Might United States cruise lines and United States airlines agree to out-of-court settlements with plaintiffs as a means to avoid having a United States District Court Judge rule on the definition of “tourism.”

With a court ruling that travel-related activities authorized by the Obama Administration and the Trump Administration constitute “tourism” which is specifically prohibited, thus illegal, by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, a substantial revenue stream would evaporate for United States-based cruise lines, airlines, travel agents, tour operators, one hotel management company and for the government of the Republic of Cuba and Republic of Cuba government-operated companies.

According to a Washington DC-based analyst, if the “educational travel” sub-category of “people-to-people” is eliminated, the result could be a 66% decrease in the number of non-family visitors from the United States to the Republic of Cuba.

If a judge determines the Obama Administration and Trump Administration violated the TSREEA, then there will the question of whether the activities of United States companies (and non-United States companies) engaging in the provision of travel-related services (airlines, cruise lines, hotel management companies) incident to what is now deemed to be unlawful have not been engaging in lawful activities despite licenses (general and specific) issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury. Economic Eye On Cuba Analysis LINK: https://www.cubatrade.org/blog/2019/3/26/trump-administration-may-have-done-what-it-said-it-did-not-do-does-it-solve-the-problem?rq=Trump%20Administration%20May%20Have%20Done%20What%20It%20Said%20It%20Did%20Not%20Do....%20Does%20It%20Solve%20The%20Problem%3F

If the travel-related services companies are found to not be operating lawfully, they could be deemed to be subject to a determination of whether they are “trafficking” using the definition of the term in Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (Libertad Act).

On 16 March 2016, the United States Department of Transportation (USDOT) in Washington DC signed a Bilateral Arrangement, not an agreement or treaty, to re-establish scheduled air services between the United States and the Republic of Cuba. According to the USDOT: “The signing brings into effect the arrangement that was reached December 16, 2015. This arrangement will continue to allow charter flight operations. While U.S. law prohibits travel to Cuba for tourist activities, this arrangement will facilitate authorized travel, enhance traveler choices, and strengthen people-to-people links between the two countries. Scheduled services are expected to commence sometime later this year. Expanding authorized travel is a critical focus of President Obama’s approach to Cuba policy, which emphasizes engagement with the Cuban people.”

The Bureau of Transportation Statistics (BTS) of the USDOT has reported data for regularly-scheduled commercial flights from the United States to the Republic of Cuba.

The first regularly-scheduled commercial flight occurred on 31 August 2016. Since the first flight, more than 2,203,490 passengers have traveled to the Republic of Cuba aboard more than 13,479 flights.

2016: 2,036 flights carrying 177,365 passengers.

2017: 1,422 flights carrying 989,280 passengers.

2018: 8,505 flights carrying 893,011 passengers.

2019: (January and February) 1,516 flights carrying 143,834 passengers.

United States airlines currently operating regularly-scheduled services are: Atlanta, Georgia-based Delta Air Lines (2018 revenues approximately US$41 billion); Fort Worth, Texas-based American Airlines (2018 revenues approximately US$42 billion); Chicago, Illinois-based United Airlines (2018 revenues approximately US$38 billion); Long Island City, New York-based JetBlue Airways (2018 revenues approximately US$7 billion) and Dallas, Texas-based Southwest Airlines (2018 revenues approximately US$22 billion). United States airlines with ticket offices in the city of Havana, Republic of Cuba: Delta Air Lines, American Airlines, United Airlines and JetBlue Airways.

Travel Data

The Ministry of Tourism of the Republic of Cuba (MINTUR) reported total international visitor arrivals of 4.75 million [also reported as 4,732,280] in 2018 compared to 4.5 million in 2017.

For the period January 2019 through April 2019, MINTUR reported approximately 257,500 visitors (not including individuals of Cuban descent) from the United States representing an increase of approximately 93% compared to the same period in 2018. MINTUR reported 638,365 visitors in 2018 from the United States who were not of Cuban-descent, representing an increase of approximately 3% compared to 2017.

MINTUR reported 142,721 of the 257,500, approximately 55%, arrived by cruise ship during the period January 2019 through April 2019. The 142,721 represented an increase of approximately 300% compared to the same period in 2018.

Prior to the 4 June 2019 announcement by the Trump Administration, MINTUR expected visitor arrivals in 2019 to increase by approximately 7% to 5.1 million compared to 2018. MINTUR reported that gross tourism-related revenues were approximately US$2.5 billion in 2018 and were expected to be approximately US$3.1 billion in 2019, representing an increase of approximately 17% compared to 2018.

MINTUR reported that in 2018 seventeen (17) cruise lines delivered approximately 800,000 [also reported as 851,810] passengers to the Republic of Cuba compared to 619,000 in 2017 and 541,000 in 2016. Media reporting has 6,770 passengers in 2012, 37,513(9) passengers in 2015, 397,520 passengers in 2017 and 500,000 passengers in 2018. MINTUR reported that the seventeen cruise lines operate twenty-five (25) cruise ships that visit the Republic of Cuba.

The Washington, DC-based Cruise Line Industry Association reported that approximately 200,000 passengers visited the Republic of Cuba from January 2019 through May 2019.

For the period 2017 through 2020, the three-largest United States-based cruise lines expected to deliver more than 700,000 passengers (progressively increasing annually) on more than 400 sailings.

The gross revenues to the Republic of Cuba in 2018 from 500,000 cruise ship passengers would have been approximately US$63 million and the gross revenues to the Republic of Cuba from 851,810 cruise ship passengers would have been approximately US$107 million.

The gross revenues to the Republic of Cuba from port charges in 2018 were approximately US$20 million.

The gross revenues to the cruise ship companies in 2018 were approximately US$400 million (500,000 passengers) to US$700 million (851,810 passengers).

Sailings to the Republic of Cuba represented approximately 1% of global sailings for Carnival Corporation & plc; approximately 3% of global sailings for Royal Caribbean Cruise Lines; and approximately 4% of global sailings for Norwegian Cruise Line. Carnival Corporation & plc had a market share of approximately 15% of sailings to the Republic of Cuba amongst competitors.

MINTUR reported 585,600 individuals of Cuban descent visited in 2018, with most arriving from the United States. The majority of these visitors reside with relatives rather than occupying hotels.

Bethesda, Maryland-based Marriott International, Inc. (2018 revenues approximately US$20 billion) and its subsidiary, Stamford, Connecticut-based Starwood Hotels and Resorts Worldwide LLC, have a series of two-year licenses from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC to manage two (2) properties located in the Republic of Cuba. Both properties managed by Marriott International (through Starwood Hotels and Resorts Worldwide LLC) are in the city of Havana, Four Points by Sheraton Havana and Hotel Inglaterra (delayed opening without explanation from December 2016 to December 2017 to December 2019 to “sometime” in 2020) and owned by entities controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR). The OFAC licenses were first issued during the Obama Administration and were renewed during the Trump Administration, although there has been a reported delay by the OFAC in transferring the licenses from Starwood Hotels and Resorts Worldwide LLC to Marriott International.

The Obama Administration was not intent upon enforcing who could not travel to the Republic of Cuba because it did not support the statute which prohibited travel for the purpose of tourism. The Obama Administration permitted an elasticizing of the twelve (12) statutorily-authorized definitions as to who could visit the Republic of Cuba.

The Trump Administration is nearing the end of an internal analysis: If two 3,000-passenger cruise ships arrive to the Port of Havana, how do 6,000 passengers have, as regulations for the statute require, “meaningful interaction between the traveler and individuals in Cuba” during a several hour visit? What does a Republic of Cuba national gain from the brief encounter other than money? Isn’t a cruise ship, by definition, a vehicle to transport and service tourists? Isn’t a cruise ship passenger, by definition, a tourist- regardless of whether they believe it so? Can “meaningful interaction” be reasonably defined? Is the definition a function of the individual rather than the government?

On 2 May 2019, two lawsuits were filed in the Miami Division of the United States District Court against Miami, Florida-based Carnival Corporation & plc relating to its use of passenger terminals located in Havana and in the city of Santiago de Cuba by plaintiffs with certified claims against the Republic of Cuba. LINK: https://www.cubatrade.org/blog/2019/5/2/libertad-title-iii-united-states-district-court-lawsuit-filing-texts-against-carnival-corporation

When Carnival Corporation & plc commenced cruises on 1 May 2016 to the Republic of Cuba, it used the 704-passenger Adonia and the itineraries were licensed by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and managed through its Fathom subsidiary which specialized in travel with a social impact. Importantly, the cruise itinerary only included the Republic of Cuba- it was not a component of a multi-country cruise which are designed for tourism. Given a lack of marketplace interest, soon the Fathom cruises to the Republic of Cuba ceased and the Republic of Cuba was increasingly included on regularly-scheduled mainline cruise ship itineraries, but with on-shore excursions within the Republic of Cuba that were marketed to be in compliance with OFAC regulations.

Since that 1 May 2016 inaugural cruise by the Adonia, there are few cruises by any company, including Miami, Florida-based Norwegian Cruise Line and Miami, Florida-based Royal Caribbean International, that only have the Republic of Cuba as the multi-day cruise destination.

According to the Republic of Cuba, in 2018 the three-largest United States-based cruise lines and smaller cruise lines delivered more than 500,000 passengers to the Republic of Cuba. The majority of passengers traveled on cruise itineraries that included multiple countries.

On 4 June 2019, Bloomberg News reported: “Cruise lines were able to charge higher prices for trips to Cuba than to other destinations, increasing the island’s financial importance, according to Instinet analyst Harry Curtis. He said the country accounts for about 4% of Norwegian’s capacity, as much as 3% for Royal Caribbean and 1% for Carnival. That [ending cruise ship operations to the Republic of Cuba] could wipe out 15 cents a share from Norwegian’s profit, he estimates. Royal Caribbean would lose 10 cents a share, while Carnival’s earnings stand to decrease by as much as 5 cents a share, he said.”

If cruise lines could not be profitable with Republic of Cuba-only cruises, then is the message to the OFAC that the passengers are not focusing upon the Republic of Cuba? If the Republic of Cuba is one of two or three or four countries on a cruise itinerary, what percentage of passengers would not participate on the cruise if the Republic of Cuba was excluded? That data will likely be important for the cruise lines to compile.

The OFAC authorized (specific licenses and general licenses) the cruises under the “educational travel” provision within the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000. The licensee is the cruise line rather than the passenger; the cruise line has potential liability as the passenger is reasonably relying upon the licensee to operate within the confines of United States laws, regulations and policies. To mitigate liability, cruise lines have been requiring passengers to self-certify that they adhere to the statutory and regulatory requirements of the TSREEA.

United States airlines are not considered licensees and passengers traveling from the United States to the Republic of Cuba are self-certifying that they adhere to one of the twelve authorized categories of travel to the Republic of Cuba. The third-party companies that are processing the self-certifications are also not licensees. The passenger is wholly-responsible for compliance with the OFAC regulations.

