Freedom to Export to Cuba Senate Bill

On February 12, Sen. Amy Klobuchar (D-MN) introduced Senate Bill 491, the Freedom to Export to Cuba Act. This bipartisan bill is intended to lift the broad embargo on U.S. trade and investment in Cuba, but leaves in place many of the restrictions related to human rights and property claims, as well as those imposed by other laws and regulations for other reasons other than the embargo, such as Cuba’s state sponsorship of terrorism. In proposing this type of legislation, its sponsors hoped to take an incremental step to open up U.S.-Cuba trade without addressing the most sensitive issues.

At the time of introduction, the bill was co-sponsored by a bipartisan list of senior Senators, including Mike Enzi (R-WY), Debbie Stabenow (D-MI), Jeff Flake (R-AZ), Patrick Leahy (D-VT), and Dick Durbin (D-IL). Since introduction, Sen. Rand Paul (R-KY), a top Republican presidential contender, has since joined the bill as a co-sponsor.

If enacted this bill would repeal many of the general legal restrictions against U.S. companies and individuals from exporting to or investing in Cuba. To accomplish this, the bill strikes specific portions of the Trading with the Enemy Act, the Foreign Assistance Act of 1961, the Cuban Democracy Act of 1992, the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, and the Trade Sanctions Reform and Export Enhancement Act of 2000 to remove the justifications for the embargo against Cuba and the total ban on trade and investment. As applied, this bill would repeal:

• the original 1961 authorization for establishing the trade and investment embargo and subsequent laws that required enforcement of the embargo;
• restrictive statutes that prohibit transactions between U.S.-owned or controlled firms and Cuba, and
• limitations on direct shipping between U.S. and Cuban ports.

Of note, the bill would rescind Section 1706 of the Cuban Democracy Act, which would end the restriction on:

• licenses for the trade in goods between U.S.-owned or controlled firms in third countries and Cuba;
• shipping between the United States and Cuba; and
• remittances from the United States to Cubans not subject to other sanctions or restriction.

Furthermore, rescinding Section 1704 of the Cuban Democracy Act would end some of the U.S sanctions against countries that assist Cuba.

Perhaps most significantly, revoking provisions of the Trade Sanctions Reform and Export Enhancement Act would end the ban on U.S. government assistance to Cuba, which includes U.S. export assistance, export finance, and trade credits and guarantees. These changes would also remove the prohibition on private financing of U.S. agricultural sales to Cuba that are not blocked for other reasons.

Despite the important new trade openings provided by this bill, it does not repeal human rights provisions or provisions relating to property claims against the Cuban government. It also does not address any issues related to the sugar quota.

Moreover, even though U.S. exports to and investment in Cuba could begin in general under this bill, several restrictions will likely remain in place in the near-term even if this bill became law. Significant portions of the patchwork of laws governing trade and investment in Cuba would remain in place if this law was enacted. As such, exports to and investments with specific individuals or groups will likely still face restriction until the President changes additional regulations or Congress amends other laws. Most significant among these continuing restrictions are those related to Cuba’s designation as a state sponsor of terrorism. Were that designation to be lifted – a central part of ongoing U.S.-Cuba negotiation – further restrictions on trade and investment would recede.

While a significant step on the path to full rapprochement, this bill does not yet represent a full opening with Cuba.

Upon introduction, this bill was praised by various corporate coalitions looking to export agricultural, commercials, and industrial products to Cuba. However, despite corporate support and the bipartisan list of co-sponsors, passage of this legislation is not assured. U.S. policy towards Cuba remains a serious topic of debate in both the Senate and House of Representative. Prominent Members of Congress, such as Sen. Marco Rubio (R-FL), a 2016 presidential contender, and Sen. Robert Menendez (D-NJ), the top Democrat on the Senate Foreign Relations Committee, are strongly opposed to any action that will prolong the Castro regime in Cuba.

Momentum is building though, with two other bills recently introduced in the House and Senate that remove the ban on travel by U.S. citizens to Cuba. Rep. Charles Rangel (D-NY), also introduced a more aggressive bill (H.R.403) repealing almost all restrictions on trade with and investment in Cuba, but this bill has no Republican support.

If U.S.-Cuba talks continue on a positive trend, odds of passage will increase. In the meantime, S. 491, has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, where the issue should receive a hearing in the near future. The Committee is chaired by Sen. Richard Shelby (R-AL), who previously travelled to Cuba with Sen. Leahy to meet with Cuban President Raul Castro and has demonstrated willingness to reconsider the embargo.