by Jake Colvin

Widespread speculation that the Obama administration will loosen restrictions on the ability of American citizens to travel to Cuba has renewed questions about the authority of the president to alter Cuba policy.  

Some have argued that, even if President Obama is inclined to change policy, Congress has tied his hands by passing legislation on Cuba. While Congress has a significant role to play in ending the attack on the right of American citizens to travel freely to Cuba, the administration’s hands are far from tied when it comes to shaping policy. 


Current executive branch discretion
 
In codifying the embargo, “including all restrictions under part 515 of title 31,” Congress captured in Helms-Burton the president’s discretion to change the restrictions. This licensing authority is stated throughout the Cuban Assets Control Regulations (CACR). Section 201(a) and (b) and Section 204(a) specify that transactions involving Cuba are prohibited “except as specifically authorized by the Secretary of the Treasury (or any person, agency, or instrumentality designated by him) by means of regulations, rulings, instructions, licenses, or otherwise.” Section 202 indicates that securities transactions with Cuban nationals are prohibited “unless authorized by a license expressly referring to this section.” The regulations restrict holding blocked property “except … as authorized by the Secretary of the Treasury or his delegate by specific license.”
 
Both Clinton and Bush utilized this discretion to modify the Cuba sanctions regulations following the passage of the Libertad Act in 1996. After Pope John Paul II visited Cuba in January 1998, the Clinton administration changed the rules to permit Cuban Americans to send money to relatives in Cuba and to allow direct flights between the United States and Havana. On January 5, 1999, Clinton announced that his administration would expand remittances to Cuba; increase people-to-people exchanges with Cuban academics, athletes, and scientists; and allow sales of agricultural products to independent groups in Cuba.
 
In 2008, the Bush administration announced and published regulations to permit Cuban Americans to distribute cell phones to relatives on the island. In explaining the policy, NSC Senior Director for Western Hemisphere Affairs Dan Fisk said, “in this case the State Department and the Department of Commerce will work together to change the regulatory structure. It’s a Federal Register [notice] … Most of the embargo is actually contained in federal regulations.” (Oddly, the Bush administration used its discretion to exempt U.S.-origin electronics on the Commerce Control List, which are specially controlled by the Department of Commerce for reasons of anti-terrorism, to a country that the State Department says is a sponsor of terrorism.)

The Trade Sanctions Reform and Export Enhancement Act of 2000
 
Ironically, the only piece of legislation that may restrict executive authority is the one that was designed to loosen the trade embargo. In 2000, a bipartisan group of lawmakers helped enact the Trade Sanctions Reform and Export Enhancement Act (TSRA). The law exempts exports of food, medicine, medical products, and agricultural products from U.S. sanctions. It is because of TSRA that U.S. farmers can sell lentils and poultry to Cuba and medicine and defibrillators to Sudan and the Palestinian Authority.
 
In exchange for exempting humanitarian trade from the embargo, pro-embargo members of Congress championed a provision that prohibits the executive branch from licensing “travel to, from, or within Cuba for tourist activities.” The president may only license travel under a dozen categories of purposeful travel, which are contained in Section 515.560 of the Cuban Assets Control Regulations.  They are:
 
(1) Family visits;
(2) Official business of the U.S. government, foreign governments, and certain intergovernmental organizations;
(3) Journalistic activity;
(4) Professional research;
(5) Educational activities;
(6) Religious activities;
(7) Public performances, clinics, workshops, athletic and other competitions, and exhibitions;
(8) Support for the Cuban people;
(9) Humanitarian projects (specific licenses);
(10) Activities of private foundations or research or educational institutes;
(11) Exportation, importation, or transmission of information or informational materials; and
(12) Certain export and marketing transactions.
 
As a result of TSRA, one of the most logical steps the president might wish to take – lifting the travel ban – likely would require an act of Congress.
 
How President Obama Can Expand Travel to Cuba
 
At the same time, the president retains a great deal of discretion within these categories to increase people-to-people contact with Cuba.  First, the administration can loosen the qualifications under the various categories of travel.  For example, the Bush administration imposed a condition that, in order to travel to Cuba under an academic license, a student had to be enrolled in a degree program and engaged in study in Cuba that was no shorter than 10 weeks.  President Bush also prohibited visits, which were allowed under Clinton administration policies, by individuals to Cuba when a family member is in Cuba pursuant to an OFAC license, except in “exigent” circumstances and only “after consultation with the Department of State, in true emergent situations, such as serious illness accompanied by an inability to travel.” 
 