The OFAC can reach back five years to seek documentary evidence of compliance. Because the OFAC has not yet sought action against United States-based companies engaged in providing travel-related services does not exempt compliance. Individuals remain liable for their actions.

All general and specific licenses issued by the OFAC are subject to change or revocation at any time should the terms of the license no longer be deemed as consistent with United States policy.

The Trump Administration may require the airlines, cruise lines and tour operators to provide the documentation since 1 May 2016 from each passenger who has traveled to the Republic of Cuba under their license. That’s potentially millions of pieces of paper subject to audit by the OFAC… and how long would that take to complete? And, would the cruises be permitted to operate during the audit process?

TSREEA Permits 12 Categories Of Travel

The authorized categories are: 1) family visits 2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations 3) journalistic activity 4) professional research and professional meetings 5) educational activities 6) religious activities 7) public performances, clinics, workshops, athletic and other competitions, and exhibitions 8) support for the Cuban people 9) humanitarian projects 10) activities of private foundations or research or educational institutes 11) exportation, importation, or transmission of information or information materials and 12) certain authorized export transactions.

Travel to the Republic of Cuba for the purpose of tourism by individuals subject to United States law is prohibited by United States law- not by regulation and not by policy.

The statute within the TSREEA: “(b) Prohibition on travel relating to tourist activities (1) In general Notwithstanding any other provision of law or regulation, the Secretary of the Treasury, or any other Federal official, may not authorize the travel-related transactions listed in subsection (c) of section 515.560 of title 31, Code of Federal Regulations, either by a general license or on a case-by-case basis by a specific license for travel to, from, or within Cuba for tourist activities. (2) Definition. In this subsection, the term ‘‘tourist activities’’ means any activity with respect to travel to, from, or within Cuba that is not expressly authorized in subsection (a) of this section, in any of paragraphs (1) through (12) of section 515.560 of title 31, Code of Federal Regulations, or in any section referred to in any of such paragraphs (1) through (12) (as such sections were in effect on June 1, 2000). (Pub. L. 106–387, § 1(a) [title IX, § 910], Oct. 28, 2000, 114 Stat. 1549, 1549A–71.)”

From The OFAC (2017):

“What is individual people-to-people travel, and how does the President’s announcement impact this travel authorization?

Individual people-to-people travel is educational travel that: (i) does not involve academic study pursuant to a degree program; and (ii) does not take place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact. The President instructed Treasury to issue regulations that will end individual people-to-people travel. The announced changes do not take effect until the new regulations are issued.

Will group people-to-people travel still be authorized?

Yes. Group people-to-people travel is educational travel not involving academic study pursuant to a degree program that takes place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact. Travelers utilizing this travel authorization must: (i) maintain a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba; and (ii) be accompanied by an employee, consultant, or agent of the sponsoring organization, who will ensure that each traveler maintains a full-time schedule of educational exchange activities. In addition, the predominant portion of the activities engaged in by individual travelers must not be with prohibited officials of the Government of Cuba or prohibited members of the Cuban Communist Party (as defined in the regulations). Once OFAC issues the new regulations, new individual people-to-people travel will not be authorized.

Will organizations subject to U.S. jurisdiction that sponsor exchanges to promote people-to-people contact be required to apply to OFAC for a specific license?

No. To the extent that proposed travel falls within the scope of an existing general license, including group people-to-people educational travel, persons subject to U.S. jurisdiction may proceed with sponsoring such travel without applying to OFAC for a specific license. It is OFAC’s policy not to grant applications for a specific license authorizing transactions where a general license is applicable.”

20. What constitutes “support for the Cuban people” for generally authorized travel and other transactions? This general license authorizes, subject to conditions, travel-related transactions and other transactions that are intended to provide support for the Cuban people, which include activities of recognized human rights organizations; independent organizations designed to promote a rapid, peaceful transition to democracy; and individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba. In accordance with the NSPM, OFAC is amending this general license to require that each traveler utilizing this authorization engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities and that result in meaningful interactions with individuals in Cuba. OFAC is also amending this general license to exclude from the authorization certain direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR §515.574

Certified Claims Background

There are 8,821 claims of which 5,913 awards valued at US$1,902,202,284.95 were certified by the USFCSC and have not been resolved for nearing sixty years (some assets were officially confiscated in the 1960’s, some in the 1970’s and some in the 1990’s. The USFCSC permitted simple interest (not compound interest) of 6% per annum (approximately US$114,132,137.10); with the approximate current value of the 5,913 certified claims US$8,521,866,236.75.

The first asset to be expropriated by the Republic of Cuba was an oil refinery in 1960 owned by White Plains, New York-based Texaco, Inc., now a subsidiary of San Ramon, California-based Chevron Corporation (USFCSC: CU-1331/CU-1332/CU-1333 valued at US$56,196,422.73).

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International; the certified claim also includes land adjacent to the Jose Marti International Airport in Havana, Republic of Cuba. The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust.

The certified claim controlled by Marriott International also includes land adjacent to the Jose Marti International Airport (HAV) in Havana, formerly known as Rancho-Boyeros Airport, located in the town of Boyeros, approximately 9 miles from Havana. HAV handles approximately 25 international airlines and serves approximately 60 destinations in approximately 30 countries.

The two (2) largest certified claims total US$449,377,207.76, representing 24% of the total value of the certified claims. Thirty (30) certified claimants hold 56% of the total value of the certified claims. This concentration of value creates an efficient pathway towards a settlement.

Title III of the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 requires that an asset had a value of US$50,000.00 when expropriated by the Republic of Cuba without compensation to the original owner. Of the 5,913 certified claims, 913, or 15%, are valued at US$50,000.00 or more. Adjusted for inflation, US$50,000.00 (3.70% per annum) in 1960 has a 2019 value of approximately US$427,267.01. The USFCSC authorized 6% per annum, meaning the 2019 value of US$50,000.00 is approximately US$1,649,384.54.

The ITT Corporation Agreement

In July 1997, then-New York City, New York-based ITT Corporation and then-Amsterdam, the Netherlands-based STET International Netherlands N.V. signed an agreement whereby STET International Netherlands N.V. would pay approximately US$25 million to ITT Corporation for a ten-year right (after which the agreement could be renewed and was renewed) to use assets (telephone facilities and telephone equipment) within the Republic of Cuba upon which ITT Corporation has a certified claim valued at approximately US$130.8 million. ETECSA, which is now wholly-owned by the government of the Republic of Cuba, was a joint venture controlled by the Ministry of Information and Communications of the Republic of Cuba within which Amsterdam, the Netherlands-based Telecom Italia International N.V. (formerly Stet International Netherlands N.V.), a subsidiary of Rome, Italy-based Telecom Italia S.p.A. was a shareholder. Telecom Italia S.p.A., was at one time a subsidiary of Ivrea, Italy-based Olivetti S.p.A. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International.

LINK To Complete Analysis In PDF Format

May 29, 2019

Marriott Again Delays Management Contract Implementation For Hotel Inglaterra In Havana

May 29, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Second-largest certified claimant, Bethesda, Maryland-based Marriott International, Inc. (2018 revenues approximately US$20 billion) and its subsidiary, Stamford, Connecticut-based Starwood Hotels and Resorts Worldwide LLC, have a series of two-year licenses from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC to manage two (2) properties located in the Republic of Cuba.

The OFAC licenses were first issued in 2015 during the Obama Administration and were renewed during the Trump Administration, although there has been a reported delay by the OFAC in transferring the licenses from Starwood Hotels and Resorts Worldwide LLC to Marriott International. The third license renewal for the licenses is in 2019.

Both properties (one currently through Starwood Hotels and Resorts Worldwide LLC) are in the city of Havana, the 186-room Four Points by Sheraton Havana (which employs approximately 125 Republic of Cuba citizens) and 83-room Hotel Inglaterra (delayed opening without public explanation from December 2016 to December 2017 to December 2019 to “sometime” in 2020).

Both properties are owned by entities controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR).

Marriott International reported that the OFAC-authorized management contract for at least one of the properties requires the investment of millions of United States Dollars; unstated as to the shared responsibility for that investment.

Certified Claims Background

The ITT Corporation Agreement

LINK To Complete Analysis In PDF Format

May 29, 2019

Arkansas-Based Home BancShares Reports About Cuba For Second Year Since Stonegate Acquisition

May 29, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

In 2015, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 on 29 October 1993 and commenced operation on 3 January 1994.

Stonegate Bank provides commercial operating accounts for the Embassy of the Republic of Cuba in Washington, DC and the Permanent Mission of the Republic of Cuba to the United Nations in New York City; the financial institution also handles other types of OFAC-authorized transactions.

In September 2017, Stonegate Bank was purchased by Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion) through its Centennial Bank subsidiary.

The Obama Administration did not authorize BICSA under a general OFAC license or reportedly in the OFAC license issued to Stonegate Bank for it to have an account with Stonegate Bank, so Stonegate Bank has processed transactions for approximately eighty (80) customers on a regular basis through Panama City, Panama-based Multibank, which has dealings with the Republic of Cuba.

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved.

Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) exports (agricultural commodities and food products) since first use by the Republic of Cuba in December 2001 are US$5,967,305,815.00 through March 2019. TSREEA requires that payments be made on a cash-in-advance basis; no other payment terms are permitted. Since 2003, healthcare product exports (payment terms are permitted) from the United States to the Republic of Cuba are approximately US$25,206,592.00 under provisions of the Cuban Democracy Act (CDA) of 1992.

Third-country financial institutions, including Montreal, Canada-based National Bank of Canada (2018 assets approximately US$250 billion) and those located on the European Continent, provide payment facilitation services for purchases made by Republic of Cuba government-operated Empresa Cubana Importadora de Alimentos (Alimport). Third-parties have received fees on nearly all of the US$5.9 billion in TSREEA-related transactions.

Home BancShares

The eight-page 2018 Annual Report for Conway, Arkansas-based Home BancShares did not mention the Republic of Cuba; the 190-page 2017 Annual Report did mention the Republic of Cuba.

The 89-page Form 10-Q filed on 6 May 2019 with the United States Securities And Exchange Commission (SEC).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this document, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, including through potential acquisitions, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:

Number 16 of 17 Listed:

risks associated with our customer relationship with the Cuban government and our correspondent banking relationship with Banco Internacional de Comercio, S.A. (BICSA), a Cuban commercial bank, through our recently completed acquisition of Stonegate Bank;

The 177-page Form 10-K filed on 26 February 2019 with the United States Securities And Exchange Commission (SEC).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

16th of 23:

Other Banking Services

As a result of our acquisition of Stonegate in September 2017, we also offer credit cards to both consumers and businesses. Credit cards typically involve a higher degree of credit risk since outstanding balances are unsecured and repayment of such balances is often negatively impacted by a decline in economic conditions. Our credit cards offer a variety of benefits and features designed to meet the needs of our customer. In addition, our consumer credit cards can be used in Cuba.

