DOT BANS SAMSUNG GALAXY NOTE7 DUE TO SAFETY CONCERNS; RECENT CHANGES TO U.S.-CUBA TRADE RELATIONS

October 17, 2016

The U.S. Department of Transportation (DOT) and the Office of Foreign Assets Control (OFAC) both issued updated policies late last week which we have summarized below.

DOT BANS SAMSUNG GALAXY NOTE7 DUE TO SAFETY CONCERNS

Late on Friday afternoon, DOT together with the Federal Aviation Administration and Pipeline Hazardous Materials Safety Administration issued an emergency order to ban all Samsung Galaxy Note7 smartphone devices from air transportation in the United States.  Effective Saturday, October 15, 2016, individuals who own or possess a Samsung Galaxy Note 7 device may not transport the device on their person, in carry-on baggage, or in checked baggage on flights to, from, or within the United States. The phones also may not be shipped as air cargo.  According to the emergency order:

• If passengers attempt to travel by air with their Samsung Galaxy Note7 devices, they should be denied boarding.
• Passengers who attempt to evade the ban by packing their phone in checked luggage are increasing the risk of a catastrophic incident.  Anyone violating the ban may be subject to criminal prosecution in addition to fines.
• If an airline representative observes that a passenger is in possession of a Samsung Note7 device prior to boarding an aircraft, the air carrier must deny boarding to the passenger unless and until the passenger divests themselves and their carry-on and checked baggage of the Samsung Galaxy Note7 device.  Passengers absolutely should not pack the phones in their checked luggage. 
• If a flight crew member identifies that a passenger is in possession of a Samsung Galaxy Note7 device while the aircraft is in flight, the crew member must instruct the passenger to power off the device, not use or charge the device while aboard the aircraft, protect the device from accidental activation, including disabling any features that may turn on the device, such as alarm clocks, and keep the device on their person and not in the overhead compartment, seat back pocket, nor in any carry-on baggage, for the duration of the flight.

RECENT CHANGES TO U.S.-CUBA TRADE RELATIONS

Also last Friday, OFAC, together with the Department of Commerce’s Bureau of Industry and Security (BIS), announced new amendments today to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR).  These changes will: 

• Expand opportunities for scientific collaboration by allowing certain transactions related to Cuban-origin pharmaceuticals and joint medical research;
• Improve living conditions for Cubans by expanding existing authorizations for grants and humanitarian-related services;
• Increase people-to-people contact in Cuba by facilitating authorized travel and commerce;
• Facilitate safe travel between the United States and Cuba by authorizing civil aviation safety-related services; and
• Bolster trade and commercial opportunities by expanding and streamlining authorizations relating to trade and commerce.

The specific aviation/travel-related changes are:

Travel-related Transactions – Supporting People-to-People Contact by Facilitating Authorized Travel and Commerce

Importation of Cuban-origin merchandise as accompanied baggage for personal use.

OFAC is removing the monetary value limitations on what authorized travelers may import from Cuba into the United States as accompanied baggage. This includes the value limitation on alcohol and tobacco products. Persons subject to U.S. jurisdiction will be further authorized to import Cuban-origin merchandise acquired in third countries into the United States as accompanied baggage, again without value limitations. OFAC is also removing the prohibition on foreign travelers importing Cuban-origin alcohol and tobacco products into the United States as accompanied baggage. In all cases, the Cuban-origin goods must be imported for personal use, and normal limits on duty and tax exemptions will apply.

Remittances

Persons subject to U.S. jurisdiction will be authorized to make remittances to third-country nationals for travel by third-country nationals to, from, or within Cuba, provided the travel would be authorized by general license for a person subject to U.S. jurisdiction.

Civil Aviation – Supporting International Aviation and Passenger Safety

Safety-related services

OFAC is adding a new authorization that will allow persons subject to U.S. jurisdiction to provide civil aviation safety-related services to Cuba and Cuban nationals aimed at promoting safety in civil aviation and the safe operation of commercial aircraft.

Trade and Commerce – Bolstering Trade and Commercial Opportunities and the Growth of Cuba’s Private Sector

Export-related transactions

OFAC is amending its general license authorizing certain transactions incident to exports and reexports authorized by the BIS to eliminate references to “100% U.S.-origin items.” This is intended to minimize and clarify the circumstances in which an export or reexport authorized by BIS requires additional licensing by OFAC.

Consumer goods for personal use

BIS will generally authorize exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use.

Imports of previously exported items

OFAC is adding an authorization that will allow the importation into the United States or a third country of items that were previously exported or reexported to Cuba pursuant to a BIS or OFAC authorization. This authorization will also permit persons subject to U.S. jurisdiction to service and repair such items. Exporting or reexporting replacement items or items that have been repaired or serviced must be separately authorized by OFAC and/or BIS as appropriate.

Contingent contracts

 OFAC is adding an expanded general license that will authorize persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions currently prohibited by the embargo, provided that contract performance is made expressly contingent on prior authorization by OFAC and any other relevant Federal agency, or on authorization no longer being required. Transactions ordinarily incident to negotiating and entering into such contracts will also be authorized.

Financing

OFAC is making a technical correction to clarify that agricultural items, such as pesticides and tractors, authorized by BIS for export or reexport to Cuba are not subject to restrictions on payment terms. As required by the Trade Sanctions Reform and Export Enhancement Act, authorized exports and reexports to Cuba of agricultural commodities, such as poultry and corn, remain subject to the limited payment and financing terms of cash in advance or third country financing.

Certain vessel transactions

OFAC is issuing a general license that will waive the restriction prohibiting foreign vessels from entering a U.S. port for purposes of loading or unloading freight for 180 days after calling on a Cuban port for trade purposes if the items the vessel carried to Cuba would, if subject to the EAR, be designated as EAR99 or controlled on the Commerce Control List for anti-terrorism reasons only.

Transit of cargo

BIS will generally authorize air cargo to transit Cuba, complementing an existing general authorization for cargo transiting Cuba aboard vessels.

If you have any question on either of these topics please feel free to contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).

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