Loosening these and other rules could have a significant impact on travel to Cuba.
 
Another change that could have a significant impact would be to permit more travel to Cuba via general licenses rather than requiring specific license applications.  The administration currently relies heavily on “specific licenses,” which requires the Treasury Department to approve individual applications to travel to Cuba in many cases.
 
The administration should ease the burden on the Treasury Department by mandating general licensing of authorized categories of travel to Cuba while redeploying resources internally to focus on the department’s urgent priorities of tracking terrorist financing.
 
Loosening travel restrictions would be a welcome step in the right direction that would create additional momentum for Congress to end the entire travel ban.
 
Jake Colvin is Vice President for Global Trade Issues with the National Foreign Trade Council, a Washington, DC-based business association which promotes open and fair global markets.  Jake is also a fellow with the New Ideas Fund. This report is adapted from The Case for a New Cuba Policy, available at www.usaengage.org.

USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.

Business Groups Applaud Passage of Legislation to Repeal Travel Ban, Ease Trade Restrictions 

“NFTC commends the House Agriculture Committee for favorably reporting H.R. 4645.  Today’s vote is the first step towards a more rational foreign policy towards Cuba, and one that the business community strongly supports.

“Now that this bill has passed the Committee, we urge House leadership to bring the bill to the floor quickly.  Should this important piece of legislation come to the floor, Members’ votes will be included in this year’s NFTC/USA*Engage Congressional scorecard.

“This bill is in the interest of American farmers, businesses and citizens, and would mark one of the only pro-trade votes the House may have this year.

“We applaud the members of the committee who voted in favor of this legislation. We are particularly grateful to Chairman Peterson for his dedication and leadership in moving this bill forward, as well as for his ongoing efforts to champion U.S. Cuba policy reform.”

NFTC and USA*Engage have been strong advocates of the legislation which would lift restrictions on travel by American citizens to Cuba and U.S. agricultural and humanitarian exports to the country. Yesterday, the associations sent a letter to all members of the committee urging them to support the bill.

*NOTE: If you would like additional commentary or an opportunity to speak with Jake about the markup, please contact Jennifer Cummings at 202-822-9491 or jcummings@fratelli.com.

Washington, DC –  On eve of tomorrow’s House Agriculture Committee markup of H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, the National Foreign Trade Council (NFTC) and USA*Engage today sent a letter to all members of the committee to urge them to support the bill. NFTC and USA*Engage advocated for the legislation which would lift restrictions on travel by American citizens to Cuba and U.S. agricultural and humanitarian exports to the country. The associations wrote:

“H.R. 4645 represents a bipartisan effort to remove self-imposed and counterproductive barriers to American citizens, farmers and businesses to humanitarian trade with and travel to Cuba.  The legislation would reverse the controversial and restrictive “payment of cash in advance” rule governing U.S. exports to Cuba, eliminate an expensive and unnecessary requirement that payments to U.S. agricultural sellers must pass through banks in third countries and lift restrictions on travel by American citizens to Cuba…The Committee mark up on Wednesday will likely be one of the only opportunities this year to vote to liberalize trade and encourage U.S. engagement in the world.”

“Members of the Agriculture Committee have a golden opportunity to vote for a bill that helps American farmers, businesses and citizens, as well as the Cuban people," said NFTC Vice President for Global Trade Issues Jake Colvin. “We commend Chairman Peterson for his leadership on fixing America's relationship with Cuba and hope that Members of the Committee will support the Chairman on Wednesday."

The letter notes that, should the bill come to the floor, members’ votes will be included in this year’s NFTC/USA*Engage Congressional scorecard.

For a copy of the letter, please click here.

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today expressed concerns over the unilateral and extraterritorial sanctions, as well as the state divestment provisions contained in the Comprehensive Iran Sanctions Accountability and Divestment Act of 2010 conference report. The associations released the following joint statement.

“Just two weeks ago, the Administration successfully garnered international support and cooperation to impose additional multilateral UN sanctions against Iran. Given this recent development, we are deeply concerned about the timing of this legislation and its unintended consequences for legitimate global commerce,” said NFTC President and USA*Engage Co-Chair Bill Reinsch. 

“We continue to believe the legislation is ill-advised.  Unilateral sanctions fail to produce their intended effects upon sovereign states, and the scope of these sanctions is worrisome.  We realize that the conferees have made some efforts not to damage normal commerce and the global supply chain in the construction of the sanctions regime,” said USA*Engage Director Richard Sawaya.