Our banking relationships with the Cuban government and Banco Internacional de Comercia, S.A. (“BICSA”) may increase our compliance risk and compliance costs. U.S. persons, including U.S. banks, are restricted in their ability to establish relationships and engage in transactions with Cuba and Cuban persons pursuant to the existing U.S. embargo and the Cuban Assets Control Regulations. However, as a result of our acquisition of Stonegate Bank in 2017, we maintain a customer relationship to handle the accounts for Cuba’s diplomatic missions at the United Nations and for the Cuban Interests Section (now the Cuban Embassy) in Washington, D.C. This relationship was established in May 2015 pursuant to a special license granted to Stonegate Bank by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) in connection with the reestablishment of diplomatic relations between the U.S. and Cuba. In July 2015, Stonegate Bank established a correspondent banking relationship with Banco Internacional de Comercio, S.A. (“BICSA”) in Havana, Cuba.

Cross-border correspondent banking relationships pose unique risks because they create situations in which a U.S. financial institution will be handling funds from a foreign financial institution whose customers may not be transparent to the U.S. financial institution. Moreover, Cuban financial institutions are not subject to the same or similar regulatory guidelines as U.S. banks; therefore, these foreign institutions may pose a higher money laundering risk to their respective U.S. bank correspondent(s). Investigations have determined that, in the past, foreign correspondent accounts have been used by drug traffickers and other criminal elements to launder funds. Shell companies are sometimes used in the layering process to hide the true ownership of accounts at foreign correspondent financial institutions. Because of the large amount of funds, multiple transactions, and the U.S. bank’s potential lack of familiarity with a foreign correspondent financial institution’s customer, criminals and terrorists can more easily conceal the source and use of illicit funds. Consequently, we may have a higher risk of noncompliance with the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) rules due to our correspondent banking relationship with BICSA and will likely need to more closely monitor transactions related to correspondent accounts in Cuba, potentially resulting in increased compliance costs. Our failure to strictly adhere to the terms and requirements of our OFAC license or our failure to adequately manage our BSA/AML compliance risk in light of our correspondent banking relationship with BICSA could result in regulatory or other actions being taken against us, which could significantly increase our compliance costs and materially and adversely affect our results of operations.

Stonegate Bank

On September 26, 2017, the Company completed the acquisition of all of the issued and outstanding shares of common stock of Stonegate Bank (“Stonegate”), and merged Stonegate into Centennial. The Company paid a purchase price to the Stonegate shareholders of approximately $792.4 million for the Stonegate acquisition. Under the terms of the merger agreement, shareholders of Stonegate received 30,863,658 shares of HBI common stock valued at approximately $742.3 million plus approximately $50.1 million in cash in exchange for all outstanding shares of Stonegate common stock. In addition, the holders of outstanding stock options of Stonegate received approximately $27.6 million in cash in connection with the cancellation of their options immediately before the acquisition closed, for a total transaction value of approximately $820.0 million.

Including the effects of purchase accounting adjustments, as of acquisition date, Stonegate had approximately $2.89 billion in total assets, $2.37 billion in loans and $2.53 billion in customer deposits. Stonegate formerly operated its banking business from 24 locations in key Florida markets with significant presence in Broward and Sarasota counties.

Through our acquisition and merger of Stonegate into Centennial, we maintain a customer relationship to handle the accounts for Cuba’s diplomatic missions at the United Nations and for the Cuban Interests Section (now the Cuban Embassy) in Washington, D.C. This relationship was established in May 2015 pursuant to a special license granted to Stonegate by the U.S. Treasury Department’s Office of Foreign Assets Control in connection with the reestablishment of diplomatic relations between the U.S. and Cuba. In July 2015, Stonegate Bank established a correspondent banking relationship with Banco Internacional de Comercio, S.A. in Havana, Cuba. As of December 31, 2017, this correspondent banking relationship does not have a material impact to the Company’s financial position and results of operations.

During 2017, the Company acquired a total of 33 branches through the acquisitions of GHI, BOC and Stonegate. In an effort to achieve efficiencies, primarily from the Stonegate acquisition, the Company closed 12 Florida locations during the first quarter of 2018.

See Note 2 “Business Combinations” in the Notes to Consolidated Financial Statements for an additional discussion regarding the acquisition of Stonegate.

LINK To Analysis In PDF Format

LINK To:

Home BancShares Reports On Its Risks Associated With Cuba-Related Banking Services

5 May 2018

LINK To 2018 Annual Report

LINK To 2018 10-K Filing

LINK To 2018 10-Q Filing

LINK To 2017 Annual Report

May 27, 2019

Four Judges Assigned To First Four Libertad Act Title III Cases Have Histories With Cuba

May 27, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

One Judge Ruled Against Cuba In “Brothers To The Rescue” Case

One Judge Handled Previous Carnival Corporation Lawsuit Involving Cuba

One Judge Ruled Against Cuba In A Terrorism Case

One Judge Ruled In Cuba Espionage Case

Will Defendants Or Plaintiffs Seek New Judges? New Venues?

The Honorable James King, Senior Judge of the United States District Court for the Southern District of Florida

Garcia-Bengochea v. Carnival Corporation (1:19-cv-21725-JLK)

https://www.fjc.gov/history/judges/king-james-lawrence

https://www.flsd.uscourts.gov/content/senior-judge-james-lawrence-king

https://en.wikipedia.org/wiki/James_Lawrence_King

The Honorable Marcia Cooke, Judge of the United States District Court for the Southern District of Florida

Havana Docks Corporation v. Carnival Corporation (1:19-cv-21724-MGC)

https://www.fjc.gov/history/judges/cooke-marcia-g

https://www.flsd.uscourts.gov/content/judge-marcia-g-cooke

https://en.wikipedia.org/wiki/Marcia_G._Cooke

The Honorable Amit P. Mehta, Judge of the United States District Court for the District of Colombia

Exxon Mobil Corporation v. Corporacion Cimex S.A. AND Union Cuba-Petroleo (19-CV-1277-APM)

https://www.dcd.uscourts.gov/content/district-judge-amit-p-mehta

https://www.fjc.gov/history/judges/mehta-amit-priyavadan

https://en.wikipedia.org/wiki/Amit_Mehta

The Honorable Joan A. Lenard, Senior Judge of the United States District Court for the Southern District of Florida

Marisela Mata and Bibiana Hernandez, as individuals and on behalf of all others similarly situated, v. GRUPO HOTELERO GRAN CARIBE, CORPORACION DE COMERCIO Y TURISMO INTERNACIONAL CUBANACAN S.A., GRUPO DE TURISMO GAVIOTA S.A., CORPORACION CIMEX S.A., RAUL DOE 1-5, and MARIELA DOE 1-5 (1:19-cv-22025-JAL)

https://www.fjc.gov/history/judges/lenard-joan

https://www.flsd.uscourts.gov/content/senior-judge-joan-lenard

https://en.wikipedia.org/wiki/Joan_A._Lenard

May 21, 2019

Fourth Lawsuit Filed, First Non-Certified, In Florida Federal Court Seeking Class-Action Status; Melia Of Spain Is Target

May 21, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Case: 1:19-cv-22025-JAL

Marisela Mata and Bibiana Hernandez, as individuals and on behalf of all others similarly situated,

GRUPO HOTELERO GRAN CARIBE, CORPORACION DE COMERCIO Y TURISMO INTERNACIONAL CUBANACAN S.A., GRUPO DE TURISMO GAVIOTA S.A., CORPORACION CIMEX S.A., RAUL DOE 1-5, and MARIELA DOE 1-5,

Defendants

LINK To Court Filings On 20 May 2019

Judge: Lenard, Joan A.

Born 1952 in Amityville, NYFederal Judicial Service:Judge, U.S. District Court for the Southern District of Florida Nominated by William J. Clinton on September 29, 1995, to a seat vacated by James Lawrence King. Confirmed by the Senate on December 22, 1995, and received commission on December 26, 1995. Assumed senior status on July 1, 2017.

Education: Rockland Community College, A.A., 1972 Roger Williams College, B.A., 1973 Antioch Sch. of Law (now Univ. of the District of Columbia, Clarke Sch. of Law), J.D., 1976

Professional Career: Assistant state attorney, Eleventh Judicial Circuit, Florida, 1976-1982; chief, Consumer Fraud Division, 1978-1980; chief, Consumer and Economic Crime Division, 1980-1982 Judge, Dade County [Florida] Court, 1982-1993 Judge, Circuit Court of Florida, Family Division, Eleventh Judicial Circuit, 1993-1995.

May 19, 2019

Five Essential Elements For Cuba Food/Ag Legislation To Be Successful In The U.S. Congress

May 19, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Five Essential Elements For Cuba Food/Ag Legislation To Be Successful:

1. MAP/FMD Funding Needs To Be Requested From USDA

2. Solve Home BancShares Mystery Because It’s An Achilles Heel

3. Exporters Need To Be Public- Who Will Provide Payment Terms?

4. Financial Institutions Need To Be Public- Who Will Provide Financing?

5. FAR Amendments Are Coming From Four Senators; Get In Front Of Them

There has yet to be a United States agricultural commodity exporter or United States financial institution who has publicly stated they would today provide payment terms and/or financing and what those payment terms and financing terms would be for Republic of Cuba government-operated entities to purchase agricultural commodities and food products. That absence- which has remained consistent since 2000, is an Everest-like legislative hurdle. Lacking pressure, why would the Trump Administration do anything that it does not want to do?

Current Export Statistics

United States agricultural commodity and food product exports to the Republic of Cuba for the first quarter of 2019 have increased 30.1% compared to the same period in 2018.

Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,234.00. Trump Administration: US$569,659,155.00 (through March 2019).

Legislative Checklist

There is an eighteen-year-old legislative graveyard filled with headstones of initiatives that were “on the cusp” of success.

But for one moment in 2018, those legislative initiatives whose fates have been preordained and with headstones engraved in advance absent the date of internment were focused one country: Republic of Cuba.

During the second quarter of 2019, the goal once again will be tee-up a change United States law from requiring payment-of-cash-in-advance for exports to the Republic of Cuba to authorizing, but not requiring, exporters to extend payment terms and for financial institutions to provide financing/loans for exports to the Republic of Cuba.

Members of the United States Congress should want to avoid the fate of the cemetery. They can by not believing there is always a “pathway forward” and by reining-in those who belittle constituencies required for a successful legislative journey- and that includes those within the Trump Administration.

Supporters also need to accept the reality of the legislative marketplace with respect to the Republic of Cuba- the country is itself a commodity and supporters and opponents will need to negotiate an acceptable bicameral price for legislation to become law.

