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Update FAQs January 2017

On 6th January 2017 the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) updated its guidelines regarding Cuba to issue five new FAQs (#86-#90) regarding vessel transactions with Cuba, and in particular the “180-day rule” and the “goods/passengers-on-board rule”.

#86 states that the 180-day rule is a statutory restriction prohibiting any vessel that enters a port or place in Cuba to engage in the trade of goods or the purchase or provision of services there from entering any US port for the purpose of loading or unloading freight for 180 days after leaving Cuba, unless authorized by OFAC. This restriction is applied even if a vessel has stopped in Cuba solely to purchase services unrelated to the trade of goods, such as planned ship maintenance. The 180-day rule is separate from a second statutory restriction – the goods/passengers-on-board rule – which prohibits any vessel carrying goods or passengers to or from Cuba or carrying goods in which Cuba or a Cuban national has an interest from entering a US port with such goods or passengers on board, unless authorized or exempt. There are certain exceptions to these rules. For a complete description of the 180-day rule, the goods/passengers-on-board rule, and the general licenses and exemptions that apply, see 31 C.F.R. §§ 515.206, 515.207, and 515.550.

#87 confirms OFAC has authorized by general license certain exceptions to the 180-day and goods/passengers-on-board rules. If a vessel engages only in one or more of the following activities with Cuba, it will qualify for the general license and therefore will not be subject to the 180-day rule or the goods/passengers-on-board rule:
- Engaging or has engaged in trade with Cuba authorized under the Cuban Assets Control Regulations (CACR), such as a vessel carrying goods from the US that are licensed or otherwise authorized for export or re-export to Cuba by the US Department of Commerce (DoC) pursuant to the EAR;
- Engaging or has engaged in trade with Cuba that is exempt from the prohibitions of the CACR, such as a vessel carrying exclusively informational materials;
- Engaging or has engaged in the export or re-export from a third country to Cuba of agricultural commodities, medicine, or medical devices that, were they subject to the EAR, would be designated as EAR99;
- Carrying or has carried persons between the United States and Cuba or within Cuba pursuant to the general license for the provision of carrier services under the CACR or, in the case of a vessel used solely for personal travel (and not transporting passengers), pursuant to a license or other authorization issued by the DoC for the exportation or re-exportation of the vessel to Cuba; or
- A foreign vessel that has entered a port or place in Cuba while carrying students, faculty, and staff that are authorized to travel to Cuba pursuant to the general license for educational activities under the CACR.

Additionally, if a vessel’s only transactions with Cuba are the exportation to Cuba from a third country of items that, were they subject to the EAR, would be designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism reasons, the vessel will not be subject to the 180-day rule.

These exceptions to the 180-day rule do not apply to a vessel that:
- Carries for export to Cuba any additional goods that, were they subject to the EAR, would not be designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism reasons;
- Picks up any goods in Cuba, unless the transactions involving those goods are authorized by OFAC or exempt from the prohibitions of the CACR; or
- Purchases or provides services in Cuba, other than docking, unloading, or other services associated with normal shipping transactions.

For a complete description of the 180-day rule, the goods/passengers-on-board rule, and the general licenses and exemptions that apply, see 31 C.F.R. §§ 515.206, 515.207, and 515.550.

#88 states that the general licenses involving the 180-day rule only authorize certain vessels to enter a US port within 180 days after leaving a port or place in Cuba; they do not authorize any shipments to or from Cuba. Shipments to or from Cuba may be separately authorized under other provisions of the CACR or, as in the case of most shipments from third countries to Cuba, may simply not be subject to the restrictions of the CACR, though other US government agency restrictions may apply. For a complete description of the 180-day rule and the general licenses and exemptions that apply, see 31 C.F.R. §§ 515.206, 515.207(a), and 515.550.

#89 confirms that if a foreign vessel is traveling to the US via Cuba with cargo destined for the US, goods may remain aboard the vessel for delivery to the US while the vessel is docked in a Cuban port, and that vessel and its cargo may then enter the US without being subject to the 180-day rule or the goods/passengers-on-board rule, provided that no other factors trigger the 180-day rule or the goods/passengers-on-board rule. For example, no goods may be unloaded in Cuba other than goods that would be designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism reasons if they had been exported from the US; and no merchandise may be loaded in Cuba that is not licensed or exempt. Goods entering the US that remained on board the ship while it docked in a Cuban port are not considered goods carried to or from Cuba or goods in which Cuba or a Cuban national has an interest for purposes of the goods/passengers-on-board rule. Furthermore, such goods are not considered goods that have been located in or transported through Cuba for the purposes of 31 C.F.R. § 515.204, which prohibits the importation of certain merchandise into the US. For a complete description of the 180-day rule, the goods/passengers-on-board rule, the importation prohibition, and the general licenses and exemptions that apply, see 31 C.F.R. §§ 515.204, 515.206, 515.207, and 515.550.

#90 states that the exceptions to the 180-day rule apply to each individual vessel that meets the requirements of the general license irrespective of any code-sharing arrangement (a type of vessel or slot sharing agreement between carriers). Thus, any shipping company may deploy a vessel in a broader shipping arrangement and, so long as the vessel meets the terms of the general license, that vessel may enter a US port accordingly. There is no requirement for authorization of the individual companies or the broader code-sharing arrangement. Code-sharing agreements do not affect the general license or its requirements.