On Monday, October 17th, a new round of changes in U.S.-Cuba policy went into effect. And while the removal of restrictions on bringing back rum and cigars grabbed most headlines, other embargo-easing measures will be more significant.
The regulatory amendments, announced by National Security Advisor Ambassador Susan Rice on Friday, October 14th, aimed to facilitate travel, trade and financial dealings with Cuba. The Treasury Department lists them here.
The regulatory changes came as part of a broader announcement of a public “Presidential Policy Directive,” which as Ambassador Rice explained, clearly laid out the Obama administration’s approach to Cuba. In summarizing the Directive, Ambassador Rice re-iterated President Obama’s call to the Congress to do its part and vote to end the U.S. embargo.
While all of the measures will smooth the U.S.-Cuba relationship, some simply make tweaks to remove bureaucratic hurdles to already-open sectors, while others open new routes of engagement and provide benefits to both the United States and to Cuba.
Here is a rundown of the changes likely to have the most impact and why they matter for both countries:
- Cuban-origin pharmaceuticals can be FDA-tested, and if approved by the FDA after clinical trials, sold in the United States under a general license.
Cuba has developed a number of drugs that can benefit thousands in the United States.
Each year, about 75,000 of the roughly 29 million Americans that have diabetes have foot amputations. Cuba has a drug that reduces the risk of amputation by over 70%. Other Cuban-origin pharmaceuticals that could benefit U.S. citizens include anticancer medications, a drug that targets coronary clots, innovative burn treatments, medication for head and neck tumors and vaccines for hepatitis B and C and meningitis B. A number of other anticancer medications and vaccines are also currently in development.
Under the new changes, all transactions related to importing pharmaceutical samples for testing, and carrying out FDA-approved clinical testing in the United States are covered under a general license. Pharmaceutical distributors will not need to seek specialized approval to submit Cuban-origin drugs for clinical testing. Further, if a drug or pharmaceutical product is approved by the FDA, it can be then marketed in the United States without any additional approvals, also under a general license.
This is crucial because although some companies in the United States have previously gotten approval to do clinical testing of these drugs, they had been reluctant to go through the trials because testing is expensive and without being able to market approved drugs, sales were likely to be low. Friday’s announcement changed that.
This is a modification that will offer health benefits to U.S. consumers and increase exports for the Cuban pharmaceutical industry.
- U.S. citizens and entities can now carry out joint medical research projects with people in Cuba.
As mentioned above, Cuba has an innovative, active medical sector that is at the forefront of research of issues such as cancer and tropical diseases, like dengue. Under previous changes, non-commercial research projects were allowed. The latest measures allow for commercial investment in research – this will not only broaden the possibilities, but will also greatly increase Cuban researchers’ capacity, giving them greater access to resources and equipment.
Research results could yield personal and public health benefits for people in both the United States and Cuba.
- Many foreign ships can now come directly to the United States after trading with Cuba.
Previously, foreign ships carrying cargo that had docked in Cuba for trade purposes had to wait 180 days before traveling to U.S. ports to load or unload. This hurt Cuba’s trade because ships carrying cargo from Asia, for example, would not want to stop in Cuba before going to the United States. Under the new rules, ships carrying most forms of commercial cargo to Cuba will be able to go directly to the United States.
This will likely reduce transportation costs for goods that Cuba purchases abroad. It will also mean that Cuba’s relatively new port of Mariel will receive more Asia-sourced goods and help make it more of a transshipment business for the Caribbean – all of which will boost Cuba’s economy and the livelihood of its citizens.
- U.S. citizens and companies can provide infrastructure services in Cuba.
U.S. entities can now develop, repair, maintain and improve Cuban infrastructure as long as it benefits the Cuban people. According to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), “infrastructure” means:
[S]ystems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools. [It also includes] projects related to the environmental protection of U.S., Cuban, and international air quality, waters, and coastlines.
Cuba has a crumbling infrastructure. Many schools are dilapidated, aging housing stock in several areas is collapsing (and the rainy season does it no favors), entire neighborhoods are sometimes without water for days, waste management is a problem throughout the island and electrical blackouts are not foreign to most. The list of Cuba’s infrastructure needs goes on.
Under the new regulations, while Cuba will have to arrange the financing for such projects, individuals and entities in the United States are now eligible to provide services to update some of these sectors.
- U.S. entities can now send people from other countries to Cuba.
According to the OFAC, the new rules allow for persons subject to U.S. jurisdiction:
“[…]to make remittances to third-country nationals for travel by third-country nationals to, from, or within Cuba, provided the travel would be authorized by general license for a person subject to U.S. jurisdiction.”
This means that U.S. citizens and organizations can put money towards citizens from other countries travelling to Cuba, increasing the potential for regional collaboration through delegations, conferences and other opportunities for engagement. For example, previously, U.S. organizations could not cover the costs of bringing scientists, activists, or intellectuals from other countries to Cuba. Under the new rules, this can happen, which opens doors to greater engagement throughout the hemisphere for everyone from gay rights activists to labor groups to scholars and artists.
Aside from the regulatory changes, there were also are two significant policy statements in the Directive, although they are spelled out only in a general way:
- A commitment to “facilitate [Cuba’s] integration into international bodies, including through the use of technical assistance programs.”
This is significant because it signals U.S. willingness to see movement on Cuba’s relationship with international financial institutions.
Formally, the Helms-Burton legislation which codified the embargo into law requires the United States to oppose Cuban membership in these institutions until changes that, for all practical purposes, constitute regime change in Cuba.
While President Clinton, who signed the Helms-Burton legislation objected to these provisions as an abrogation of Presidential authority, successive U.S. administrations have taken no action to encourage Cuban re-engagement with the international financial institutions.
Though Cuba today is not actively seeking membership in these bodies, it has been in technical discussions with some of them, and the signal that the U.S. government, despite the Helms-Burton restrictions, encourages Cuban integration into these bodies, is a positive one.
- Democracy promotion will become more transparent.
The Directive says “We will pursue democracy programming that is transparent and consistent with programming in other similarly situated societies around the world.”
While still quite general, this has the potential to be significant.
To date, U.S. democracy promotion programs have been geared toward regime change in Cuba. Many have come under fire for their secretive nature, such as ZunZuneo, a USAID-created Twitter-like platform intended to build dissent against the Cuban government. For this reason, it has been a major source of distrust between the two countries. As WOLA has previously noted, these programs have been misguided, counter-productive, and have done more harm than good.
Supporting Cuban civil society in a much more open, transparent manner will help to repair relations as normalization continues.
Looking forward, it is important that any democracy promotion program is carried out with the goal of expanding contacts between US and Cuban people. If this announcement signals a commitment to such a new approach, it would be a positive step forward.