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On Wednesday, December 17, President Obama announced a revolutionary change in policy: after decades of hostile ties and isolation, the United States will restore full diplomatic relations with Cuba and open an embassy in Havana.

The policy shift will result in some changes in permitted commerce and travel between the United States and Cuba. However, the longstanding trade embargo between the two nations has not ended. Obama will need congressional approval to fully rollback sanctions against Cuba, and there will likely be resistance.

As presently worded, the Helms-Burton Act states that sanctions cannot be ended until Cuba transitions to a democratic government. Only Congress can overturn the law and Republicans are due to take control of both the House of Representatives and the Senate in January.

Nevertheless, the administration has asserted that, over the next several weeks, the Office of Foreign Assets Control (“OFAC”) will implement the Treasury-specific changes via amendments to the Cuban Assets Control Regulations ("CACR") it administers, while the Department of Commerce will implement the remainder via amendments to the Export Administration Regulations. Arguably, the President has statutory and regulatory authority to liberalize certain rules governing trade and travel with Cuba under specific provisions of the CACR, Section 5(b) of the Trading With The Enemy Act, and even Section 102(b) of the Helms-Burton Act. Likewise, various Supreme Court decisions have emphasized the extent of the President's constitutional authority in the realm of foreign affairs. However, it is important to keep in mind that the President’s proposed regulatory changes have not yet occurred, and if implemented, may well face legal challenges from Congress and other groups.

In the interim, sanctions between the U.S. and Cuba will not change, and many of the existing limitations will remain in force. This includes, among other things:

  • Prohibitions on business transactions and other dealings with Cuban individuals and entities on the Specially Designated Nationals List of blocked parties maintained by OFAC;
  • Restrictions on travel by U.S. persons to Cuba for most purposes without a license; and
  • Bans on Cuban-origin tobacco products, whether the goods are purchased directly by the importer, given to the importer as a gift, offered over the Internet, or via catalog.

Those considering future dealings with Cuba as these policy changes unfold are strongly urged to consult with specialized international trade counsel to ensure their actions comply with the law. After all, no one wants a big fat fine, penalty, or federal investigation for Christmas.