“We endorse the commitment to duly-licensed humanitarian trade in agricultural and medical products, as well as the provision for safe operation of U.S.-made aircraft. We also are encouraged that the legislation addresses some of the legitimate concerns of U.S. companies not engaged in commerce in Iran, and that it affords the president flexibility in applying the sanctions,” Sawaya continued.

“We have and will continue to urge Congress to support the president’s multilateral and multilayered diplomacy with Iran,” Reinsch concluded.

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today welcomed news from the Obama Administration regarding an agreement reached with Russia and China on a draft UN Security Council resolution calling for multilateral sanctions against Iran. The two organizations released the following statement.
 
“We applaud the Administration’s success in reaching agreement with Russia and China on a draft UN Security Council sanctions resolution.  As we’ve stated repeatedly, only multilateral economic sanctions have a legitimate chance to influence the Iranian regime. Unilateral sanctions shut out the international community rather than encourage cooperation,” said NFTC President and USA*Engage Co-Chair Bill Reinsch.
 
“We continue to believe that unilateral economic sanctions do not work and indeed often only harm U.S. economic interests. That said, we recognize that House and Senate conferees now engaged in completing Iran sanctions legislation are committed to passing additional U.S. unilateral sanctions.   We urge them to target the legislation to identified bad actors and not penalize U.S. companies or U.S. subsidiaries of foreign companies with no direct ties to Iran’s energy sector.  Attempting to repeal the global supply chain will not add to the multilateral effort and will only hurt the U.S. economy,” said Richard Sawaya, USA*Engage Director.

USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today spearheaded a letter on behalf of the business community, expressing strong support for H.R. 874, the Freedom to Travel to Cuba Act. The letter, which was signed by eight other leading business associations, urged Members of Congress to pass the bill and remove all restrictions on travel by U.S. citizens.

In a letter delivered today to all Members of Congress, the associations stated:

“…The United States should immediately remove travel restrictions and allow Americans to act as ambassadors of freedom and American values to Cuba.  From farmers and manufacturers to human rights and religious groups, as well as a large and growing number of Cuban Americans, the American people recognize the unfairness and incongruity of restricting travel to Cuba.  It is simply wrong that American citizens cannot travel freely to Cuba but are not restricted by the United States from traveling to places like North Korea and Iran. 

“Current policies towards Cuba have clearly not achieved their objectives. Without the support of our allies and the larger international community, U.S. sanctions serve only to remove the positive influences that American businesses, workers, religious groups, students and tourists have in promoting U.S. values and human rights.  Sanctions are also blunt instruments that generally harm the poorest people of the target country rather than that country’s leaders.”

In addition to the NFTC and USA*Engage, the letter was signed by AdvaMed, the Coalition of Service Industries, the Emergency Committee for American Trade, the Interactive Travel Services Association, the National Retail Federation, the Organization for International Investment, the U.S. Chamber of Commerce and the U.S. Council for International Business.

“It is counterproductive to restrict the rights of American citizens to travel to Cuba, and Congress ought to fix this anomaly in U.S. foreign policy,” said NFTC Vice President for Global Trade Issues Jake Colvin. “Reversing the travel ban would act as a catalyst for citizen diplomacy by promoting goodwill and understanding between the people of Cuba and the United States.”

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today expressed disappointment over the U.S. House of Representatives’ approval of H.R.1327, the Iran Sanctions Enabling Act.

“At a time when the United States and our key allies are engaged in multilateral diplomatic efforts to encourage the Iranian regime to be forthcoming about its nuclear ambitions, the passage of this bill is problematic,” said USA*Engage Director Richard Sawaya. “While we understand that the legislation is a reflection of policymakers’ desire to ‘do something’ with respect to Iran, it undermines the federal government’s ability to conduct foreign policy by granting all 50 states and countless municipalities the right to levy what amount to economic sanctions against Iran.”

NFTC President and USA*Engage Co-Chair Bill Reinsch said, “From a macro perspective, this bill complicates U.S. policy toward Iran, as it calls into question our commitment to the ongoing diplomatic talks. As tempting as it may be for Congress to approve bills aimed at crippling Iran’s energy sector, the reality is two-fold: one, unilateral sanctions are by definition ineffective, and two, this kind of legislation sets a bad precedent. Today the legislation is aimed at Iran, but what happens when a given state decides it should no longer have business ties with another country? It’s a slippery slope.”