Supporters will also need to have at the ready a response to: The government of the Republic of Cuba may not be blamed for weather. However, the government of the Republic of Cuba can be blamed for not investing (or permitting viable direct foreign investment) in infrastructure to lessen the impact of weather upon the country’s ability to produce agricultural commodities and food products. Why should the Republic of Cuba have access to payment terms and financing when rather than seek assistance from the Russian Federation to improve consumable infrastructure, it sought a reported US$45 million to finance the purchase of vehicles for use by the military? What predicts the government will repay its obligations as contracted with United States companies and financial institutions? Rather than repay monies it owes; the focus is to increase the mobility of the military rather than increasing the mobility of farmers by importing US$50 million in tractors?”

And, the nearer (economically, commercially and politically) the Republic of Cuba is or is perceived to be to Venezuela, the easier will be a “pathway forward” for members of the United States Congress and for the Trump Administration to disengage from any legislative effort to change United States statutes.

Separating the Republic of Cuba from Venezuela (and the Russian Federation and People’s Republic of China) has become increasingly challenging for members of the United States Congress while becoming less problematic for the Trump Administration to maintain that connectivity due to actions by the respective governments as reported by media.

Finally, the Trump Administration has made operational Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”). Title III authorizes lawsuits in United States District Courts against companies and individuals who are using a certified claim or non-certified claim where the owner of the certified claim or non-certified claim has not received compensation from the Republic of Cuba or from a third-party who is using (“trafficking”) the asset. With Title III activity already in the courts, there may be little legislative interest in simultaneously promote legislation that will be deemed by detractors as beneficial to the government of the Republic of Cuba.

Nearing Five Months And No Applications To Use MAP/FMD Funds In Cuba

According the United States Department of Agriculture (USDA) no request has been made to use the Republic of Cuba provision in H.R. 2, the five-year Agriculture Improvement Act, known as the “Farm Bill” signed into law on 20 December 2018 by The Honorable Donald J. Trump, President of the United States.

The Farm Bill includes a provision authorizing the use in the Republic of Cuba of funding from the USDA for Market Access Program (MAP) and Foreign Market Development (FMD).

Advocates maintained that the Farm Bill provision was critical to “laying the groundwork” for increasing exports of agricultural commodities and food products to the Republic of Cuba. Statements from members of Congress included: “… an important first step to regaining our presence in Cuba.” Yet, not one request to the USDA.

Most observers reasonably concluded that legislative advocates- within the United States Congress and organizations located in Washington DC and located outside of the beltway would have prominently teed-up at least one high-profile applicant to request funding on 21 December 2018- regardless of whether the USDA was expected to approve including the Republic of Cuba in Fiscal Year 2019 allocations. Unfortunately, for some advocates having the USDA deny the allocation would be of greater value than the USDA approving the allocation- another avenue to seek funding for advocacy.

Why Won’t Exporters Say They Will Provide Payment Terms?

There is no lack of support from exporter-supported organizations promoting that the accessibility to payment terms and financing for agricultural commodities and food products is important to a normalized commercial bilateral relationship with the Republic of Cuba.

However, some of these organizations (and their members) refuse to take positions with respect to specific components of legislation and regulations relating to the transaction process. For example, Direct Correspondent Banking Agreements (DCBA).

There is a lack of credibility when an organization supports legislation yet none of the members of the organization will support the legislation by specifically sharing how they would use the legislation if it became law.

There is a lack of support by individual exporters- and having those exporters be specific as to how they would use the proposed legislation if that legislation became law.

The lack of public support from specific exporting companies stating on-the-record (at hearings, in media releases, etc.) that they would today provide payment terms- and what those payment terms would be, to Republic of Cuba government-operated entities is harmful to any legislative effort.

Will the exporter provide financing based upon the credit report provided by Republic of Cuba government-operated Empresa Cubana Importadora Alimentos (Alimport), under the auspice of the Ministry of Foreign Trade of Cuba (MINCEX)? Will Alimport provide financial statements?

Alimport has received up to two years to make payment for rice imported from Vietnam; and Alimport (and all Republic of Cuba government-operated entities) generally seek a minimum of 180-days with a preference for 360-days to make payment for imports. Will United States exporters provide the same?

Important to note that in 1999 and 2000, United States exporters opposed including a provision within the Trade Sanctions Reform and Export Enhancement Act (TSREEA) that would authorize payment terms for agricultural commodity and food product exports from the United States to the Republic of Cuba.

There were two reasons: First, United States exporters believed that if payment terms were authorized in the TSREEA, the first delay or default by any Republic of Cuba government-operated entity reported by the media would be disastrous for all exporters- and would likely result in an immediate halt of payment terms; and members of the United States Congress would have a choir of recrimination singing “I Told You So.” Second, although the lack of payment terms might result in less revenues from exports to the Republic of Cuba, there would be no risk to United States exporters or to the Republic of Cuba; and the Republic of Cuba could be presented (and it has been for eighteen years) to naysayers as the “safest export market in the world for United States companies.” Absent payment terms, the Republic of Cuba would be required to make purchases from the United States based upon quality of product and time of delivery for product along with whether such purchases would influence the political process in the United States.

After eighteen (18) years of payment-of-cash-in-advance for purchases, the Republic of Cuba could make a legitimate argument that authorizing payment terms, even with limited “toe-in-the-water” transactions, would be reasonable.

Philosophically, United States companies and financial institutions believe that their owners and managers should determine credit worthiness of a potential customer rather than the United States government.

Why Won’t Financial Institutions Say They Will Providing Financing?

There continues to be a lack of public support from financial institutions stating on-the-record (at hearings, in media releases, etc.) that they would today provide loans to Republic of Cuba government-operated entities based upon the credit profiles of those entities.

Would today Greenwich Village, Colorado-based CoBank or New York, New York-based J.P. Morgan Chase & Co. provide financing to United States companies who seek to export agricultural commodities and food products to the Republic of Cuba? Will CoBank or J.P. Morgan Chase & Co. provide financing based upon the financial statements provided by Alimport? Will Alimport provide financial statements?

For perspective, review an article referencing a 14 September 2016 hearing before the Committee on Agriculture of the United States House of Representatives. Significant to note that the individual quoted in an exchange with Representative Crawford is now Senior Director for Western Hemisphere Affairs at the National Security Council (NSC) in The White House:

https://www.cubatrade.org/blog/2016/9/17/from-inside-us-trade-lawmaker-pledges-to-push-ahead-on-cuba-trade-bill-after-house-hearing?rq=cobank

When New York, New York-based The Trump Organization transfers funds to the United States from one of the seven countries which host four of its hotels and seven of its golf clubs, The Trump Organization does not use a third country; it uses a straight line- a financial institution electronically transfers the funds from Canada, Dubai, Indonesia, Ireland or the United Kingdom to New York City. The Trump Organization does not want to waste time or waste money. The Trump Organization uses financial institutions with direct correspondent banking accounts.

One United States-based financial institution has a partial DCBA with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 on 29 October 1993 and commenced operation on 3 January 1994.

However, because BICSA does not have an account with the United States-based financial institution, a fully-operational direct correspondent relationship does not exist, and a multi-country triangular payment process continues- financial institutions in third countries have received fees on more than US$5.8 billion in transactions during the last eighteen years.

In 2015, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with BICSA. Stonegate Bank provides commercial operating accounts for the Embassy of the Republic of Cuba in Washington, DC and the Permanent Mission of the Republic of Cuba to the United Nations in New York City; the financial institution also handles other types of OFAC-authorized transactions.

In September 2017, Stonegate Bank was purchased by Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion) through its Centennial Bank subsidiary.

The Obama Administration did not authorize BICSA under a general OFAC license or reportedly in the OFAC license issued to Stonegate Bank for it to have an account with Stonegate Bank, so Stonegate Bank has processed some transactions through Panama City, Panama-based Multibank, which has dealings with the Republic of Cuba.

One signature from Ms. Andrea Gacki, Director of the OFAC, can permit two-way direct correspondent transactions rather than the three-way transaction process that has existed for seventeen years.

The augmentation of the OFAC license would be consistent with the export-focused mandates from the Trump Administration to the USDA and United States Department of Commerce (USDOC).

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved.

That license would immediately benefit United States agricultural commodity and food product exporters from the first transaction- United States exporters will get paid more transparently, safer, faster and with less cost for each payment they receive from the Republic of Cuba.

Ports in Alabama, Florida, Georgia, Louisiana, Mississippi, Texas and Virginia would also benefit by a more efficient transaction process and vessel departure schedule as United States exporters would have confirmation of payment delivery in a more consistent manner- paperwork delays would be fewer due to not having to await documentation from outside of the United States.

To date, Home BancShares has refused to disclose the reason(s) it has not sought authorization from the OFAC for BICSA to have an account with Home BancShares.

If each financial institution had an account with the other, the implementation of Direct Correspondent Banking (DCB) services would be operable- meaning that third-country financial institutions would no longer receive a commission for each United States-Republic of Cuba transaction. DCB saves money, saves time, is more transparent, and safer.

Ironically, the four (4) members of the House of Representatives and two (2) members of the United States Senate from Arkansas (exporter of poultry, rice, etc.) have not demonstrated an interest in public engagement with Home BancShares to implement DCBA.

Amendments Are Coming; Get In Front Of Them

Any proposed legislation to authorize payment terms and financing for exports of agricultural commodities and food products from the United States to the Republic of Cuba should include a prohibition provision relating to the Revolutionary Armed Forces of the Republic of Cuba (FAR) because The Honorable Marco Rubio (R- Florida), The Honorable Rick Scott (R- Florida), The Honorable Robert Menendez (D- New Jersey) and The Honorable Ted Cruz (R- Texas), each of Cuban descent, will seek to add, and succeed in adding an amendment to any legislation.

If advocates believe that they can “roll” these four members of the United States Senate, they are delusional. The most effective strategy is to negotiate early rather than risk an amendment, secondary amendment or “killer amendment.”

The Republic of Cuba-related provision within the recently-enacted Farm Bill became law, somewhat ironically, because of one (1) United States Senator representing the State of Florida- who initially opposed the provision, but supported the provision when language was added which prohibited the use of United States taxpayer funds with entities in the Republic of Cuba controlled by the military. The United States business community did not oppose that prohibition.

The Farm Bill includes a provision authorizing the use in the Republic of Cuba of funding from the USDA for Market Access Program (MAP) and Foreign Market Development (FMD).

The provision in the Farm Bill was co-authored by two members of the United States Senate: The Honorable Heidi Heitkamp (D- ND), who lost her 2018 re-election, and Senator Rubio.

Senator Heitkamp agreed to include language submitted by Senator Rubio that would prohibit MAP and FMD funding to be used with Republic of Cuba entities that are controlled by the FAR, consistent with policies of the Trump Administration.

The specific language: “(d) Cuba. — Notwithstanding section 908 of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( 22 U.S.C. 7207 ) or any other provision of law, funds made available under this section may be used to carry out the programs authorized under sections 222 and 223 in Cuba. Funds may not be used as described in the previous sentence in contravention with directives set forth under the National Security Presidential Memorandum entitled ‘Strengthening the Policy of the United States Toward Cuba’ issued by the President on June 16, 2017, during the period in which that memorandum is in effect.

