Starting Friday, travel and trade rules for Cuba eased

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Starting Friday, trade and travel with Cuba easier

Starting Friday, Americans can bring Cuban cigars back to the States

The Obama administration is putting a large dent in the U.S. embargo against Cuba as of Friday, significantly loosening restrictions on American trade and investment.

The new rules also open up the communist island to greater American travel and allow U.S. citizens to start bringing home small amounts of Cuban cigars after more than a half-century ban.

Thursday's announcement of new Treasury and Commerce Department regulations are the next step in President Barack Obama's ambitious goal of re-establishing diplomatic relations with the government of Cuban President Raul Castro, Fidel's younger brother. They come three days after U.S. officials confirmed the release of 53 political prisoners Cuba had promised to free.

Only Congress can end the five-decade embargo but starting Friday, U.S. companies will be able to export mobile phones, televisions, memory devices, recording devices, computers and software to a country with notoriously poor Internet and telecommunications infrastructure. The goal is to "contribute to the ability of the Cuban people to communicate with people within Cuba, in the United States, and the rest of the world," according to a Treasury Department fact sheet. Internet-based communications will fall under a general license.

With hundreds of thousands of Cuban-Americans visiting family each year, Cuba is already awash in American products brought in people's luggage, including iPhones and flat-screen TVs. The main barriers to Internet access are high prices and restrictions imposed by a government desperate for hard currency and worried about allowing citizens unrestricted communications among themselves and with the outside world.

Americans permitted to travel to Cuba for family visits, official U.S. government business, journalism, research, education, religious activity and other reasons fall under a U.S. general license and don't need to apply for a separate license. A limit on remittance payments to family members in Cuba will be raised to $8,000 per year, from $2,000 per year. Americans visiting Cuba will be allowed to bring home $100 in alcohol and tobacco products, and $400 in total goods.

The few U.S. companies facilitating travel to Cuba say inquiries have exploded since December. American visits could triple this year, from about 90,000 annually. "We're hiring more people, we've secured more hotel rooms and assets in Cuba to provide additional travel," said Tom Popper, president of New York-based insightCuba.

With the new regulations public, the focus shifts to American businesses and the Cuban government. Some changes could take months as U.S. firms analyze the risks and benefits of moving into a complicated new market. And the Cuban government has said nothing publicly about how it will regulate new trade with the United States. Foreign companies currently deal almost entirely with state-owned firms that are notoriously slow, inefficient and short on cash.

Also casting a shadow on potential deals is the possibility of litigation by Cuban-Americans and U.S. firms whose property was confiscated in Fidel Castro's 1959 revolution and may try to sue companies entering into business with the Cuban government. It's possible Congress may also seek to erect barriers to new investment.

Other changes include:

—No more limits on how much money Americans spend in Cuba each day or what they spend it on.

—Permissible use of U.S. credit and debit cards.

—Travel agents and airlines can fly to Cuba without a special license.

—Insurance companies can provide coverage for health, life and travel insurance policies for individuals residing in or visiting Cuba.

—Financial institutions may open accounts at Cuban banks to facilitate authorized transactions.

—Investments can be made in some small businesses and agricultural operations.

—Companies may ship building materials and equipment to private Cuban companies to renovate private buildings.

Old foes and new ones

Obama vowed to soften the embargo last month and begin restoring diplomatic ties with Havana, saying "these 50 years have shown that isolation has not worked." The deal was the product of 18 months of secret talks that culminated in the exchange of imprisoned spies and release of Alan Gross, a U.S. government contractor who had been imprisoned in Cuba for five years.

The sudden rapprochement between Cold War foes has divided U.S. lawmakers across party lines and interests. Among Republicans and Democrats in Congress, Cuban-Americans such as Sens. Marco Rubio of Florida and Bob Menendez of New Jersey have been particularly vocal in opposition.

But some pro-business types have welcomed the opportunity to open up a new export market in a country so close to American shores. The head of the U.S. Chamber of Commerce, for example, said Wednesday it was better for the U.S. to sell computers, smartphones and cars to Cuba than to cede such business to countries like Russia and China. Still, the embargo as a whole appears unlikely to fall anytime soon.

The U.S. and Cuba are scheduled to hold migration talks in Havana next week, the next step in their normalization process. Leading the American delegation is Roberta Jacobson, the top U.S. diplomat for Latin America. Her visit marks the highest-level trip to Cuba by a U.S. official since 1980.

Further down the road, Washington envisions reopening the U.S. Embassy in Havana and carrying out high-level exchanges and visits between the governments. Secretary of State John Kerry could travel to the island later this year.

Associated Press