Increasing the Free Flow of Information to Cuba under U.S. Sanctions

On December 17, President Barack Obama made a historic announcement: after maintaining a restrictive trade embargo on Cuba for more than 50 years, the United States will begin to “chart a new course in our relations with Cuba and to further engage and empower the Cuban people.” The surprise decision generated national headlines, garnering both praise and outrage as well as speculation about what, exactly, the changes would mean in the near term. A follow-up announcement last week provided important insight into how the Obama Administration will implement a key piece of its new policy: increasing the free flow of information to, from, and within Cuba. On Friday, the Commerce and Treasury Departments published important changes to the Cuban Assets Control Regulations (CARC) and the Export Administration Regulations (EAR), officially authorizing a range of new exports to the small island nation.

The new policy will help open up a vital channel for the Cuban people to connect to the outside world. And the change is a critical piece of a broader U.S. government effort to update comprehensive sanctions to support the free flow of information. This problem has become increasingly acute in the past few years, as outdated sanctions force American companies to block new technologies like communications tools, which can actually play a vital role in enabling citizens to organize and communicate more securely. Last week’s announcement places U.S. policy toward Cuba on par with Iran in terms of having the clearest and most well-developed authorizations for personal communications tools.

According to Freedom House, Cuba’s Internet penetration is estimated to be about five percent, one of the lowest rates in the world, due in part to the fact that telecommunications services in Cuba are exorbitantly expensive and extremely limited in their offerings. But U.S. sanctions have also contributed to the problem, making it difficult or impossible for American companies to make their software, services, and hardware available on the island. As part of the initiative “to increase Cubans’ access to communications and their ability to communicate freely,” the White House fact sheet released on December 17 indicated that, going forward, U.S. policy toward Cuba will ensure that, among other things:

• “The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people in the United States and the rest of the world will be authorized. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.”
• “Telecommunications providers will be allowed to establish the necessary mechanisms, including infrastructure, in Cuba to provide commercial telecommunications and internet services, which will improve telecommunications between the United States and Cuba.”

Simply put, the U.S. government will legalize a range of exports to increase access to both personal communications tools and telecommunications services in Cuba going forward. But to understand what the new policy actually means, it’s helpful to have some context on how technology authorizations have evolved under Cuba sanctions, a relatively new development in the 55-year history of the U.S. embargo.

A brief history of Cuba sanctions and how communications technology has been treated in the past

In 1960, the U.S. imposed a financial embargo on Cuba aimed at destabilizing the Communist government of Fidel Castro. Since then, U.S. sanctions against Cuba have been among the most comprehensive unilateral sanctions in the world, strictly limiting virtually all commerce and interaction between the two countries despite only 90 miles of water between them. Although the Treasury Department’s Office of Foreign Assets Control (OFAC) oversees all licensing for the export of goods, financial transactions, bank transfers, and travel for most sanctioned countries, Cuba sanctions are administered by both OFAC and the Commerce Department’s Bureau of Industry and Security (BIS), which handles specific licensing for exporting products to Cuba. That means it takes not one but two government agencies to make significant changes to Cuba sanctions, such as authorizing the export of information and communications technologies.

In general, the U.S. government has been in the process of updating all of its comprehensive sanctions policies in the past few years to promote the free flow of information and enable ordinary citizens living in sanctioned countries to access vital communications tools. Cuba was included in several of the early policy initiatives that also applied to Iran, Sudan, and Syria — including the historic 2010 General License that authorized the export of free, publicly available personal communications tools to sanctioned countries. But updates to our Cuba policies have since lagged behind, and the breadth and complexity of the existing legal restrictions imposed on Cuba have continued to create unique challenges for American companies, even compared to the other comprehensive sanctions regimes.

In April 2009, the Obama Administration first asked the State Department, the Treasury Department, and the Commerce Department to make changes to Cuba sanctions regulations that would enable greater telecommunications links between Cuba and the United States. Those changes included provisions aiming to “increase the free flow of information to the Cuban people” by authorizing the creation of general licenses for a wide range of activities related to telecommunications services and personal communications. In response, OFAC amended the Cuban Assets Control Regulations, and BIS issued a License Exception Strategic Trade Authorization in September 2009 on “Consumer Communications Devices.” The CCD License Exception made it legal to export certain software and commodities, including printers, disk drives, modems, and mobile phones — although they were subject to a donation requirement because of financial restrictions (meaning that companies could not actually sell their products to Cuba). It was, at the time, an unprecedented move to increase the free flow of information. But in addition to the challenges created by the donation requirement, implementation was further complicated by the fact that authorization was interpreted narrowly and did not include certain hardware required to make the activities feasible — or appealing to companies trying to operate in Cuba.

