Design firms need to be realistic about projects in Cuba

On December 17th President Obama announced a new approach to U.S.–Cuba diplomatic relations. Many design firms well aware of the need to upgrade the island’s infrastructure, hospitality, and housing are anxious to tap the market, either through lucrative aid contracts or by working with the many U.S. commercial entities that have been planning financial investments in Cuba.

Along with reestablishing diplomatic relations with Cuba in matters such as migration, counter-narcotics, environmental protection, and many others, the administration’s initiatives include adjusting regulations to improve travel and remittance policies and authorizing expanded sales and exports to Cuba.

But U.S. firms hoping to cash in on the new opening with Cuba and the vast potential for island development need to be cautious. Currently, the Department of Treasury’s Office of Foreign Asset Control (OFAC) has regulations dating back to 1963 under the Trading With the Enemy Act that restrict ordinary financial dealings in Cuba. OFAC should implement the changes to the Cuba sanctions program—the Cuban Assets Control Regulations—in response to Treasury-specific changes through amendments to the governing regulation. And the Department of Commerce will implement the remainder of the changes through amendments to its Export Administration Regulations. OFAC may issue its regulatory amendments in January and is certain to do so within the first quarter of 2015 unless Congress intervenes and votes to continue the current restrictive trade policy or modify the 1963 law with only minor changes. None of the changes to doing business with or in Cuba would take effect until the new regulations are issued in compliance with applicable U.S. law.

The current regulations do not only stifle the ability of U.S. design firms to provide services in Cuba. Even if design services could be provided for projects in Cuba, the current OFAC regulations make it impossible for U.S. insurers to make payments on behalf of those firms for design deficiencies or bodily injury claims to entities or persons in Cuba. As the law and regulations currently stand, firms basically would have no insurance coverage for projects in Cuba if the Cuban government, non-governmental Cuban entities, or Cuban nationals bring the claim against the U.S. firm.

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