UPDATE 4-Obama measures on Cuba trade, travel poke new holes in embargo – Reuters


(Adds reaction from companies, comment on travel)

By Anna Yukhananov, Matt Spetalnick and Krista Hughes

WASHINGTON Jan 15 (Reuters) – The United States announced
sweeping new rules on Thursday that will significantly ease
sanctions on Cuba, opening up the communist-ruled island to
expanded U.S. travel, trade and financial activities.

Defying hardline critics in Congress, President Barack Obama
made good on his commitment last month to loosen restrictions on
dealings with Cuba as part of a historic effort to end decades
of hostility.

The 54-year-old U.S. embargo on Cuba will remain in place –
only Congress can lift it.

But the package of regulations issued by the Treasury and
Commerce Departments, which will take effect on Friday, will
allow U.S. exports of telecommunications, agricultural and
construction equipment, permit expanded travel by Americans to
the island and open banking relations.

It was the first tangible U.S. step to implement economic
changes Obama pledged on Dec. 17 when he and Cuban President
Raul Castro announced plans to restore diplomatic relations
between the old Cold War foes.

“Today’s announcement takes us one step closer to replacing
out-of-date policies that were not working and puts in place a
policy that helps promote political and economic freedom for the
Cuban people,” said U.S. Treasury Secretary Jacob Lew.

While Castro has welcomed last month’s deal, he has made
clear that Havana does not intend to abandon single-party rule
or the state-controlled economy. Congressional critics of
Obama’s shift say that Washington should not be rewarding Cuba.

The new regulations will allow Americans to travel to Cuba
for any of a dozen specific reasons, including family visits,
education and religion, without first obtaining a special
license from the U.S. government as was previously the case.

But general tourism will still be banned.

John McAuliff, executive Director of the Fund for
Reconciliation and Development, which has organized trips to
Cuba, said that apart from Cuban-Americans visiting relatives,
most other Americans would still be corralled into escorted
group tours.

Still, U.S. travelers will be allowed to bring home small
numbers of the Cuban cigars that are highly rated by
aficionados.

It will also be easier for U.S. companies to export mobile
phone devices and software as well as to provide Internet
services in Cuba. U.S. airlines will be permitted to expand
flights to the Caribbean island. Delta Air Lines and
JetBlue Airways said they would look into adding
services.

In an expansion of remittances allowed, Americans will now
be able to send up to $8,000 to Cuba a year, up from $2,000
previously, and bring $10,000 with them when they travel to the
country. They will also be able to use credit and debit cards.

In addition, a changed definition of “cash in advance”
payments required by Cuban buyers could help businesses, most
notably U.S. agriculture, gain greater access to Cuban markets.
The largest U.S. meat processor, Tyson Foods Inc, which
already does some business with Cuba, hailed the changes.

The announcement came after the Obama administration said
Cuba had fulfilled its promise to free 53 political prisoners
and a week before high-level U.S.-Cuba talks in Havana aimed at
normalizing ties, including discussions on when to reopen
embassies.

‘SIGNIFICANT STEP’

Obama’s spokesman, Josh Earnest, called it a “significant
step” in delivering on Obama’s new Cuba strategy. The president
declared last month that decades of trying to force change by
isolating the island had not worked.

But Republican Senator Marco Rubio, a Cuban-American who has
been strongly critical of the policy shift, called the
announcement “a windfall for the Castro regime that will be used
to fund its repression against Cubans, as well as its activities
against U.S. national interests.”

While Obama is using executive powers to poke holes in trade
barriers, Republicans who control Congress have made clear they
will not let him entirely dismantle the embargo. Washington
imposed economic sanctions as Fidel Castro steered the island
along a socialist path that made it a close ally of the Soviet
Union, and severed diplomatic ties with Cuba in 1961.

U.S. officials made clear the new measures do not mean Cuba
is now open for business, stressing that while investments in
Cuba’s limited array of small businesses are permitted, general
investment will still be prohibited.

And while telecommunications firms can export devices, U.S.
companies still have to reach an agreement with the Cuban
government, which controls all imports and maintains a firm grip
on Internet access.

Reaction from the U.S. business community, which had pressed
the administration to open up Cuban markets, was positive but
tempered with caution.

“The regulations were welcome and they went even farther
than was articulated in the president’s announcement,” said Jake
Colvin, vice president at the National Foreign Trade Council.
“But now it will depend on the reality on the ground in Cuba.”

There was no immediate official reaction from Havana, but
some ordinary Cubans welcomed the changes.

“If more Americans can come here, that means more customers,
and this will be good for the economy,” said Orlando Veliz, a
cook for a private restaurant in Havana.

(Additional reporting by Dan Trotta in Havana and Patricia
Zengerle in Washington; Writing by Matt Spetalnick; Editing by
Doina Chiacu and Frances Kerry)

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