Wednesday, January 27, 2016

U.S. Loosens Rules on Cuba Trade Financing

U.S. Loosens Rules on Cuba Trade Financing
Relaxed rules will permit competitive export packages from the U.S. to Cuba
Updated Jan. 26, 2016 7:11 p.m. ET

The U.S. on Tuesday loosened rules for financing certain exports to
Cuba, part of the Obama administration's step-by-step measures to build
ties with Havana after decades of sanctions.

The relaxed financing rules are accompanied by other provisions aimed at
facilitating trade, travel and cultural exchanges with Cuba. Still,
officials signaled that major changes to relations would depend on steps
taken by the Cuban government or on action in Congress to dismantle the
U.S. trade embargo.

The altered rules will allow some industries to arrange competitive
export packages from the U.S. Before the new provisions, financing had
to be routed through a third country.

A company such as Caterpillar Inc., for example, will be able to provide
financing for approved shipments of agricultural machinery after the
rules take effect on Wednesday, lawyers said. Exports of construction
materials, as well as many other permitted products, could also benefit
from the new rules.

But farm products, which are traditionally the biggest Cuban import from
the U.S., are excluded from the new provisions, as such lending would
violate the U.S. embargo.

The Treasury Department and Commerce Department also extended previous
rules that allowed for air and marine travel to Cuba, and issued
guidelines to facilitate musical performances, film, journalism and
professional conferences undertaken on the island.

"You're going to probably see a lot more movement in terms of musical
festivals, arts festivals, etc.," said Augusto Maxwell, a partner in the
Akerman law firm's Miami office. The new rules would "encourage more
concerts, workshops, athletic exhibitions in Cuba," he said.

President Barack Obama in December signaled he may visit Cuba during his
remaining months in office. Officials on Tuesday declined to elaborate
on his plans for a visit. Secretary of State John Kerry, Commerce
Secretary Penny Pritzker and Agriculture Secretary Tom Vilsack recently
visited the island.

"Everything is focused upon creating a landscape that is difficult for a
successor to dismantle and which will permit better optics when creating
an itinerary for the president to visit Cuba," said John Kavulich, the
president of the U.S.-Cuba Trade and Economic Council.

Many Republicans have resisted changes to U.S.-Cuba relations. Sen.
Marco Rubio (R., Fla.), a son of Cuban immigrants and a candidate for
the 2016 GOP presidential nomination, has spoken out against new ties
with Havana.

"The Obama administration's one-sided concessions to Cuba further
empower the regime and enable it with an economic windfall," Mr. Rubio
said in a statement on Tuesday.

Mr. Obama launched a major effort to re-establish ties with Havana in
December 2014. Since then, Washington has renewed official diplomatic
relations with Cuba, removed the country from a list of state sponsors
of terrorism, and relaxed the rules regarding certain forms of travel
and trade.

U.S. officials say they are working to boost entrepreneurship and the
private sector in Cuba, a communist country dominated by
state-controlled enterprises.

"We think that our steps have significant impact, but they would have
much greater impact if Cuba would match those steps as well," a senior
administration official said Tuesday.

Even if the Cuban government takes steps to free up commercial relations
on its side, establishing major business ties would require the U.S.
Congress to roll back a series of laws codifying sanctions on Cuba.

Write to William Mauldin at

Source: U.S. Loosens Rules on Cuba Trade Financing - WSJ -

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