Then, in March 2010, OFAC further loosened technology restrictions for Cuba, issuing a historic General License Related to Personal Communications Services that also applied to Cuba as well as Iran and Sudan. This General License authorized the export of Internet-based communications tools such as instant messaging, chat, email, and social network services that were free and publicly available.

As a report from the Cuba Study Group predicted in 2010, however, “the regulatory changes released by the [Commerce and Treasury] departments to reflect the directives issued by President Obama risk falling short of what is necessary to actually begin establishing greater telecommunications links. The agencies may not have gone far enough in the rule-making process to incentivize American companies to invest in Cuba.” The report noted challenges with the donation requirement in particular, which made commercial export of technologies authorized by the CCD impossible. Indeed, although the 2009 and 2010 policy changes theoretically eased the restrictions on technology, in practice they did little to actually improve access to communications tools, effectively supporting the information controls put in place by the Cuban government. And while the U.S. government has issued interpretive guidance and made numerous changes to Iran sanctions policies since 2010 aimed at further increasing the free flow of information, there’s been little progress on Cuba and tech sanctions until now.

Understanding last week’s changes to Cuba policy

Last week, the U.S. government took a significant — and long overdue — leap forward with respect to increasing the free flow of information “to, from, and among the Cuban people.” BIS amended the EAR to eliminate the donation requirement in the 2009 Consumer Communications Devices License Exception, officially authorizing the sale of various products to eligible end users in Cuba. As the new rule explains, the donation requirement “limited the incentive to send these items for Cuba,” and removing it will allow commercial sale of a wide range of technologies, including personal computers, mobile phones, TVs, radios, and digital cameras, as well as related software and services. The CCD has also now been updated to reflect how these technologies have changed since 2009. What’s more, under the newly created License Exception “Support for the Cuban People,” BIS now also allows the export of “certain items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation, and upgrades.” These measures should make it much easier for American companies to offer the Cuban people communications tools, vital software and security updates, antivirus software, and satellite Internet connectivity.

At the same time, OFAC issued a rule that will help facilitate the processing of authorized transactions with the Cuban people and allow a number of other activities related to telecommunications (as well as financial services, trade, and shipping). These changes will allow U.S. providers to offer Internet and telecommunications services and hardware within Cuba, and to build infrastructure that will increase telecommunications links between the island and the rest of the global network.

Putting the changes in context: broader implications for the Cuban people and the free flow of information in all comprehensively sanctioned countries

It all sounds great — American companies are now legally allowed to make their products available in Cuba, from McAfee antivirus software to iPhones and tablets. But, as with most changes to U.S. sanctions policy, actual implementation can be a slower and much more difficult process. As Ellery Biddle, a fellow at the Berkman Center for Internet Society and expert on digital culture in Cuba, explained after President Obama’s initial announcement, “This promising but vague assertion raises a lot of questions.” With sanctions, the devil is often in the details, as we learned when OFAC had to issue a revised General License authorizing similar tech exports to Iran in February 2014 — nearly a year after the U.S. government first changed its policy — in order to clarify apparently unforeseen ambiguities created by the text of the initial license. Simply put, doing business in Cuba may still prove challenging for American companies in the near term, especially with other trade restrictions in still place (which President Obama cannot unravel entirely without help from Congress ).

What’s more, the U.S. government isn’t the only one whose policies have been restricting the Cuban people’s ability to access the Internet. There’s also the question of how the Cuban government will respond and whether the commercial environment within the country will be hospitable enough to invite significant outside investment from American tech and telecommunications companies. As Robert Muse, a DC lawyer with expertise in U.S. laws and expertise related to Cuba, explained to Scientific American, the Cuban government has traditionally viewed “control of media and information as necessary to state security. It seems unlikely that Cuba is going to welcome U.S. telecom infrastructure providers or direct, unmediated broadcasts between the U.S. and the island—at least for now.” It’s not clear whether or how the Cuban government will change its tech policies or foreign ownership rules right now to facilitate U.S. entry into the market.

Nonetheless, this policy shift is still significant in the context of both Cuba and the broader trend of carving out exemptions under U.S. sanctions policies to promote the free flow of information and access to vital communications tools. As American products begin to flow into Iran and Cuba, it’s time for the U.S. government to start working on similar changes for Sudan and Syria.