OFAC’s Newly Issued General
License for Publishing Activities
Memo from Attorney Michael Krinsky, Esq.
RABINOWITZ, BOUDIN, STANDARD, KRINSKY & LIEBERMAN, P.C.
ATTORNEYS AT LAW
740 BROADWAY AT ASTOR PLACE, FIFTH FLOOR
NEW YORK, NY 10003-9518
TELEPHONE (212) 254-1111
FACSIMILE (212) 674-4614
From: Michael Krinsky, Esq.
Date: December 21, 2004
Re: OFAC’s Newly Issued General License for Publishing Activities
On December 14, 2004, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added a General License for publishing activities to the Cuban Assets Control Regulations. It added similar general licenses to its Sudan and Iranian regulations. Their publication in the Federal Register is available on OFAC’s website, www.treas.gov/ofac in the “Recent Actions” section.
We briefly summarize OFAC’s new General License, and also offer some preliminary comments.
We emphasize that institutions and persons interested in these matters should contact us before proceeding with any projects on the assumption that the General License applies. We naturally cannot address all details in this memorandum. In addition, it is important to consider the most up-to-date information on how the General License is being interpreted.
1. OFAC’s General License authorizes U.S. persons to engage in certain Cuba-related publishing and related activities that have never before been permitted by the U.S.
Under the General License, Cuban academic and research institutions, and their personnel, are able to take advantage of these opportunities, even if the institutions are considered part of the Cuban government. Except for Cuban academic and research institutions, the General License excludes transactions with the “Government of Cuba” from the General License. The scope of that exclusion is not well-defined.
2. One of the General License’s most significant innovations is that, for the first time, OFAC has allowed U.S. publishers to commission and to pay advances for the creation of new manuscripts, books, journals and newspapers.
For example, a U.S. publisher can contract with the University of Havana to prepare an encylopedia on Cuban history that the U.S. company will publish, and can pay an advance to the University to engage in the necessary work. If consistent with general U.S. industry practice, the U.S. publisher also can pay the University for related research and writing costs.
3. Another important innovation is that the General License permits the “collaboration” of U.S. persons and Cubans in the creation of new manuscripts, books, journals, and newspapers, when incident to a publishing activity.
For example, it seems likely that a U.S. publisher can contract with a U.S. scholar and a Cuban scholar to co-author a book on a topic they both have researched, and to pay each of them for their work.
4. Still another significant innovation is that the General License authorizes U.S. persons, in connection with their publishing or marketing activities, “to engage the services of publishing houses or translators in Cuba,” provided such activity is primarily for the dissemination of written publications in Cuba.
5. In addition, the General License removes the recent impediments to academic publishing that resulted from OFAC’s confusing and contradictory interpretative rulings on the “Berman Amendment” over the last year. The “Berman Amendment” is legislation adopted by the U.S. Congress in 1988 and then amended in 1994. It authorizes the exportation and information of informational materials to and from Cuba.
6. The General License addresses only publishing and marketing activities involving “manuscripts, books, journals, and newspapers.” It does not apply to other types of informational products – for example, recorded music, cinema, paintings or sculpture.
7. The General License applies to the publication of manuscripts, books, journals and newspapers in electronic format, as well as in paper format.
8. Since it is a “General License, ” U.S. persons do not have to seek OFAC’s approval to engage in the specified activities, and do not have to notify OFAC that they plan to, or have engaged, in those activities. Rather, U.S. persons can simply proceed on their own reasonable interpretation of what the General License authorizes.
9. The General License does not supersede or limit the Berman Amendment. U.S. persons retain all the rights they had under the Berman Amendment.
OFAC’s General License For Publishing and Related Activities
1. OFAC’s General License authorizes persons and companies subject to U.S. jurisdiction (“U.S. persons”) “to engage in all transactions necessary and ordinarily incident to the publishing and marketing of manuscripts, books, journals, and newspapers” (collectively,“written publications”).
The General License covers the publishing and marketing of written publications in “electronic format,” as well as in paper format. Thus, for example, it covers publishing manuscripts, books, journals and newspapers on the Internet, or on CD’s.
