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

Atlas + Cuba

Patrick Collison on March 18, 2016

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

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

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

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

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

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

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

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

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

March 17, 2016

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

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

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

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

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

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

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

Have Consultants Become Tour Guides Rather Than Business Guides?

Have Consultants Become Tour Guides Rather Than Business Guides?

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

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

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

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

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

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

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

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

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

New U.S. Commerce Department Regulations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

COMPLETE TEXT

United States Postal Service Commences Operations To Cuba

United States Postal Service Resumes Mail Service to Cuba

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

USPS Commences Deliveries To Cuba

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

March 16, 2016

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

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

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

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

USPS To Commence Operations
December 11, 2015

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

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

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

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

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

Cruise Ships Are The New Battleships

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

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

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

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

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

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

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

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

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

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

Importing Goods for Personal Use from Cuba

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

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

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

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

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

HTSUS Duty Free Exemptions for Alcohol and Tobacco:

Not Returning Resident

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

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

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

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

Returning Resident

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

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

CLICK HERE TO VIEW CUSTOMS FORM

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

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

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

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

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

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

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

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

New OFAC Regulations (effective 16 March 2016)

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 515

Cuban Assets Control Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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

CLICK HERE FOR TEXT

New OFAC Regulation Benefits MLB Players; Performers & Teachers Too

New OFAC Regulation Benefits MLB Players; Performers and Teachers Too

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

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

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

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

New OFAC Regulation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Delta Air Lines DOT Route Application

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

ECONOMIC EYE ON CUBA March 2016 Newsletter

ECONOMIC EYE ON CUBA©
March 2016

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

CLICK HERE FOR COMPETE REPORT

U.S. Technology Companies "Backdoor" Into Cuba

U.S. Technology Companies "Backdoor" Into Cuba

The government of the Republic of Cuba unlikely to purchase technology hardware and software from United States-based companies.

A challenge for United States-based communications/telecommunications companies and the United States government is how to answer the following inquiry from the Ministry of Communications of the Republic of Cuba: “If we purchase your equipment, how do we know the equipment will not be compromised before it arrives or have an ability to be compromised from abroad after its installation?  Will you augment the specifications of equipment so we may monitor all voice, text, data and email traffic flowing through the equipment?”   

However, United States-based air carriers and United States-based hospitality companies that will operate within the Republic of Cuba will import for their use servers, CPUs, monitors, laptops, modems, facsimile machines, printers, digital telephone systems, cables, satellite communications equipment, photocopiers, reservations systems software and other state-of-the-art products.  The following companies, among others, could have an indirect operational presence within the Republic of Cuba:

California-based AMD
California-based Apple
California-based Broadcom
California-based Cisco Systems
California-based Hewlett Packard
California-based Ingram Micro
California-based Intel
California-based Oracle Corporation
California-based Qualcomm
Connecticut-based Xerox
Massachusetts-based EMC
New York-based IBM
Texas-based Dell
Washington-based Amazon
Washington-based Microsoft

From 20 January 2016 to 22 January 2016, The Honorable Daniel Sepulveda, Deputy Assistant Secretary of State and U.S. Coordinator for International Communications and Information Policy led an official fourteen-member delegation to the Republic of Cuba which included The Honorable Thomas Wheeler, Chairman of the Federal Communications Commission (FCC) and FCC staff, representatives from the OFAC, and according to Deputy Assistant Secretary Sepulveda, representatives of “academia, and the private sector.” 

The names of the non-United States government participants have not been disclosed by the United States Department of State.  The Washington, DC-based Information Technology Industry Council confirmed that its president, Mr. Dean Garfield, participated in the delegation “led by the U.S. Ambassador and Deputy Assistant Secretary of State for International Communications and Information Policy Daniel Sepulveda.”  Other private sector participants included representatives of California-based Cisco Systems, Pennsylvania-based Comcast, Sweden-based Ericsson (North American Headquarters in Plano, Texas).

From Chairman Wheeler on 27 January 2016: “Ambassador Daniel Sepulveda from the State Department led our delegation which also included representatives from the Department of the Treasury as well as representatives of the technology community. The inclusion of the private sector in the talks advanced the dialog with real life examples of what was possible.”  

NOTE: On 1 February 2016, Republic of Cuba government-operated Empresa Nacional de Telecomunicaciones de Cuba S.A. (ETEC S.A.) reported that it would install broadband services within the area of Old Havana using equipment sourced from Shenzhen, People’s Republic of China-based Huawei Technologies Co Ltd. (2015 revenues exceeded US$28 billion).  On 6 November 2015, Huawei Technologies Co Ltd. Reported an agreement to market mobile devices, parts, accessories and to train repair personnel.  The government of the People’s Republic of China has extended substantial financial credits to the government of the Republic of Cuba.

