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US relaxes trade, travel restrictions on Cuba

One expert calls the new rules a ‘full frontal assault’ on the more than 50-year-old embargo

HAVANA — Doing business in Cuba could soon get a lot easier for Americans.

The U.S. Treasury and Commerce departments announced Friday what analysts describe as the most comprehensive change to trade and investment on the island in more than half a century.

Twenty-seven pages of new regulations authorize American entrepreneurs to engage with Cuban government-owned companies as well as the more 200 categories of independently licensed businesses on the island.

That means that, starting Monday, the U.S. government will not prevent companies such as FedEx from opening drop-off locations in Cuba, John Deere from opening showrooms or Microsoft from opening a Havana office and hiring Cuban employees.

“This isn’t end-run around the embargo,” said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council. “It’s a full frontal assault.”

The U.S. slapped a trade embargo against Cuba in 1960, which was strengthened over the next two years, after Fidel Castro’s government began nationalizing private property of American businesses.

Only an act of Congress may lift it.

And yet while the U.S. Trading With the Enemy Act specifically restricts trade, it has also historically granted the White House a certain degree of leeway in determining how those restrictions are interpreted and applied.

“The embargo has more holes than Swiss cheese,” said Pedro Akerman, the chairman of Akerman’s International. “You’ve just got to know where the holes are.”

The regulatory shift further eases restrictions on travel, allows Americans to open bank accounts and expands general licenses for telecommunications and Internet services.

It also gets rid of restrictions on remittances to Cuba, which in 2014 totaled roughly $1 billion, according to the U.S.-Cuba Trade and Economic Council.

Before Friday’s announcement, the U.S. maintained a $2,000 quarterly maximum on funds that U.S. residents were allowed send to friends and family in Cuba. Unrestricted cash flow from the U.S. is therefore expected be a boon to the cash-strapped Cuban economy.

“These resources are catalyzing a host of positive developments,” wrote Ted Piccone, a senior fellow at the Brookings Institution, referring to the use of remittances to reduce dependence on the socialist state.

The announcement comes two days before Pope Francis is scheduled to address hundreds of thousands of people in Havana’s Revolution Plaza — the third such visit by a pontiff in less than two decades.

After President Barack Obama announced an accord to normalize relations between Cuba and the United States, on Dec. 17, 2014, Roberta Jacobson, a U.S. assistant secretary of state, told Congress that Francis “was crucial to both sides” in in brokering the agreement behind the scenes.

Many in Havana wonder openly whether Sunday's Mass will turn political.

Cuba insiders say the focus now largely shifts to the Cuban government and how it will handle newfound attention from U.S. businesses. 

The Cuban government typically has foreign companies partner with the state before setting up operations on the island — something about which many of the more than 250 foreign companies in Cuba have complained.

The new policy “will create for the Republic of Cuba the type of pressure that will be challenging to manage,” said Kavulich. American “companies will continue to be used as bait, but now the Republic of Cuba will need to reciprocate or risk a lessening of interest by the United States business community.”

Despite lingering questions for American companies about the business climate, the buying power of Cuban consumers, the influence of the government and the lack of infrastructure needed to facilitate business, there are signs of change.

On Thursday, Verizon Communications Inc. began offering roaming wireless service on the island — becoming the first U.S. carrier to provide cellphone coverage in Cuba. 

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