Cuba: Open for Aircraft Parts Business (sort of) ….
September 30, 2015
by Jason Dickstein
Many of ASA’s are wondering whether they can begin selling aircraft parts to Cuban operators. The short answer is yes (if you obtain a license).
Americans are still generally prohibited from doing business or investing in Cuba unless licensed by the Treasury Department’s Office of Foreign Asset Control (OFAC). For articles subject to Commerce Department jurisdiction, a license from the Bureau of Industry and Security is also typically necessary. The problem? There is a general policy of denial that applies to such licenses.
But as of September 21, 2015, there is special licensing program that permit the sale of aircraft parts. This program is similar in scope to the program that permitted licenses to be issued for aircraft parts transactions to Iran. It permits licenses to be issued on a case-by-case basis for the export to Cuba of:
(6) … items to ensure safety in civil aviation, including the safe operation of commercial passenger aircraft …. 15 C.F.R. § 746.2(b)(6).
The new rules have also removed Cuba from Country Group E:1 (terrorist supporting countries) in Supplement No. 1 to Part 740 of the EAR.
80 Federal Register 43314 (July 22, 2015). This is an important removal because it makes Cuba potentially subject to certain useful license exceptions. Look carefully at the license exceptions before using them, because some special Cuba-related-provisions have been added to some of the useful license exceptions.
80 Federal Register 56898 (Sept. 21, 2015).
An OFAC general license (a form of published exception) is a special exception to the rules. There is an OFAC general license that authorizes the export from the United States to Cuba in those cases where the export is already licensed or otherwise authorized by the Commerce Department’s Bureau of Industry and Security (BIS). 15 C.F.R. § 515.533(a)(1). This general license restricts payment methods to either cash-in-advance or financing by a banking institution located in a third country (not the US or Cuba). 15 C.F.R. § 515.533(a)(2).
Interested in visiting potential customers in Cuba? U.S. trade delegations are now authorized to travel to Cuba in limited situations. For example, travel to Cuba is authorized when it is incidental to exporting authorized goods. This includes “market research, commercial marketing, sales negotiation,accompanied delivery, or servicing in Cuba of items consistent with the export or re export licensing policy of the Commerce Department.” 31 CFR § 515.533(d).
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About Jason Dickstein
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