Verizon Wireless Shifts From Indirect To Direct Roaming Agreement In Cuba

New York-based Verizon Wireless, which had since 2015 operated a roaming agreement through London, United Kingdom-based Vodafone) with Republic of Cuba government-operated ETECSA, has announced that the company now has a direct roaming agreement. 

Texas-based AT&T is expected to announce a direct roaming agreement with ETECSA.

In 2015, Kansas-based Sprint Corporation established the first direct in roaming agreement with ETECSA. 

Let's Put The US$4.3 Billion In 2015 U.S. Commerce Department Licenses In Perspective... Politics Versus Reality

Let’s Put The US$4.3 Billion In 2015 U.S. Commerce Department Licenses In Perspective…. Politics Versus Reality

The New York Times
13 March 2016

“Penny Pritzker, the commerce secretary, said the next day that her department had granted American companies billions of dollars’ worth of authorizations to do business in Cuba.”

The New York Times
17 February 2016

“Ms. Pritzker said her department had acted aggressively since Mr. Obama’s December 2014 announcement to pave the way for American companies to do business in Cuba, granting 490 authorizations amounting to $4.3 billion last year alone — a roughly 30 percent increase over the previous year.”

NOTE: We missed this… a perspective should have been provided last month.

For the first agricultural commodities (corn and poultry) exported (US$4,318,906.00) in December 2001 to the Republic of Cuba, United States companies were required to obtain/have a license/authorization from the Bureau of Export Administration (BXA) of the United States Department of Commerce for the exact value(s) of the product(s) to be exported to the Republic of Cuba.  In 2002, the BXA was renamed the Bureau of Industry and Security (BIS).

When the government of the Republic of Cuba continued and then expanded its purchases of agricultural commodities and food products into 2002, in spite of initial statements that the 2001 purchases were to be a “one off” so United States companies were not to expect further orders, there began discussions between exporters and representatives of the BIS about opportunities to create a more efficient licensing process.

One such decision by the BIS was to permit, and then encourage, United States companies to apply for a license that would attempt to include an estimate of what potentially might be exported by the company; and licenses were to be valid for up to two years.  In some instances, the export qualified under the “export exception” provision and would not require certain BIS processes.  A goal was to lessen the paperwork for the BIS and the United States companies.

For example, if a United States company wanted to export corn to Republic of Cuba government-operated Empresa Cubana Importadora Alimentos (Alimport), under the auspice of the Ministry of Foreign Trade of the Republic of Cuba (MINCEX), and had a contract or anticipated a contract or wanted to have all documentation necessary so the company could approach Alimport and say they were “ready to go," the BIS encouraged the company to add to the expected or desired quantities and U.S. Dollar values.  Simply put, if the reasonable expectation was to export corn valued at US$1 million, the company would use US$5 million or US$10 million or US$100 million… whatever they wanted to use.

While Secretary Pritzker reported that the BIS issued 490 licenses in 2015 valued at US$4.3 billion, this is not reasonably related to actual exports; many of the application values upon which the BIS licenses were based were aspirational.  Would have been productive for the United States Department of Commerce to provide detailed data about the 490 licenses (with company names redacted) for review.
 
Agricultural commodity and food product exports from the United States to the Republic of Cuba for the period December 2001 through January 2016 under provisions of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) were US$5,283,872,190.00.  For 2015, the value was US$170,670,054.00

Healthcare product exports from the United States to the Republic of Cuba under provisions of the Cuban Democracy Act (CDA) of 1992 were US$11,043,717.00 for the period 2003 through January 2016.  For 2015, the value was US$4,896,966.00.

Humanitarian donation exports from the United States to the Republic of Cuba during the period 2014 through January 2016 were US$5,832,280.00.  For 2015, the value was US$4,619,588.00.

Thus, the total value of reported exports from the United States to the Republic of Cuba in 2015 were US$180,186,608.00 and in 2014 were US$293,077,853.00; both years data a meaningful distance from US$4.3 billion.  

In 2015, the number of companies and organizations engaging in all exports were less than one hundred; for agricultural commodity and food products, the number of exporters was approximately thirty.

There is a substantial political component, which commenced during the Bush Administration and has continued through the Obama Administration- increase the value of licenses so as to emphasize 1) The White House was authorizing/encouraging commercial activity 2) Demonstrate that United States companies were eager to engage with the Republic of Cuba and 3) Reinforce the narrative that the government of the Republic of Cuba was not engaging to the level that United States companies were desiring.

Aggressively marketing aspirational license values can create an unsustainable and, more significantly, an unattainable commercial landscape.  Important to neither oversell the Republic of Cuba nor undersell the Republic of Cuba.  Sell it for what it is and be reasonable and honest about the potential.  This will provide value to United States companies.

Creating a narrative within which the government of the Republic of Cuba is unlikely to have the capacity to participate is unproductive and potentially harmful.