LINK To Complete Analysis In PDF Format

May 17, 2019

DOT Reports 2.2 Million Airline Passengers To Cuba Aboard 13,479 Flights Since August 2016

May 17, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

The Bureau of Transportation Statistics (BTS) of the United States Department of Transportation (USDOT) in Washington DC has reported data for regularly-scheduled commercial flights from the United States to the Republic of Cuba.

On 16 March 2016, the United States Department of Transportation signed a Bilateral Arrangement, not an agreement or treaty, to re-establish scheduled air services between the United States and the Republic of Cuba. According to the USDOT: “The signing brings into effect the arrangement that was reached December 16, 2015. This arrangement will continue to allow charter flight operations. While U.S. law prohibits travel to Cuba for tourist activities, this arrangement will facilitate authorized travel, enhance traveler choices, and strengthen people-to-people links between the two countries. Scheduled services are expected to commence sometime later this year. Expanding authorized travel is a critical focus of President Obama’s approach to Cuba policy, which emphasizes engagement with the Cuban people.”

Link To Document: https://static1.squarespace.com/static/563a4585e4b00d0211e8dd7e/t/57767ecde4fcb56c633fc4cc/1467383504107/USCubaCivilAviationArrangement2016.pdf

The first regularly-scheduled commercial flight under provisions of the Arrangement occurred on 31 August 2016.

Since the first flight, 2,203,490 passengers have traveled to the Republic of Cuba aboard 13,479 flights.

2016: 2,036 flights carrying 177,365 passengers.

2017: 1,422 flights carrying 989,280 passengers.

2018: 8,505 flights carrying 893,011 passengers.

2019: (January and February) 1,516 flights carrying 143,834 passengers.

The Ministry of Tourism of the Republic of Cuba (MINTUR) reported 585,600 individuals of Cuban descent visited in 2018, with most arriving from the United States. The majority of these visitors reside with relatives rather than occupying hotels.

MINTUR reported that in 2018 seventeen (17) cruise lines delivered approximately 800,000 passengers to the Republic of Cuba compared to 619,000 in 2017 and 541,000 in 2016. Media reporting has 6,770 passengers in 2012, 37,513(9) passengers in 2015, 397,520 passengers in 2017 and 500,000 passengers in 2018.

MINTUR reported total international visitor arrivals of 4.75 million in 2018 compared to 4.5 million in 2017.

May 12, 2019

USDA Has Up To US$201 Million Available For Cuba- Why Doesn't Any Organization Want To Use It?

May 12, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Nearing Five Months No Requests To Use US$201 Million In Farm Bill MAP/FMD Funds

87 Applicants; Not One Request

Advocates Said Funding Important; Why Doesn’t Anyone Want To Use It?

Who Is To Blame?

Consultancy Wants Payment To Advise On Using MAP/FMD Funds In Cuba

“Wasting Time Using Funds In Cuba” Offers One Executive

Washington DC-based consultancy’s Internet site: “Agriculture: special USDA programs: Recent changes in U.S. law make it possible for exporters to use basic Department of Agriculture export promotion programs (MAP and FMD) in Cuba. Effective use of these funds, carried out in compliance with U.S. regulations, can help your company to understand and succeed in the Cuba market.”

From Mr. Dwight Roberts, President and Chief Executive Officer of the Katy, Texas-based U.S. Rice Producers Association: “My office receives an important allocation of MAP [Market Access Program] funds and the new ATP [Agriculture Trade Promotion] funds that the current administration allocated to offset trade losses. These funds are allowed to be used for development and promotional activities in almost all the world markets including Cuba. However, the feeling is that due to the circumstances of our current policy, these funds would not be wisely spent in Cuba but in other markets showing promise and where we currently have access. At the same time, we remain fully committed to opening trade with Cuba and maintain our relationships in both Havana and Washington, DC with Cuban officials. And we never hesitate to voice our strong opinion on Capitol Hill with regards to our agricultural and rice trade policies with Cuba and other markets complicated by political issues.”

The Honorable Sonny Perdue, United States Secretary of Agriculture, is prohibiting applicants who successfully submitted applications for United States Department of Agriculture (USDA) Fiscal Year 2019 MAP (Market Access Program) and FMD (Foreign Market Development) funding requests from redirecting funding from other countries to the Republic of Cuba.

Why? The USDA confirms that it can permit such requests. Total MAP/FMD Fiscal Year 2019 funding is US$201,697,191.00 compared to US$200,287,394.00 in Fiscal Year 2018.

According the USDA no request has been made to use the Republic of Cuba provision in H.R. 2, the five-year Agriculture Improvement Act, known as the “Farm Bill” signed into law on 20 December 2018 by The Honorable Donald J. Trump, President of the United States.

Not one request in 141 days. Advocates maintained that the Farm Bill provision was critical to “laying the groundwork” for increasing exports of agricultural commodities and food products to the Republic of Cuba. Statements from members of Congress included: “… an important first step to regaining our presence in Cuba.” Yet, not one request to the USDA.

Not one of the eighty-seven (87) applicants who were approved for Fiscal Year 2019 MAP/FMD funding have sought to use any of the US$201 million in funding in the Republic of Cuba? Not one.

The most significant impact of not having any requests to use the Republic of Cuba provision in the Farm Bill is what the lack of interest foretells for legislative efforts currently in the United States Congress to rescind prohibitions upon the provision of payment terms for agricultural commodity and food product exports from the United States to the Republic of Cuba. To remind, there has yet to be a United States agricultural commodity exporter or United States financial institution who has publicly stated that they would today provide payment terms and/or financing and what those payment terms and financing terms would be for Republic of Cuba government-operated entities. That absence- which has remained consistent since 2000, is a massive legislative hurdle. Lacking pressure, why would the Trump Administration do anything that it does not want to do?

From USDA

On 3 August 2018, the USDA wrote to the USCTEC: “Per the 2019 MAP NOFA (Federal Register Notices attached), All applications must be received by 5 p.m. Eastern Daylight Time, on Friday, June 8, 2018. Applications received after this date will not be considered. FAS anticipates that the initial funding selections will be made by the end of October 2018, with the initial award dates estimated to be by the end of December 2018. Hence, groups are not able to submit additional applications. Groups can request to make changes to their Unified Export Strategy in order to reallocate funding from one approved project to another. These modifications are routine and groups work with their FAS Marketing Specialist to submit changes for approval.”

On 20 March 2019, the USDA wrote to the USCTEC: “Applications for FY19 MAP/FMD funds were made in 2018 when Cuba was not an eligible country. USDA is not allowing those funds to shift to Cuba. USDA will consider proposals for FY20 MAP/FMD funds for Cuba projects.”

On 5 April 2019, the USDA wrote to the USCTEC: “For FY 2019, FMD and MAP are being operated according to the NOFAs [Notice of Funding Availability] published in May 2018, at which time Cuba was ineligible. At this time FAS has no plans, nor has it received any requests, to authorize the redirection of already allocated funds to Cuba this fiscal year. For FY 2020, the NOFAs are currently under development and FAS program managers are working to ensure that the funding solicitations reflect the intent of Congress as expressed in the Farm Bill vis-à-vis Cuba.”

On 9 May 2019, the USDA wrote to the USCTEC: “Since April 5, the Foreign Agricultural Service has not received any requests to redirect FY 2019 market development program funds to Cuba.”

USDA Background

In 2018, the Foreign Agricultural Service (FAS) of the USDA reported none of the applications for Fiscal Year 2019 submitted by the 8 June 2018 deadline included funding requests for MAP/FMD to be allocated for use in the Republic of Cuba.

That none of the applications included the Republic of Cuba was not unexpected as the Republic of Cuba was not eligible for MAP/FMD funding and applicants may not have known on 8 June 2018 that an amendment would be introduced in the United States Senate on 13 June 2018 to authorize MAP/FMD funds to be available for the Republic of Cuba and whether that amendment would become a statute and when it would become a statute:

https://www.heitkamp.senate.gov/public/index.cfm/2018/6/heitkamp-boozman-introduce-2018-farm-bill-amendment-to-boost-u-s-ag-exports-authorize-trade-promotion-funds-to-be-used-in-cuba

According to the USDA in 2018, if the Republic of Cuba was included among Fiscal Year 2019 eligible countries for MAP/FMD funding, applications submitted by 8 June 2018 would be authorized by the USDA to be amended. The FMD Year began in October 2018 and the MAP Year began in January 2019.

According to the USDA in 2018, absent changes to the then-existing USDA application process by Secretary Perdue, applications submitted by 8 June 2018 would have only been permitted to be amended- not to seek additional USDA funding, but reallocate previously-submitted funding requests from one country to another country, in this instance the Republic of Cuba.

The USDA reported in 2018 that it recognized there were unplanned events that impact an applicant’s ability to use previously-requested or previously-authorized MAP/FMD funds.

For example, the People’s Republic of China and members of the Brussels, Belgium-based European Union (EU) implemented tariffs on certain food products and agricultural commodities after 8 June 2018, so an applicant might not want or might have been precluded from using requested or allocated funds towards activities in the People’s Republic of China and EU; so, the applicant might have wanted to submit a request to the USDA to reallocate all or a portion of funds towards use within another country.

According to the USDA in 2018, there may also have been impacting events that remained unknown through 2018 and became known in 2019, after the USDA had allocated all MAP/FMD funds to applicants, so then an entity having received a MAP/FMD funding allocation could request a reallocation from the USDA.

The USDA does not provide any payments to selected applicants in advance of the applicant making disbursements. The USDA provides payment upon receipt of an invoice from the applicant. The invoices are audited by the USDA and a claw back of payments is permitted. Any Republic of Cuba-related invoice is likely to receive additional scrutiny due to an amendment to the Farm Bill submitted by The Honorable Marco Rubio (R- Florida), a member of the United States Senate.

What Is FMD & MAP?

https://www.fas.usda.gov/programs/market-access-program-map/map-funding-allocations-fy-2019

For Fiscal Year 2019, the USDA allocated US$174,600,000.00 in taxpayer funds to sixty-five (65) participants under the MAP, an average of US$2,686,153.00 per distribution. For Fiscal Year 2018, the USDA allocated US$173,802,447.00 in taxpayer funds to sixty-six (66) participants under the MAP, an average of US$2,633,370.00 per distribution.

MAP: “Through the Market Access Program (MAP), FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities that help build commercial export markets for U.S. agricultural products and commodities.

MAP reaches virtually every corner of the globe, helping to build markets for a wide variety U.S. farm and food products. FAS provides cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research and technical assistance. When MAP funds are used for generic marketing and promotion, participants must contribute a minimum 10-percent match. For promotion of branded products, a dollar-for-dollar match is required.

