ATRIP-USA*Engage comments to OFAC on interim final rules restricting travel to Cuba

Thursday, 12 August 2004

August 12, 2004

Chief of Records
ATTN: Request for Comments
Office of Foreign Assets Control, Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Re: Interim Final Rule on Cuba trade and travel [FR Doc. 04-13630 and FR Doc. 04-13631]

Dear Sir or Madam:

The ATRIP-USA*Engage Alliance with the National Foreign Trade Council hereby comments on the interim final rule changes to the Cuban Assets Control Regulations (CACR).

USA*ENGAGE is a coalition of over 670 small and large businesses, agriculture groups and trade associations seeking alternatives to the proliferation of unilateral U.S. foreign policy sanctions and promoting the benefits of U.S. engagement abroad. ATRIP, comprising a broad spectrum of travel industry professionals including airlines, charter service operators, tour operators and travel agents, is the nation's leading voice on the elimination of unnecessary or unduly burdensome restrictions on travel.

We view the amendments to the CACR, published in the June 16, 2004 Federal Register, as a capricious and unwarranted attack on U.S. businesses, Cuban Americans and their families, and the right of Americans to travel freely. The new regulations were adopted without public comment, industry consultation, any reasonable transition period, or adequate preparation on the part of the agency that administers them. They will harm American businesses by cutting their passenger base and their revenue, creating a trickle-down effect of lost jobs in south Florida and in the New York and Los Angeles areas.

I. New Family Travel Limits are Costly, Inhumane, and Ineffectual

The new regulations dramatically reduce opportunities for Cuban Americans to visit their loved ones in Cuba by limiting visits to immediate relatives (i.e.-grandparents, parents, siblings) to once every three years, and by prohibiting visits to aunts, uncles, cousins, nieces, or nephews.

According to the Commission for Assistance to a Free Cuba, some 160,000 Americans travel to Cuba each year, of which about 120,000 are Cuban Americans traveling to visit family. The Administration's deep reduction in family visits has caused harsh economic impacts on the companies that provide Cuba travel services and on their employees. Job losses have already occurred. The full extent of the impact is not yet known because the regulations were implemented without a transition mechanism. Thus, as of this date, it is impossible to tell what level of traffic can be expected under the new regulations.

What is clear is that so far, the Administration's action has resulted in a de facto moratorium on Cuban American travel. The new regulations require Cuban Americans to obtain a specific license from OFAC for family visits. We are not aware of a single license that has been granted to date, and we have seen press reports that cite Administration officials saying that no licenses may be granted by the end of August, 60 days after the regulations took effect. Since July 1, the majority of Cuba flights have been cancelled because the bulk of the passenger traffic, Cuban Americans on family visits, has been decimated.

We believe that the regulations may well prove unworkable because OFAC may be unable to establish a system for rapid approval of licenses. If half of the Cuban Americans who travel each year are new travelers, or have not traveled in the previous 3 years, then OFAC will have to process 60,000 applications for specific licenses each year, or 1,150 applications per week. This is an extraordinary volume for a regulatory, investigative, and enforcement agency that has limited personnel, vast responsibilities, and no experience serving customers at this volume and with the speed required to make a new application process run smoothly. As long as the task of approving family visits is assigned to OFAC, a unit designed for other purposes, it is difficult to envision an efficient process.

We also wish to comment on the humanitarian issues raised by the sharp cuts in family contact that these regulations intend. The retroactive application of the three-year rule means that a Cuban American who visited last spring, with no knowledge of the impact his trip would have under the new regulations, is barred from travel until spring of 2007. It only seems fair to eliminate this retroactivity and remove a penalty imposed on Cuban Americans who had no advance notice of the changes in the regulations.

We question why the Administration did not provide a humanitarian exception to the three-year rule. Certainly OFAC has experience in processing this kind of application, and new rules could be calibrated to fit the Administration's definition of a humanitarian emergency. The new regulations will prevent Cuban Americans from seeing dying grandparents, from caring for a mother injured in a car accident, or from arranging and attending a religious service and burial for a relative who dies alone.

The three-year restriction on new immigrants who wish to return for a family visit causes a strange irony: a person who emigrated from a communist country to start a new life in our democracy is faced with a situation where the communist government will allow him to return for a visit, but the democracy will not let him go.