GE Looking Around.....

Fairfield, Connecticut-based General Electric (2015 revenues US$117 billion) is evaluating export/service opportunities within the Republic of Cuba.  GE has focuses including Healthcare, Power Generation, Aviation, and Lighting.

"GE (NYSE: GE) is the world’s Digital Industrial Company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive. GE is organized around a global exchange of knowledge, the "GE Store," through which each business shares and accesses the same technology, markets, structure and intellect. Each invention further fuels innovation and application across our industrial sectors. With people, services, technology and scale, GE delivers better outcomes for customers by speaking the language of industry."

Will US Hospitality Companies Change Cuba Or Will They Be Changed By Cuba? Islands of state-of-the-art technology surrounded by seas of technology expectations

The most important question relating to the return of United States-owned hospitality companies to the Republic of Cuba marketplace is:  

Will Bethesda, Maryland-based Marriott International and Stamford, Connecticut-based Starwood Hotels and Resorts Worldwide (which is being acquired by Marriott International) force changes to the hospitality sector throughout the Republic of Cuba or will the companies conform to the existing infrastructure (operations, economics, personnel, etc.)?

NOTE: the term “tourism” should not be used as the twelve categories of travelers permitted by the Trade Sanctions Reform and Export Enhancement Act of 2000 does not legally authorize leisure travel to the Republic of Cuba by individuals subject to United States law.

The initial answer will be a bit of both…

With the return of regularly-scheduled commercial airline service, the operational requirements of airlines are the foundation upon which the hospitality companies will operate.

There is a requirement for high-speed internet access (satellite or land-based, potentially leading to an upgrade of the cable that lies under the Florida Straits).  The airlines and the hospitality companies will bring with them servers and modems and Wi-Fi equipment and computers and facsimile machines and printers and cable and satellite (Direct TV, Dish, etc.) and cellular equipment for 4G and 5G capabilities and digital telephone systems.  As are the airlines, they will seek for the government of the Republic of Cuba to institute an electronic visa program.  They will be islands of state-of-the-art technology surrounded by seas of technology expectations.    

There is a requirement for correspondent banking (with Pompano Beach, Florida-based Stonegate Bank being the principal benefactor as the airlines and hospitality companies will make use of its direct correspondent banking agreement with Republic of Cuba government-operated Banco Popular de Ahorro).  

Marriott International and Starwood Hotels and Resorts Worldwide will not permit their flagship properties to become ambassadors of what is a minimally-acceptable customer experience; envoys to the status-quo.  They will be advocates for change; they will be forceful.

The United States companies will not permit properties to be absent of basic guest room necessities; nor will restaurant and bar menus not have available the products that are listed for purchase.

The United States companies will not permit properties to fall into disrepair because the Republic of Cuba government-operated company that owns the property is required to make payments to the government of the Republic of Cuba to be directed for other purposes.  

The United States companies will not finance the operations of their properties because their landlord does not have the funds as required by the management contract.

The United States companies will have training programs- and they will bring individuals of Cuban descent from their United States properties to train and to work and to manage various departments of their respective properties.  They will bring individuals of nationalities from throughout their global operations to impact the commercial, economic and political environment.  They will increase the wages and benefits of their employees who are Republic of Cuba nationals.  They will be employment magnets for the best and the brightest from existing properties throughout the Republic of Cuba.  They will upend the existing employment structures.

Will the management contracts signed by Starwood Hotels and Resorts Worldwide and Marriott International be similar as those that Spain-based Melia and France-based Accor among others have signed with Republic of Cuba government-operated companies including Cubanacan Group, Gaviota Group, Gran Caribe, Hoteles Habaguanex?  No, they will be adjusted towards the standards of the United States companies rather than the United States companies adjusting towards standards that will be operationally problematic.    

The Libertad Act of 1996 authorizes individuals and companies subject to United States law to engage in direct negotiations with the government of the Republic of Cuba to settle claims registered with the Foreign Claims Settlement Commission under the auspice of the United States Department of Justice.  As a result of a series of mergers and acquisitions during the last fifty-seven years, a US$51,128,927.00 claim initially made by New York-based International Telephone & Telegraph Corporation (ITT) is now controlled by Starwood Hotels and Resorts Worldwide (and, soon, Marriott International), which can use this value as a means to secure opportunities within the Republic of Cuba.

A cautionary note…. Since 17 December 2014, the government of the Republic of Cuba has continued to accept and to authorize primarily those Obama Administration initiatives that will earn revenues (visitors) rather than result in an expenditure of earnings (imports).  United States agricultural commodity/food product exports to the Republic of Cuba decreased 41% in 2015 compared to 2014; and January 2016 exports to the Republic of Cuba decreased 8% compared to January 2015.  Healthcare product exports increased fivefold in 2015 compared to 2014.