In August 2006, the NFTC and eight boards of Illinois public employee pension funds brought suit (NFTC v. Giannoulias) against Illinois over the state’s Act to End Atrocities and Terrorism in Sudan, challenging the constitutionality of the Illinois Act. In February 2007, Judge Matthew Kennelly of the Federal District Court for the Northern District of Illinois ruled that the state’s law was “unconstitutional because the Act [violated] federal constitutional provisions that preclude the states from taking actions that interfere with the federal government’s authority over foreign affairs and commerce with foreign countries.”

The NFTC lawsuit followed the precedent set in the U.S. Supreme Court’s 2000 decision in Crosby v. NFTC, in which the Court struck down sanctions enacted by Massachusetts on Burma.  In that decision the Court ruled that if the federal government has enacted sanctions on a country, state and local governments are preempted from imposing sanctions of their own.

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today joined other leading associations in urging the Administration to weigh in with Congress to eliminate H.R. 2194 and S. 2799 – problematic legislative proposals that would expand U.S. sanctions on Iran and significantly undermine the U.S. national interest.

In a letter sent to National Security Advisor James Jones and National Economic Council Director Lawrence Summers, nine business organizations, including the NFTC and USA*Engage, wrote:

“While we agree that preventing Iran from developing the capability to produce nuclear weapons is an urgent U.S. national security objective, the unilateral, extraterritorial, and overly broad approach of these bills would undercut rather than advance this critical objective.

“The proposed sanctions would incite economic, diplomatic, and legal conflicts with U.S. allies and could frustrate joint action against Iran. They could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed….

“…The United States and our allies must present a united front in the face of Iran’s nuclear ambitions. Unfortunately, these proposals would undermine these goals with sanctions of inappropriately sweeping reach, undue constraints on the U.S. Export-Import Bank, and the elimination of executive discretion in the conduct of U.S. foreign policy. We urge you to weigh in vigorously with Congress to eliminate these highly problematic proposals.”

In addition to the NFTC and USA*Engage, the letter was signed by Business Roundtable, the Coalition for Employment through Exports, the Emergency Committee for American Trade, the National Association of Manufacturers, the Organization for International Investment, the U.S. Chamber of Commerce and the U.S. Council for International Business.

Urge Senators to Reject Legislation

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today expressed deep disappointment over the U.S. House of Representatives’ approval of H.R. 2194, a bill that would amend the Iran Sanctions Act of 1996 by expanding U.S. unilateral sanctions against Iran in ways that pose a threat to the competitiveness of U.S. and foreign companies.

“We are deeply disappointed that the House approved this flawed piece of legislation. In many ways, the House vote was predictable, as Congress consistently feels the need to ‘do something’ to show the Iranian regime it disapproves of its pursuit of nuclear weapons. While the intentions behind the bill are understandable, this is both the wrong time and the wrong policy tool to use to affect the behavior of Iran’s leaders,” said NFTC President Bill Reinsch. “The reality is three-fold. One, unilateral sanctions are ineffective because they do not include the buy-in and support of our allies in the international community. Two, the Administration is engaged in delicate multilateral  negotiations aimed at applying pressure on Iran to change course. Three, this bill is far-reaching, and instead of imposing targeted sanctions, it will, if enacted, broaden the scope of actions and actors subject to sanctions in an unprecedented way.”

“The potential consequences of this bill to U.S. industry, exports and jobs have not been analyzed in great detail. We urge the Senate to reject S. 2799, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009, in its current form, and spend time reviewing its provisions to better determine the impact on the U.S. economy,” said USA*Engage Director Richard Sawaya. “Now is not the time to implement broad-brush sanctions that have little focus and will likely do more harm than good. We applaud several Senators who have expressed concerns and principled objection to the bill as drafted, including Senator Kerry."

A NFTC/USA*Engage analysis of the House and Senate bills highlights the following key flaws:

• - With respect to the extension of the Iran Sanctions Act to “entities” that trade refined petroleum products to Iran, both bills contain language that would subject any entity that trades refined petroleum products (as defined in the law) with Iran, over a fairly minimal dollar threshold, to mandatory sanctions enumerated in the bills. Assuming OFAC adopts the traditional approach to restricting U.S. persons from dealing in "property" or "interest in property" of the sanctioned person, U.S. companies could be precluded from any trade or business relationship with the sanctioned entity. The language in the additional mandatory sanctions section of each bill is quite sweeping, and would isolate any entity engaged in such trade from the U.S. economy. 

• 
  
• - The bills also target foreign export credit agencies (ECAs) that finance any entities that have dealings with Iran’s energy sector. This measure would effectively preclude the Export-Import Bank from co-financing with such ECAs projects of U.S. exporters that have no relation to Iran’s or to its energy sector.
• 
  
• - The President’s waiver authority in both bills is severely constrained.
  