2. This authorization applies to transactions with Cuban “academic and research institutions and their personnel,” whether or not they are considered by the U.S. to be part of the Government of Cuba.
3. This authorization also applies to any other Cuban person, institution or company, with the exception of the “Government of Cuba.”
To be clear, the General License applies to “academic and research institutions and their personnel,” whether or not they are considered to be part of the Government of Cuba, but other institutions and individuals are excluded if they are considered to be part of the “Government of Cuba.”
4. For purposes of this exception, the “Government of Cuba” is defined to be the state and the Government of Cuba, as well as any political sudivison, agency or instrumentality thereof; any persons occuping certain specified positions; and any person acting or purporting to act directly or indirectly on behalf of any of the foregoing with respect to the publishing transactions.
(a) “Agencies or instrumentalities” are included within the definition of “Government of Cuba” and hence are excluded from the General License. However, the Cuban Assets Control Regulations (“CACR”) nowhere defines what is meant by “agencies or instrumentalities,” and OFAC has never issued any meaningful clarification of that concept in the context of the CACR.
The phrase “agency or instrumentality” is found most prominently in U.S. law in the Foreign Sovereign Immunities Act (“FSIA”). In the absence of any definition by OFAC, it would be logical for U.S. persons to turn to the FSIA for guidance. In the FSIA, “agency or instrumentality” is defined as a legal person, corporate or otherwise, that is “an organ of a foreign state,” or a majority of whose shares or other ownership interests is owned by a foreign state, and which was not created under the laws of the foreign state. An “agency or instrumentality” does not include a corporation owned by an agency or instrumentality. In other words, if the government owns a corporation, that corporation is an agency or instrumentality, but if that corporation owns a corporation, the latter is not an agency or instrumentality.
(b) Even though Cuban government institutions, and “agencies or instrumentalities,” are excluded, their employees are not excluded, unless they are acting in the publishing transaction on behalf of the agency or instrumentality. For example, a U.S. publisher can contract with someone who happens to work for the Ministry of Culture to write a book, at least if the Ministry of Culture has no financial involvement in the transaction and the author is not writing the book on behalf of or subject to the direction of the Ministry.
(c) Under the General License, the following persons are defined to be part of the “Government of Cuba” and hence cannot be parties to the publishing transactions authorized by the General License: Ministers and Vice-ministers; members of the Council of State, and the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; members and employees of the Supreme Court (Tribunal Supremo Nacional); members of the Politburo; the Central Committee; Department Heads of the Central Committee; employees of the Central Committee; secretary and first secretary of the provincial Party central committees; employees of the Department of Justice.
(d) By its terms, the General License’s exclusion of the “Government of Cuba” applies when the Government of Cuba, as defined by the General License, is one of the “parties” to the transaction. It should follow that the General License’s exclusion does not apply simply because, for example, an excluded person is the author of a book or article if the author is not a “party” to the transaction with a U.S. publisher.
For example, members of the National Assembly are defined to be part of the “Government of Cuba” and therefore cannot be parties to transactions with U.S. publishers. Suppose a member of the National Assembly writes an article, and gives all the rights to the University of Havana. It should be possible for a U.S. publisher to engage in all the transactions with the University of Havana that are permitted by the General License with respect to the article, at least absent the National Assembly member’s having a right to the payment of royalties by the University of Havana on account of the U.S. transaction and absent the National Assembly member’s having the right to approve or disapprove the transaction. In those circumstances, the National Assembly member should not be considered a “party” to the transaction.
Although the above analysis seems sound to us, we do not yet know how OFAC views this issue. There are a number of different situations to consider based on the possibility of someone being the author of an informational work but not being a “party” to the publishing transaction with the U.S. party.
5. The General License authorizes U.S. persons, as part of their publishing activities, to “commission and mak[e] advance payments of identifiable written publications not yet in existence, to the extent consistent with industry practice.”
For example, a U.S. publisher can contract with the University of Havana for the University to research and prepare an encyclopaedia on Cuban history that the U.S. company will publish and market. The U.S. publisher can pay a fee in advance of any work being done. If consistent with U.S. industry practice, the U.S. publisher could also pay the University for its costs in researching and writing the encyclopaedia.