We respectfully suggest that the regulations will be ineffectual and in part self-defeating. We strongly doubt that the new travel regulations, along with the full series of measures that accompanies them, will bring about a political transition in Cuba; indeed, neither the Administration nor any outside expert asserts this to be the case.

Finally, while the regulations may deny marginal financial resources to the Cuban government, they will at the same time cut vital lines of communication between Cubans and the outside world. The potential reduction in financial flows to the Cuban government will clearly be less than expected, as many Cuban Americans, especially those facing humanitarian emergencies, will likely travel to Cuba through third countries. Thus, the minor economic impact of the regulations on the Cuban regime is significantly outweighed by their negative social consequences to Cuban citizens. This strategy stands at odds with American foreign policy goals in other parts of the world where engagement is seen as critical in the dissemination of democratic values to closed societies.

II. New baggage limits are founded on erroneous information

The new final rule also limits to 44 pounds the amount of baggage a passenger may carry to Cuba. This limitation will have a two-fold effect: it will prevent Cuban American travelers from carrying gifts and needed items, such as clothing and toiletries, to their relatives, and it will also result in the loss of revenue by American charter companies licensed to provide travel services to Cuba.

In the report of the President's Commission for Assistance to a Free Cuba, whence many of the recommendations codified in this final rule come, the rationale for the 44-pound limit is to deny revenue to the Cuban government. The Commission states that fees collected by charter operators for excess baggage are passed on, in part, to the Cuban government. This assertion is simply false. These fees are charged by American companies to offset expenses incurred for services rendered. No portion of these fees is remitted to Cuba. The fees themselves are very much in line with charges levied elsewhere in the U.S. travel industry. Because the fees both defray costs related to excess baggage and contribute to the carriers' general revenues, elimination of them could prompt a general fare increase.

We note that the Cuban government does not charge excess baggage fees based on weight except when the weight of the bags exceeds 88 pounds, and U.S. carriers do not generally allow passengers to carry baggage on any flight to Cuba exceeding that threshold.

III. Fully hosted travel transfers no funds to Cuba and should not be ended

The amendments to the CACR have abolished the category that was known as "fully hosted." The term historically refers to travel to, from or within Cuba for which all costs and fees either are paid for by a third-country national who is not subject to US jurisdiction or are covered or waived by Cuba or a national of Cuba. It is our contention that the effort to prohibit fully hosted travel exceeds the authority granted to the Executive in § 5 (b) of the Trading With the Enemy Act (TWEA).

TWEA was designed to prohibit the flow of hard currency from the United States to our enemies. It was never the intent of Congress in enacting TWEA that the receipt of goods and services from an embargoed nation or national thereof, where no gain is realized by the provider of those goods and services, be curtailed. On this basis, we take issue with the elimination of the "fully hosted" category of travel. based on an overreaching application of § 5 (b) of TWEA.

In fact, the CACR, as amended, seem to be at odds with itself. The background information published in the Federal Register claims that the prohibition on the receipt of goods or services in Cuba when those goods or services are provided free-of-charge may be surmounted by an OFAC general or specific license. Yet, §515.420 amended states a "prohibition on dealing in property in which Cuba or a Cuban national has an interest set forth in §515.201 (b) (1) includes a prohibition on the receipt of goods or services in Cuba, even if provided free of charge by the Government of Cuba or a national of Cuba or paid for by a third-country national who is not subject to U.S. jurisdiction." This novel concept that defines receipt of a gift as "dealing in property" - the basis for invalidating the fully hosted travel category - is undermined by the Administration's decision not to consider these "dealings" at all in any other category of travel.

We submit that free receipt of goods and services by fully hosted Americans- a loss to the Cuban government - is a non-transaction that has no reason to be covered in regulations designed to control financial benefits to the Cuban government. The fact that it requires tortured and inventive legal reasoning, and the fact that the number of fully hosted travelers is very small, lead us to argue that the decision on fully hosted travel should be reversed, and the category reinstated.

We appreciate your consideration of these comments and, as always, are prepared to consult with Administration representatives about these comments or about factual issues surrounding licensed travel to Cuba, which is our members' daily business.

USA*ENGAGE is a coalition of over 670 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. For more information on USA*ENGAGE and the harmful effects of unilateral trade sanctions, visit the USA*ENGAGE web site at