Each year, FAS announces the MAP application period and criteria in the Federal Register. Applicants apply for MAP through the Unified Export Strategy (UES) process, which allows eligible organizations to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.”

https://www.fas.usda.gov/programs/foreign-market-development-program-fmd/fmd-funding-allocations-fy-2019

For Fiscal Year 2019, the USDA allocated US$27,097,191.00 in taxpayer funds to twenty-two (22) cooperators under FMD, an average of US$1,231,690.00 per distribution. For Fiscal Year 2018, the USDA allocated US$26,484,947.00 in taxpayer funds to twenty-three (23) cooperators under the FMD, an average of US$1,021,084.00 per distribution.

FMD: “The Foreign Market Development (FMD) Program, also known as the Cooperator Program, helps create, expand and maintain long-term export markets for U.S. agricultural products. Under the program, FAS partners with U.S. agricultural producers and processors, who are represented by non-profit commodity or trade associations called “cooperators,” to promote U.S. commodities overseas.

The FMD program focuses on generic promotion of U.S. commodities, rather than consumer-oriented promotion of branded products. Preference is given to organizations that represent an entire industry or are nationwide in membership and scope.

FMD-funded projects generally address long-term opportunities to reduce foreign import constraints or expand export growth opportunities. For example, this might include efforts to: reduce infrastructural or historical market impediments, improve processing capabilities, modify codes and standards, or identify new markets or new uses for the agricultural commodity or product.

Each year, FAS announces the FMD application period and criteria in the Federal Register. Organizations apply for the FMD program through the Unified Export Strategy (UES) process, which allows applicants to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.”

Value Of MAP/FMD

For the United States business community, the MAP/FMD amendment to the Farm Bill was significant, but more likely to provide greater financial value to the government of the Republic of Cuba than to United States food product and agricultural commodity exporters using provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.

The likelihood of a value to United States taxpayers, as members of the United States Senate have posited, of US$28.00 returned for every US$1.00 in expenditures of MAP/FMD throughout the world, and now including the Republic of Cuba, will be challenging to measure- but it will be important to measure and the USDA should focus upon the cost-benefit analysis.

Reporting Year/U.S. Dollar Value Of TSREEA-Authorized Exports To Cuba

2019- US$90,098,594.00

2018- US$224,910,413.00

2017- US$268,800,005.00

2016- US$232,064,645.00

2015- US$170,551,329.00

2014- US$291,258,881.00

2013- US$348,747,293.00

2012- US$457,318,357.00

2011- US$358,457,389.00

2010- US$366,467,782.00

2009- US$528,482,955.00

2008- US$710,086,323.00

2007- US$437,564,824.00

2006- US$340,433,442.00

2005- US$350,218,040.00

2004- US$391,990,382.00

2003- US$256,901,471.00

2002- US$138,634,784.00

2001- US$4,318,906.00 (December- 1st sales under TSREEA)

Total Sales- US$5,994,445,931.00

History Of The Legislative Provision On 28 June 2018, the United States Senate, by a vote of 86-11, approved the S. 3042, the Agriculture Improvement Act of 2018. On 21 June 2018, the United States House of Representatives passed H.R. 2, the 748-page Agriculture and Nutrition Act of 2018 by a vote of 213-211. Then, S. 3042 and H.R. 2 were submitted to a conference committee with final language eventually submitted to The White House for signature.

On 18 June 2018, the United States Senate Committee on Agriculture, Nutrition, & Forestry reported, on a vote of 20-1, S. 3042, the 1,210-page The Agriculture Improvement Act of 2018 which included an amendment on page 248 authored by The Honorable Heidi Heitkamp (D- North Dakota; defeated for re-election in 2018): “To provide for the use of market access program and foreign market development cooperator program funds in Cuba.” In Fiscal Year 2018, the total expenditures for these two programs was US$200,287,394.00.

A representative of a member of the United States Senate Committee on Agriculture, Nutrition, & Forestry shared “[t]here is no set amount of funds that would be made available specifically for Cuba. The amendment would only allow producers and agricultural trade associations who are already utilizing these programs to also use them to promote their goods in Cuba. So to that point, yes these funds are only going towards agriculture producers who are represented by trade associations and state regional trade groups.”

On 27 June 2018, Senator Rubio reported, via Twitter, that “I have decided to block the addition of any new amendments to #FarmBill until they either accept the Cruz amendment striking the use of taxpayer $ for promotions in #Cuba or they accept my amendment that prohibits taxpayer $ being spent at business owned by Cuban military.”

Then, in remarks on the floor of the United States Senate later in the day, Senator Rubio said: “I’m not going to object to the ability for American farmers to market our products to a market,” he said. “In the end, it’s food. What I do think we should not allow, however, is the ability to spend taxpayer money in properties and in other places on the island that are owned and controlled by the Cuban military.”

From an interview in Politico: Under current law, U.S. producers are free to travel to Cuba to meet with importers on their own dime, said Olivia Perez-Cubas, a spokeswoman for Rubio. “Taxpayer dollars shouldn’t be used to subsidize private U.S. industries to travel to Cuba, especially when that money goes into the pocket of the Cuban military,” she said.

Senator Heitkamp responded with a statement: “This amendment passed unanimously with overwhelming bipartisan support during markup of the farm bill in the Senate Agriculture Committee… This amendment would do nothing to lift current restrictions on doing business with the Cuban government, and it would provide a much-needed opportunity for American producers when so many of our important trade relationships are suffering from uncertainty.”

This is the text of and LINK to the amendment submitted by Senator Rubio which was approved by the United States Senate: https://www.congress.gov/amendment/115th-congress/senate-amendment/3364/actions?q=%7B%22search%22%3A%5B%22S.Amdt.+3364%22%5D%7D

1. S.Amdt.3364 to S.Amdt.3224 — 115th Congress (2017-2018) Purpose: To prohibit the use of funds to carry out programs in Cuba in contravention of the National Security Presidential Memorandum prohibiting transactions with entities owned, controlled, or operated by or on behalf of military intelligence or security services of Cuba. Amends Bill: H.R.2 Sponsor: Sen. Rubio, Marco [R-FL] (Submitted 06/28/2018) (Proposed 06/28/2018) Latest Action: 06/28/18 Amendment SA 3364 agreed to in Senate by Unanimous Consent. (All Actions)

S.Amdt.3364 to S.Amdt.3224115th Congress (2017-2018)

Amends Bill: H.R.2 — Agriculture and Nutrition Act of 2018

Sponsor: Sen. Rubio, Marco [R-FL] (Submitted 06/28/2018, Proposed 06/28/2018)

Latest Action: 06/28/2018 Amendment SA 3364 agreed to in Senate by Unanimous Consent.

On 28 June 2018, Senator Rubio issued the following through Twitter: Rubio Keeps Taxpayer Dollars Out of the Cuban Regime's Pocket. Washington, D.C. – U.S. Senator Marco Rubio (R-FL) today issued the following statement after the Senate adopted his amendment to the Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, to prevent U.S. taxpayer funds for agricultural export promotion from going to the Cuban regime: “American taxpayer dollars should never go into the pocket of the Cuban regime. That is why we worked to ensure that taxpayer funds for agricultural promotion will not be going to the oppressive Cuban military and its subsidiaries.”

On 28 June 2018, Senator Heitkamp issued the following statement: “Her amendment to boost trade with Cuba. Heitkamp and Boozman successfully included their bipartisan amendment to allow USDA to use its existing export market development programs to create, expand, and maintain a strong Cuban export market for U.S. agricultural producers and processors— at no additional cost to U.S. taxpayers. This change in USDA policy would provide some needed relief from low American commodity prices by fostering a new, reliable trade relationship, boosting agricultural export revenue, and increasing export volume for American farmers and ranchers. This builds on Heitkamp’s efforts to boost trade with Cuba going back to 2015, when she first introduced legislation to lift the ban on private banks and companies offering credit for agricultural exports to Cuba.”

Senator Heitkamp was inaccurate to submit that her amendment will be “at no additional cost to U.S. taxpayers.” Accurate that the amendment did not specifically allocate new Republic of Cuba-specific United States taxpayer funds, but it did permit the eighty-nine (89) United States-based entities (and potentially others in Fiscal Year 2019) who obtained US$200,287,394.00 for use in FMD and MAP expenditures in Fiscal Year 2018 to seek authority from the USDA to use United States taxpayer funds for Republic of Cuba-focused activities. The amendment as passed by the United States Senate does authorize the use of United States taxpayer funds in the Republic of Cuba.

Senator Rubio was inaccurate to submit that his amendment to Senator Heitkamp’s amendment ensures that “taxpayer funds for agricultural promotion will not be going to the oppressive Cuban military and its subsidiaries.” United States taxpayer funds may continue to weave their way to companies controlled by the Revolutionary Armed Forces (FAR) of the Republic of Cuba, albeit indirectly. Here’s why:

In November 2017 (and again in March 2019), the United States Department of State published a list (https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/index.htm) of Republic of Cuba government-operated entities that were to be restricted from engagement by travelers (and United States companies) subject to United States jurisdiction.

The list identifies entities affiliated with and/or controlled by (Grupo de Adminisracion Empresarial (GAESA) and FAR. The wording with respect to compliance is “Direct financial transactions with certain entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services are also generally prohibited.” Significant the document also contains “*** Entities or subentities owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the list. ***.”

Republic of Cuba government-operated Havanatur (reported to be controlled by GAESA and thus FAR) is not on the list. The majority of travelers subject to United States jurisdiction use the services of Havanatur.

In March 2018, the Miami, Florida-based publication Cuba Standard reported that a New York, New York-based attorney received verbal confirmation from a representative of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC that at least one Trump Administration travel-related narrative believed true by many is not accurate.

It is the process of engagement that defines the impact upon travelers. The meaning of “direct” and “indirect” are relevant. If a payment to an entity on the list maintained by the United States Department of State (which has not been updated since its initial publication) is made indirectly, that indirectness may satisfy the OFAC requirement.

From one experienced legislative observer: “The Rubio legislation will require a new rule making by OFAC. We’ll see if the OFAC takes its traditional position that independent due diligence is required by United States companies to determine whether a Republic of Cuba entity is owned, controlled etc. by a different Republic of Cuba entity - in this case the due diligence must focus on whether the proposed recipient of United States taxpayer money is “operated by or on behalf” of the FAR. If so, it can’t receive that United States taxpayer money. Also, we might see a new OFAC rule in the context of a new statute (i.e. Senator Rubio’s amendment) addressing the word “direct” to eliminate the pass-through deals currently permitted with third party intermediaries to get around the State Department’s Prohibited Cuban Entities List.”

And added, “There could have been some sloppy lobbying work- and a result could be impactful, collaterally, on all visitors to Cuba.”