This is a reversal of OFAC’s long-standing position. OFAC has previously prohibited U.S. persons’ contracting for the creation of new informational products, or paying advances for their creation.
6. The General License authorizes U.S. persons to engage in the activity of “collaborating on the creation and enhancement of written publications,” when “necessary and ordinarily incident” to the publishing of written publications.
Particularly as it applies to “collaborating,” this too represents a reversal of OFAC’s position.
It seems likely that this provision authorizes, for example, a U.S. journal to request a Cuban scholar and a U.S. scholar to co-author an article on a subject they both have researched, and for the journal to publish the co-authored article. Similarly, a U.S. publisher could commission Cuban and U.S. authors, or Cuban and U.S. academic institutions, to co-author a book, and the U.S. publisher could pay advances and costs.
A somewhat different question is posed by the following hypothetical: a Cuban scholar and a U.S. scholar wish to co-author a book and, after it is written, to seek out a publisher for the work. They have no firm commitment from a publisher. Does the General License authorize their co-authoring a new informational product, which they simply hope will be published in the future? We are not yet prepared to answer this question.
7. The General License authorizes U.S. persons, in connection with their publishing or marketing activities, “to engage the services of publishing houses or translators in Cuba,” provided “such activity is primarily” for the dissemination of written publications in Cuba. This too represents a significant new innovation.
For example, it allows a U.S. publisher to contract with non-excluded Cuban entities (such as Cuban academic or research institutions) to translate, and to print and distribute, the U.S. publisher’s book or journal, provided that the book or journal is distributed “primarily” in Cuba.
“Primarily” means more than 50%. Therefore, a U.S. publisher could contract for a non-excluded Cuban publishing house (such as the publishing division of a Cuban university) to translate, and to print, the U.S. publisher’s book or journal, if 51% of the copies are distributed in Cuba and the other 49% are sold by the U.S. publisher in Latin America or the United States or Spain.
It likewise should permit U.S. foundations, for example, to provide grants for non-excluded Cuban entities (such as Cuban academic or research institutions) to translate, print and distribute works in Cuba, including works by Cuban authors.
When viewed in conjunction with the General License’s provision authorizing the commission of new works, this provision takes on added dimensions. For example, it should be possible for a U.S. publisher or foundation to pay a Cuban writer to write a book and pay a Cuban publishing house to publish and sell the Cuban’s book “primarily” in Cuba, with other sales to be made outside of Cuba.
This provision covers transactions that simply involve Cubans providing translation services, or simply providing printing services, provided, in both instances, that the informational product that results from these activities is to be distributed “primarily” in Cuba.
This provision appears to open up substantial opportunities for Cuban translation, printing, and publishing. We caution that its precise contours are not yet fully known.
8. The General License contains a number of provisions that remove the obstacles and uncertainties created by OFAC’s recent interpretative rulings on the Berman Amendment. The General License eliminates these difficulties by expressly permitting U.S. persons to engage in the following activities:
- augmenting written publications through the addition of items such as photographs, artwork, translation and explanatory text;
- substantive editing of written publications;
- creating or undertaking a marketing campaign to promote a written publication.
9. In detailing certain activities as coming within the scope of the General License, the General License does not necessarily state the full scope of authorized activities. To the contrary, the General License explicitly states that the General License covers “other transactions necessary and ordinarily incident to the publishing and marketing of written publications.” It is worth considering what additional transactions may be of interest.
10. The General License does not authorize travel to Cuba. Rather, U.S. persons wishing to travel to Cuba in order to pursue the authorized activities must apply to OFAC for specific licenses. OFAC’s requiring specific licenses for travel is consistent with the CACR’s existing provision that requires a specific license for travel to arrange Berman Act transactions. OFAC has readily issued those licenses.
11. The General License does not permit activities just because they are carried out in written form. For example, it does not permit a U.S. engineer to provide engineering services to a Cuban factory even though the engineer’s work specifications would be communicated to the factory in written form.
12. The General License does not permit the export of technology that was already prohibited.