1178. Can a good be considered “produced by independent private sector entrepreneurs” for purposes of 31 CFR § 515.582 (authorizing the importation of certain goods and services produced by independent private sector entrepreneurs) if a Cuban state-owned entity is involved?
Section 515.582 of the CACR authorizes persons subject to U.S. jurisdiction to import certain goods and services produced by independent private sector entrepreneurs, as determined by the State Department and set forth on the State Department's Section 515.582 List. See FAQ 770.
In determining whether a good is produced by an independent private sector entrepreneur, as defined in 31 CFR § 515.340, persons subject to U.S. jurisdiction should consider the extent of Cuban state-owned entities’ involvement in the production and exportation of such goods. For example, goods generally are not considered produced by independent private sector entrepreneurs if the manufacturing or processing conducted by Cuban state-owned...
1) 515.582 authorizes “transactions, including payments, necessary to import certain goods and services produced by independent Cuban entrepreneurs, as defined in § 515.340.” Nothing in the GL excludes transactions involving the Government of Cuba on a per se basis. Here, OFAC appears to fashion a standard for determining what is and is not “produced by independent Cuban entrepreneurs” by articulating something close to a “substantial transformation” test. OFAC says that " goods generally are not considered produced by independent private sector entrepreneurs if the manufacturing or processing conducted by Cuban state-owned entities results in a product with a new name, character, or use”. This seems to be a way of saying that if the Cuban state-owned entity substantially transforms the independent Cuban entrepreneur-product good, it does not qualify for the GL. The counterexample is “a good can still be considered...