April 10, 2015 | Industry Insights

Don’t Jump Too Far in Front on Cuba

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While many shippers, retailers and travel companies are intrigued by the prospects of developing opportunities in Cuba, it’s crucial to remember that the embargo remains in place. A memorandum from law firm Wiggin and Dana to the American Institute of Marine Underwriters summarizes the subject for the shipping industry.

The U.S. government broadened exchange with Cuba, but the changes have little to do with cargo shipping at this point, and “[most] transactions between the United States, or persons subject to U.S. jurisdiction, and Cuba continue to be prohibited,” according to the U.S. Treasury. Additionally, the Office of Foreign Assets Control will continue enforcing prohibitions under Cuban Assets Control Regulations.

Though there is some shipping allowed under the relaxation of rules on interchange between the two countries, authorized commerce is highly restricted. Even under the amended rules, exports from the U.S. to Cuba are still required to undergo an authorization process. Restrictions still apply to insurers, which means that insurance approval still has to be authorized separately.

The Department of Commerce has changed its export rules regarding Cuba and will now license certain export items intended to support the Cuban people’s living conditions, civil society and independent economic activity – which could include communications devices, construction tools and building materials, for example – but approvals are required for both exports and re-exports, the Wiggin and Dana memorandum indicates.

Rules on vessels engaged in “the exportation or re-exportation to Cuba from a third country of agricultural commodities, medicine or medical devices that would be designated as EAR99 under the Export Administration Regulations…if they were located in the United States” have been relaxed. Additionally, certain import transactions deemed necessary by the State Department, will be authorized.

Commerce is subject to a high degree of scrutiny, and at this point most exports and re-exports must still be licensed to be legally insured by U.S. insurers. Transactions with Cuba may be best referred to legal counsel to ensure you don’t run afoul of continuing sanctions. Most insurers appear to be awaiting further guidance or rule changes before opening coverage to shipping operations affected by the embargo, so it is incumbent upon all in the freight industry to thoroughly vet offers of shipping insurance to ensure coverage complies with U.S. law.

We invite you to learn more about us, our experienced talent in this highly specialized area, our creative insurance and bond solutions for global logistics risks, and the value we will bring to you and your clients. Please contact us at 1-800-ROANOKE (800-762-6653).

Source: American Institute of Marine Underwriters

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