LINK To Complete Analysis In PDF Format

Previous Blog Posts:

Is USDA Defying Congress (And Senator Rubio) By Preventing Farm Bill MAP/FMD Funding?

https://www.cubatrade.org/blog/2019/4/7/7cb0as049n0xbcz6emunepm577w2zj

Did USDA MAP/FMD Applicants Predict In June What Is Likely In September? If Not, Cuba Needs To Help Now

https://www.cubatrade.org/blog/2018/8/5/zan5yu902gxothclktn4aqt93m0v5u

Portion of US$200 Million In DMF & MAP Funds Likely To Be Available For Cuba Soon; Know The Application Process

https://www.cubatrade.org/blog/2018/8/3/2sayhxrojudnr42pra4ffdjdbng8r0

May 10, 2019

U.S. Food/Ag Exports To Cuba Increase 68.3% In March; 1st Quarter Exports Up 30.1%

May 10, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

ECONOMIC EYE ON CUBA©

March 2019

March 2019 Food/Ag Exports To Cuba Increase 68.3%- 1

1st Quarter Exports From U.S. Increase 30.1%

Cuba Ranked 47th of 229 U.S. Food/Ag Export Markets- 2

March 2019 Healthcare Product Exports US$59,588.00- 2

March 2019 Humanitarian Donations US$554,392.00- 3

Obama Administration Initiatives Exports Continue To Increase- 3

U.S. Port Export Data- 16

MARCH 2019 FOOD/AG EXPORTS TO CUBA INCREASE 68.3%- Exports of food products and agricultural commodities from the United States to the Republic of Cuba in March 2019 were US$41,165,385.00 compared to US$24,454,451.00 in March 2018 and US$25,018,148.00 in March 2017.

United States exports from January 2019 through March 2019 were US$90,098,594.00 compared to US$69,257,729.00 from January 2018 through March 2018, representing an increase of 30.1%.

Total agricultural commodity and food product exports since December 2001 from the United States to the Republic of Cuba under provisions of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) are US$5,994,445,931.00.

LINK To Complete Report In PDF Format

Recruiters reveal their most impressive candidates ever_940x485.jpg

May 08, 2019

Statements From Cruise Line Industry Association (CLIA) & Carnival Corporation

May 08, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

8 May 2019

Cruise Line Industry Association

Washington DC

Please see below for our statement:

“Cruising to Cuba falls under the ‘lawful travel exemption’ under Title III of the Helms Burton Act. Our member cruise lines have been and are now engaged in lawful travel to Cuba as expressly authorized by the United States federal government … Cruises to Cuba have delivered important social and cultural exchange between the people of the United States and the people of Cuba. They have also provided much-needed entrepreneurial opportunities that provide important economic benefit directly to the Cuban people.”

7 May 2019

Cruise Fever

Cincinnati, Ohio

Publication reported this:

From Carnival Cruise Lines: “Our cruises to Cuba are continuing as scheduled as part of our regular itineraries. We also want to share today’s statement from the Cruise Line Industry Association (CLIA). Said CLIA: “Cruising to Cuba falls under the ‘lawful travel exemption’ under Title III of the Helms Burton Act. Our member cruise lines have been and are now engaged in lawful travel to Cuba as expressly authorized by the United States federal government.”

As background, CLIA added: “Cruises to Cuba have delivered important social and cultural exchange between the people of the United States and the people of Cuba. They have also provided much-needed entrepreneurial opportunities that provide important economic benefit directly to the Cuban people.

CLIA Statement on Lawsuits Filed Under Title III of Helms Burton

May 1, 2019

Reactive Statement for Media

CLIA does not comment on matters involving litigation. For questions about a lawsuit involving a specific CLIA member, please contact that company directly.

Cruising to Cuba falls under the “lawful travel exemption” under Title III of the Helms Burton Act. Our member cruise lines have been and are now engaged in lawful travel to Cuba as expressly authorized by the United States federal government.

FAQ

How will the changes impact the cruise business?

CLIA defers to its members to speak to the real or potential business impact of public policy developments on their respective companies.

How will the Cruise Lines handle guests who have already booked cruises to Cuba?

For now, currently scheduled cruises are continuing. The Cruise Lines continue to travel to Cuba as part of their regular itineraries. If or when there are any changes to these itineraries, guests will be notified directly by their chosen Cruise Line.

Why cruises to Cuba?

Cruises to Cuba have delivered important social and cultural exchange between the people of the United States and the people of Cuba. They have also provided much needed entrepreneurial opportunities that provide important economic benefit directly to the Cuban people.

May 07, 2019

Wells Fargo Securities Estimates Impact Of Title III Lawsuits On U.S. Cruise Lines

May 07, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Seatrade Cruise News

Colchester, Essex, United Kingdom

7 May 2019

Wells Fargo Securities estimated potential impacts of the Trump administration's new Cuba policies in a note to investors that considered if travel restrictions were implemented and how lawsuits could go. So far, the US has not clarified additional travel restrictions announced in April.

EPS impact to Carnival, Norwegian, Royal

However, if Cuba cruises were to end, the brokerage estimated the annualized earnings per share impact on Carnival Corp. as 5 cents, Norwegian Cruise Line Holdings as 42 cents and Royal Caribbean Cruises Ltd. as 20 cents.

Cuba accounts for 1%, 4% and approximately 2.5% of CCL, NCLH and RCL’s respective global capacity allocation, according to the brokerage. its analysis on based on Cuba generating a 30% to 100% premium on typical Caribbean itineraries, based on five-day sailings in November and December 2019, excluding holiday departures. If Cuba stops are prohibited, these itineraries would garner more typical Caribbean rates.

Helms-Burton Title III lawsuits

Part of the Trump administration’s policy changes ended the Title III waiver of the Helms-Burton Act, enabling US citizens to sue individuals/companies (including foreign) in the US courts for commercial use of their properties nationalized by the Cuban government after the 1959 revolution.

Carnival Corp. became the first company sued on the day Title III became operative. 'We believe other cruise companies could also be sued, but that the cases will likely be tied up in the federal court system for some time and subject to future changes in executive branch foreign policy,' analyst Tim Conder said in the Wells Fargo note. 'Therefore, we see no near/intermediate material impact to the financial results of cruise industry companies.'

Wells Fargo rates CCL, NCLH and RCL 'outperform' (buy).

Posted 07 May 2019

NOTE: The Ministry of Tourism of the Republic of Cuba reported that approximately 800,000 visitors arrived by cruise ship to the Republic of Cuba in 2018 of 4.78 million visitors.

May 06, 2019

The Three Federal Court Judges Assigned To Title III Cases Have Previously Ruled In Cases Involving Cuba

May 06, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

One Judge Ruled Against Cuba In “Brothers To The Rescue” Case

One Judge Handled Previous Carnival Corporation Lawsuit Involving Cuba

One Judge Ruled Against Cuba In A Terrorism Case

Will Defendants Or Plaintiffs Seek New Judges? New Venues?

The Honorable James King, Senior Judge of the United States District Court for the Southern District of Florida

Garcia-Bengochea v. Carnival Corporation (1:19-cv-21725-JLK)

https://www.fjc.gov/history/judges/king-james-lawrence

https://www.flsd.uscourts.gov/content/senior-judge-james-lawrence-king

https://en.wikipedia.org/wiki/James_Lawrence_King

The Honorable Marcia Cooke, Judge of the United States District Court for the Southern District of Florida

Havana Docks Corporation v. Carnival Corporation (1:19-cv-21724-MGC)

https://www.fjc.gov/history/judges/cooke-marcia-g

https://www.flsd.uscourts.gov/content/judge-marcia-g-cooke

https://en.wikipedia.org/wiki/Marcia_G._Cooke

The Honorable Amit P. Mehta, Judge of the United States District Court for the District of Colombia

Exxon Mobil Corporation v. Corporacion Cimex S.A. AND Union Cuba-Petroleo (19-CV-1277-APM)

https://www.dcd.uscourts.gov/content/district-judge-amit-p-mehta

https://www.fjc.gov/history/judges/mehta-amit-priyavadan

https://en.wikipedia.org/wiki/Amit_Mehta

May 05, 2019

Thus Far, Of 5,913 Certified Claimants, 9th, 32nd And 196th Largest Filed Lawsuits

May 05, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

As of 2 May 2019, three (3) of the certified claimants have used Title III of the Cuban Liberty and Solidarity Act of 1996 (Libertad Act) to file lawsuits against non-Republic of Cuba government-operated companies and a non-Republic of Cuba government-operated company.

The Plaintiffs rank 9th (Exxon Mobil), 32nd (Havana Dry Docks Corporation) and 196th (Javier Garcia-Bengochea).

LINK To Lawsuits Filed Against Carnival Corporation

LINK To Lawsuit Filed By Exxon Mobil

LINK To Certified Claims List

Certified Claims Background

There are 8,821 claims of which 5,913 awards valued at US$1,902,202,284.95 were certified by the USFCSC and have not been resolved for nearing sixty years. The USFCSC permitted interest to be accrued in the amount of 6% per annum; with the current value of the 5,913 certified claims approximately US$8,521,866,156.95.

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International. The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust.

The ITT Corporation Agreement

TITLE III--SEC. 302. LIABILITY FOR TRAFFICKING IN CONFISCATED PROPERTY CLAIMED BY UNITED STATES NATIONALS.

(a) Civil Remedy.-- (1) Liability for trafficking.--(A) Except as otherwise provided in this section, any person that, after the end of the 3-month period beginning on the effective date of this title, traffics in property which was confiscated by the Cuban Government on or after January 1, 1959, shall be liable to any United States national who owns the claim to such property for money damages in an amount equal to the sum of-- (i) the amount which is the greater of-- (I) the amount, if any, certified to the claimant by the Foreign Claims Settlement Commission under the International Claims Settlement Act of 1949, plus interest; (II) the amount determined under section 303(a)(2), plus interest; or (III) the fair market value of that property, calculated as being either the current value of the property, or the value of the property when confiscated plus interest, whichever is greater; and (ii) court costs and reasonable attorneys' fees. (B) Interest under subparagraph (A)(i) shall be at the rate set forth in section 1961 of title 28, United States Code, computed by the court from the date of confiscation of the property involved to the date on which the action is brought under this subsection.

(2) Presumption in favor of the certified claims.--There shall be a presumption that the amount for which a person is liable under clause (i) of paragraph (1)(A) is the amount that is certified as described in subclause (I) of that clause. The presumption shall be rebuttable by clear and convincing evidence that the amount described in subclause (II) or (III) of that clause is the appropriate amount of liability under that clause.

(3) Increased liability.--(A) Any person that traffics in confiscated property for which liability is incurred under paragraph (1) shall, if a United States national owns a claim with respect to that property which was certified by the Foreign Claims Settlement Commission under title V of the International Claims Settlement Act of 1949, be liable for damages computed in accordance with subparagraph (C).