Groups highlight growing momentum to allow U.S. travel to Cuba

Washington, DC -- The National Foreign Trade Council (NFTC) and USA*Engage today applauded the House Foreign Affairs Committee for holding a hearing on lifting the U.S. ban on travel to Cuba. NFTC Vice President for Global Trade Issues Jake Colvin released the following statement:

"We applaud Chairman Berman for his leadership on this issue, as well as Congressmen Delahunt, Flake and Rangel and Senators Baucus, Dodd, Dorgan, Enzi and Lugar, among others, for their tireless efforts to restore the rights of U.S. citizens to travel to Cuba.

"Momentum is building to lift the ban. A solid majority of Americans support reversing the ban, and according to a recent poll conducted by Miami firm Bendixen & Associates, nearly 60% of Cuban Americans support open travel to Cuba.

"The travel ban is bad foreign policy, bad for the Cuban people, and it's bad for business. Allowing Americans to travel to Cuba would give an immediate boost to the U.S. travel industry, generate economic opportunity for Cuban citizens and help to promote understanding and dialogue between the Cuban and American people."
 

Association Says Proposed Sanctions Will Not Deliver ‘Crippling Blow’ to Iranian Regime

Washington, DC – In advance of House Foreign Affairs and Senate Banking Committee markups of Iran sanctions bills later this week, USA*Engage today urged Members of Congress to refrain from legislating additional unilateral U.S. sanctions against Iran, The association expressed support for the Administration’s efforts to build a multilateral negotiating consensus to engage the Iranian regime to forego the acquisition of nuclear weapons, and pressed policymakers to pass a bipartisan resolution reaffirming the President’s authority to implement a multilateral engagement strategy.

In a letter delivered today to all members of both committees, USA*Engage wrote the following:

… For thirty years, unilateral economic sanctions have been have been the principal instruments of U.S. policy towards the Islamic Republic of Iran. Unsurprisingly, the iron law of unintended consequences has characterized that policy. The sanctions have empowered and enriched the ruling regime, stifled ordinary engagement between citizens of the two countries, benefited American companies' foreign competitors, and provided third countries opportunities for geopolitical game-playing at the expense of U.S. national interests. The record speaks for itself....

… In working with allies, the Administration can avoid these past mistakes. Nonetheless, members of Congress appear set to legislate yet more unilateral sanctions upon Iran - this time by targeting foreign companies in any way connected with the importation of refined petroleum product into Iran. Since Iran currently relies on imported petroleum products to satisfy its highly-subsidized gasoline consumption, proponents of H.R. 2194 and S. 908 assert that unilateral sanctions will deal a "crippling blow" to the Iranian regime. The facts on the ground, however, strongly suggest the opposite…

… The President has the authority to commit the U.S. to whatever array of multilateral sanctions are deemed most able to influence Iran's decision makers. USA*ENGAGE urges Congress to pass a bipartisan resolution reaffirming the President's authority to develop a multilateral strategy, based on engagement, best suited to attain actual U.S. national interests and to oppose H.R. 2194, S. 908, and similar bills.

###

Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage today welcomed the release of new Cuba regulations by the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Commerce Department’s Bureau of Industry and Security. The regulations, which implement President Obama’s April 13 directive on Cuba policy, loosen restrictions on the ability of Cuban Americans and businesspersons to travel to Cuba, expand the amount of remittances and other items that may be sent or brought to Cuba, and allow for increased participation by U.S. businesses in Cuba’s telecommunication industry.

“We welcome the new regulations, which represent a shift in U.S policy and will help to advance diplomacy through increased travel to and communication with Cuba,” said NFTC President and USA*Engage Co-Chair Bill Reinsch. “In particular, we applaud changes in rules regulating the provision of telecommunications services and the loosening of travel restrictions related to the sale of agriculture, medical and communications equipment, allowing for increased contact between Cuba and the U.S. private sector.” 
 
“While these changes are encouraging, Congress and the Administration can’t lose sight of the fact that there is much more work left to be done to reform U.S. Cuba policy,” said NFTC Vice President for Global Trade Issues Jake Colvin. “We encourage Congress to pass legislation lifting restrictions on the right of U.S. citizens to travel to Cuba, and hope that the Administration will further loosen restrictions on the ability of students, artists, researchers and others to travel to Cuba as permitted under current law. The Administration can do more here.”

Additional information is available here.