation would apply to baseball players.  The Obama Administration did not want to provide any "fees" to the government of the Republic of Cuba.

The new regulation also enables performers and teachers visiting the United States to receive more than expenses and a per diem.

New OFAC Regulation

§ 515.571 Certain transactions incident to travel to, from, and within the United States by Cuban nationals.
(a)  * * *

All transactions ordinarily incident to the Cuban national’s presence in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government.

This paragraph (a)(5) authorizes the receipt of salary or other compensation by a national of Cuba consistent with the individual’s non-immigrant status or non-immigrant travel authorization, provided that national of Cuba is not subject to any special tax assessments by the Cuban government in connection with the receipt of the salary or other compensation.

Examples of other transactions authorized by this paragraph (a)(5) include: the payment of tuition to a U.S. educational institution by a national of Cuba issued a student (F-1) visa, and the rental of a stage by a group of Cubans issued performance (P-2) visas.

Note to paragraph (a)(5):  This paragraph authorizes banking institutions, as defined in

§515.314, to open and maintain accounts solely in the name of a Cuban national who is present in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization for use while the Cuban national is located in the United States in such status, and to close such accounts prior to departure. See paragraph (b) of this section for an authorization for banking institutions to maintain accounts opened pursuant to this paragraph while the Cuban national is located outside the United States.

Republic of Cuba Income Tax Regulations On Outside Income (Spanish & English)

ARTICULO 19: Son sujetos de este Impuesto las personas naturales cubanas y extranjeras con residencia permanente en el territorio nacional, por los ingresos obtenidos cualquiera que sea el país de origen de estos ingresos.

ARTICULO 28: Las personas naturales cubanas y extranjeras con residencia permanente en el territorio nacional, por los ingresos que perciban de contratos individuales de trabajo en el exterior, pagarán sobre el total de los mismos un cuatro por ciento (4%), sin considerar deducción alguna salvo los pagos de las comisiones que haya realizado a entidades cubanas a través de las cuales se contrató.

Se entenderá como contrato individual de trabajo en el exterior la labor remunerada que realice un ciudadano cubano en otro país por gestión propia o  por medio de una entidad cubana, sin estar amparado en un convenio de colaboración, contrato de exportación de servicio u otro de similar naturaleza.

El valor mínimo a liquidar es de veinte pesos convertibles (20.00 CUC) mensuales, aplicando las reglas de conversión establecidas en el artículo 23.

ARTICLE 19: They are subject to this tax Cuban and foreign natural persons with permanent residence in the country, the income obtained whatever the country of origin of these revenues.

Article 28: The Cuban and foreign natural persons with permanent residence in the national territory, by income received from individual employment contracts abroad, will pay the total of these four percent (4%), regardless of deduction except any commission payments you have made to Cuban entities through which hired.

It shall mean the individual employment contract outside the paid work to make a Cuban citizen in another country's own management or by a Cuban entity, without being covered by a cooperation agreement, export contract of service or other similar nature.

The minimum value to be settled is twenty monthly convertible pesos (20.00 CUC), applying the conversion rules set out in Article 23.

Delta Air Lines DOT Route Application

Click Here to view the Route Pleadings to the United States Department of Transportation by Atlanta, Georgia-based Delta Air Lines, Inc.

ECONOMIC EYE ON CUBA March 2016 Newsletter

ECONOMIC EYE ON CUBA©
March 2016

US$4.3 Billion In 2015 U.S. Commerce Department Licensee In Perspective- 1
January 2016 Food/Ag Exports Deceased 8% Compared To January 2015- 2
No Exports Of Products Authorized By 2015/2016 Initiatives
January 2016 Healthcare Product Exports- 3
January 2016 Humanitarian Donations- 4
U.S. Port Export Data- 14
Current Speaking Schedule- 16

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