(B) If the claimant in an action under this subsection (other than a United States national to whom subparagraph (A) applies) provides, after the end of the 3-month period described in paragraph (1) notice to-- (i) a person against whom the action is to be initiated, or (ii) a person who is to be joined as a defendant in the action, at least 30 days before initiating the action or joining such person as a defendant, as the case may be, and that person, after the end of the 30- day period beginning on the date the notice is provided, traffics in the confiscated property that is the subject of the action, then that person shall be liable to that claimant for damages computed in accordance with subparagraph (C).

(C) Damages for which a person is liable under subparagraph (A) or subparagraph (B) are money damages in an amount equal to the sum of-- (i) the amount determined under paragraph (1)(A)(ii), and (ii) 3 times the amount determined applicable under paragraph (1)(A)(i). (D) Notice to a person under subparagraph (B)-- (i) shall be in writing; (ii) shall be posted by certified mail or personally delivered to the person; and (iii) shall contain-- (I) a statement of intention to commence the action under this section or to join the person as a defendant (as the case may be), together with the reasons therefor; (II) a demand that the unlawful trafficking in the claimant's property cease immediately; and (III) a copy of the summary statement published under paragraph (8). (4) Applicability.--(A) Except as otherwise provided in this paragraph, actions may be brought under paragraph (1) with respect to property confiscated before, on, or after the date of the enactment of this Act.

(B) In the case of property confiscated before the date of the enactment of this Act, a United States national may not bring an action under this section on a claim to the confiscated property unless such national acquires ownership of the claim before such date of enactment. (C) In the case of property confiscated on or after the date of the enactment of this Act, a United States national who, after the property is confiscated, acquires ownership of a claim to the property by assignment for value, may not bring an action on the claim under this section.

(5) Treatment of certain actions.--(A) In the case of a United States national who was eligible to file a claim with the Foreign Claims Settlement Commission under title V of the International Claims Settlement Act of 1949 but did not so file the claim, that United States national may not bring an action on that claim under this section. (B) In the case of any action brought under this section by a United States national whose underlying claim in the action was timely filed with the Foreign Claims Settlement Commission under title V of the International Claims Settlement Act of 1949 but was denied by the Commission, the court shall accept the findings of the Commission on the claim as conclusive in the action under this section.

(C) A United States national, other than a United States national bringing an action under this section on a claim certified under title V of the International Claims Settlement Act of 1949, may not bring an action on a claim under this section before the end of the 2-year period beginning on the date of the enactment of this Act.

(D) An interest in property for which a United States national has a claim certified under title V of the International Claims Settlement Act of 1949 may not be the subject of a claim in an action under this section by any other person. Any person bringing an action under this section whose claim has not been so certified shall have the burden of establishing for the court that the interest in property that is the subject of the claim is not the subject of a claim so certified. (6) Inapplicability of act of state doctrine.--No court of the United States shall decline, based upon the act of state doctrine, to make a determination on the merits in an action brought under paragraph (1).

(7) Licenses not required.--(A) Notwithstanding any other provision of law, an action under this section may be brought and may be settled, and a judgment rendered in such action may be enforced, without obtaining any license or other permission from any agency of the United States, except that this paragraph shall not apply to the execution of a judgment against, or the settlement of actions involving, property blocked under the authorities of section 5(b) of the Trading with the Enemy Act that were being exercised on July 1, 1977, as a result of a national emergency declared by the President before such date, and are being exercised on the date of the enactment of this Act.

May 03, 2019

Exxon Mobil Corporation Third Company To Sue Using Title III Of Libertad Act; Cimex & Cupet In Cuba Are Targets

May 03, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

LINK To Exxon Mobil Corporation Lawsuit Filing

LINK To Standard Oil Company Claim (US$173,157.12)

LINK To Mobil Oil Corporation Claim (US$71,611,002.90)

Irving, Texas-based Exxon Mobil Corporation is the second-largest company in the United States (2018 revenues of US$290 billion) and second-largest oil and gas company in the world.

Certified Claims Background

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International. The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust.

The ITT Corporation Agreement

TITLE III--SEC. 302. LIABILITY FOR TRAFFICKING IN CONFISCATED PROPERTY CLAIMED BY UNITED STATES NATIONALS.

LINK To Complete Analysis

May 02, 2019

Libertad Title III United States District Court Lawsuit Filing Texts Against Carnival Corporation

May 02, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

These are links to the 2 May 2019 filings in the Miami Division of the United States District Court by Havana Docks Corporation and Javier Garcia-Bengochea against Carnival Corporation

LINK- Havana Docks Corporation

LINK- Javier Garcia-Bengochea

May 01, 2019

Title III Operational At 12:01 Am On 2 May 2019- First Lawsuit Expected Thursday

May 01, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Title III Operative At 12:01 Am- First Lawsuit Expected Today

What Might Plaintiffs Want?

Get Out

Give Us A Fee

Give Us A Percentage

Make Us Your Partner

At 12:01 am on 2 May 2019, the Trump Administration made operational Title III and further implemented Title IV of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as “Libertad Act”).

Title III authorizes lawsuits in United States District Courts against companies and individuals who are using a certified claim or non-certified claim where the owner of the certified claim or non-certified claim has not received compensation from the Republic of Cuba or from a third-party who is using (“trafficking”) the asset.

Title IV restricts entry into the United States by individuals who have connectivity to unresolved certified claims or non-certified claims. One Canada-based company is currently subject to this provision based upon a certified claim.

What Plaintiffs May Seek From Courts

1) Ask Circuit Court to reduce court filing fee for Title III on the basis that it is unconstitutionally high- an unreasonable and arbitrary barrier to file a lawsuit.

“For filing an action brought under Title III of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, P.L. 104-114, 110 Stat. § 785 (1996), $6,548. (This fee is in addition to the filing fee prescribed in 28 U.S.C. § 1914(a) for instituting any civil action other than a writ of habeas corpus.). Related: 28 U.S. Code § 1914 - District court; filing and miscellaneous fees; rules of court (a) The clerk of each district court shall require the parties instituting any civil action, suit or proceeding in such court, whether by original process, removal or otherwise, to pay a filing fee of $350, except that on application for a writ of habeas corpus the filing fee shall be $5.”

2) Ask Circuit Court to rule that travel-related decisions by the Obama Administration (20 January 2009 to 20 January 2017) violated a provision of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 which prohibits individuals subject to United States law from visiting the Republic of Cuba for the purpose of tourism. If successful, a Circuit Court ruling could provide a foundation for lawsuits against United States-based companies engaged in the provision of travel-related services (airlines, cruise lines, hotel management).

There are twelve (12) categories of travel authorized by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury; the categories were codified into law by the TSREEA: 1) family visits 2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations 3) journalistic activity 4) professional research and professional meetings 5) educational activities 6) religious activities 7) public performances, clinics, workshops, athletic and other competitions, and exhibitions 8) support for the Cuban people 9) humanitarian projects 10) activities of private foundations or research or educational institutes 11) exportation, importation, or transmission of information or information materials and 12) certain authorized export transactions.

Travel to the Republic of Cuba for the purpose of tourism by individuals subject to United States law is prohibited by United States law- not by regulation and not by policy.

What Plaintiffs May Seek From Defendants (“Traffickers”)

1) Defendant to cease operation(s) in the Republic of Cuba;

2) Defendant to purchase asset(s) from Plaintiff;

3) Defendant pay to Plaintiff a percentage of all funds Defendant pays to Republic of Cuba government-operated entities. For example, rent, utilities, taxes, duties, product payments, etc.

For Travel-Related Defendants

A 2,000-passenger cruise ship docks at the Port of Havana or Port of Santiago de Cuba and pays US$70,000.00 in port fees. A Plaintiff wants 100% of the port fee or a percentage of the port fee.

The 2,000-passenger cruise ship has passengers paying US$2,000 per person; gross revenues exceeds US$4 million when adding food and beverage. A Plaintiff wants a percentage of the total revenue from each vessel that docks at the port.

A 200-passenger commercial aircraft lands at Jose Marti International Airport in Havana and pays US$500.00. A Plaintiff wants 100% of the landing fee or a percentage of the landing fee. The 200-passenger aircraft has passengers paying US$200.00 per person; gross revenues US$40,000.00. A Plaintiff wants a percentage of the total revenue from each flight that lands at the airport.

A 200-room hotel is located on land for which there is a certified claim or non-certified claim. The Plaintiff wants a percentage of all payments by management contract holder to Republic of Cuba government-operated entities. The gross annual revenues of the hotel are US$7 million. A Plaintiff wants a percentage of the gross revenues. A Plaintiff wants an equity share of the management contract.

For Real Estate Defendants

Defendant pay to Plaintiff a percentage of rent Plaintiff pays to Republic of Cuba government-operated entity for use of a structure/building/hotel/airline ticket office, etc.

For Exporters Of Products

Defendant pays to Plaintiff a percentage of the value of product exported from the Republic of Cuba.

Certified Claims Background

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc. The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International. The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust.

The ITT Corporation Agreement

TITLE III--SEC. 302. LIABILITY FOR TRAFFICKING IN CONFISCATED PROPERTY CLAIMED BY UNITED STATES NATIONALS.

LINK To Complete Analysis In PDF Format

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May 01, 2019

Royal Caribbean Cruises Chairman Discusses Cuba

May 01, 2019/ U.S.-Cuba Trade and Economic Council, Inc.

Travel Weekly

Secaucus, New Jersey

1 May 2019

Royal Caribbean Cruises Ltd. chairman Richard Fain told investors that the effect of an announced change in the U.S. policy toward Cuba was hard to determine. In a teleconference call on first-quarter earnings, Fain commented on two Cuba-related questions.

As far as the possible travel policy changes announced in a speech by national security advisor John Bolton in Miami on April 17, Fain said, "At this point, we don't know if there will be changes, what those changes will be or to what extent they would impact us." Fain pointed out that only 3% of RCCL itineraries currently go to Cuba.

Bolton's comments led some to believe that travel to Cuba will be further restricted, possibly including cruises, but until amendments to the rules are published by the U.S. Treasury, the travel rules remain as is.

Fain also commented on the administration's changed stance towards enforcement of the Helms-Burton law regarding pre-Castro era ownership of property in Cuba. Fain said the change is likely to prompt litigation with companies that do business in Cuba. "We believe we have solid defenses and are not expecting to change our itineraries as a result," he said.

4 June 2019

Bloomberg News reported: “Cruise lines were able to charge higher prices for trips to Cuba than to other destinations, increasing the island’s financial importance, according to Instinet analyst Harry Curtis. He said the country accounts for about 4% of Norwegian’s capacity, as much as 3% for Royal Caribbean and 1% for Carnival. That [ending cruise ship operations to the Republic of Cuba] could wipe out 15 cents a share from Norwegian’s profit, he estimates. Royal Caribbean would lose 10 cents a share, while Carnival’s earnings stand to decrease by as much as 5 cents a share, he said.”

Economic Eye On Cuba

U.S. - Cuba Trade and Economic Council, Inc.