From The Tampa Tribune:
U.S. businesses slow to expand to Cuba
Through a series of executive orders by President Barack Obama during the past year, U.S. citizens are finding it easier to do business in Cuba than at any time in five decades.
Americans can now sell and export items such as materials, equipment and tools for construction or agriculture, on credit if they choose, to the Cuban private sector. They also can establish a presence on the island nation and hire its citizens.
Still, no deals have been struck yet — raising concerns that without brick-and-mortar progress on the ground, the U.S. president who will be sworn in Jan. 20 could wipe away Obama’s orders with a stroke of a pen.
The same clock is ticking on a measure by U.S. Rep. Kathy Castor, the Tampa Democrat, calling for Congress to lift the embargo on travel and trade that Obama’s orders have whittled away. There is pressure, Castor has said, to pass her Cuba Trade Act during the term of a president she knows would sign it into law.
An established U.S. business presence in Cuba, though, with millions already invested, would prove a major obstacle if the next president seeks to walk back the steps toward normalization that Obama has taken.
Still, can enough of an investment be made in the next 11 months?
Two U.S. businesses seem close to finalizing a deal with Cuba — Alabama-based Cleber LLC, which would sell tractors to farmers, and Tampa’s Florida Produce, which would operate a distribution warehouse for all American goods that can legally be sold on the island nation.
Both ventures have been approved by the U.S. government.
Saul Berenthal, co-founder of Cleber, said the Cuban government verbally OK’d his company’s proposal to open a manufacturing and distribution center in the Mariel special economic development zone, an area covering 180 square miles west of Havana.
Berenthal will formally file the necessary documents with the Cuban government to receive official approval when he returns there March 11 for the International Agricultural Fair.
He expects the approval process to take 60-90 days. His company would then begin building a $5 million to $10 million tractor manufacturing center by end of the year with a goal of starting production in the first half of 2017.
“We are not afraid,” Berenthal said, considering the prospect of a new U.S. president. “We believe this is an important step in improving the relations with the two countries and is something that can help the Cuban people. So it is worth the risk.”
Florida Produce and its owners, Manuel Fernandez and Mike Mauricio, will give their formal presentation to the Cuban government March 29, said Tim Hunt, their attorney, with Tampa law firm Hill Ward Henderson.
Conversations he already had with Cuban government officials left Hunt confident that Florida Produce will win approval of its proposal once all the paperwork is filed and bureaucratic channels navigated.
Florida Produce would then lease a warehouse from the Cuban government in Havana.
Hunt said he could not estimate yet how much his clients will invest, but it would include installation of proper refrigeration and other components of a warehouse. Nor did Hunt have a timeline for beginning operations, except to say they prefer to open before Obama leaves office.
“I think the more we can implement, the harder it will be for the next president to unwind the executive orders,” Hunt said.
Nothing would stand in the way of a president who wishes to rescind Obama’s orders in the view of another Cuba observer, Mauricio Claver-Carone, director of the Washington, D.C.-based U.S.-Cuba Democracy PAC.
The president’s job, Claver-Carone said, is to uphold the law and he believes Obama’s policies violate the law by circumventing the embargo. Only Congress can change the embargo and allow even limited trade with Cuba, he said.
The only trade Congress allows now is for U.S. companies to sell Cuba agriculture and medical devices, and on a cash-only basis, Claver-Carone said.
Congress also allows U.S. companies to establish telecommunication services with Cuba’s state-run ETECSA, but sale of devices these services require is prohibited, as are investments in the island nation’s domestic infrastructure.
Obama’s executive orders permit commercial exports of limited telecommunications to Cubans, those necessary for communicating with people in the U.S. and the rest of the world.
In addition, telecommunications providers are allowed to establish in Cuba the necessary mechanisms, including infrastructure, to provide commercial telecommunications and Internet services.
“Some of the transactions that Obama is giving a wink-and-nod to today can easily be considered sanctions violations tomorrow,” Claver-Carone said. “Many of the regulations altered already stretch the bounds of the law.”
The companies closing in on a deal with Cuba, Claver-Carone noted, would establish small operations that a new president would feel little compunction to honor. He doesn’t envision any major corporations investing in Cuba under current conditions.
Even American Airlines, with plans to take advantage of a non-binding arrangement allowing as many as 110 commercial U.S. flights to Cuba each day, has no plans yet for one of its signature Admiral’s Clubs in Havana’s José Martí International Airport.
American Airlines is focused on applying for scheduled services through the U.S. Department of Transportation, spokesman Matt Miller said.
That process ends March 21. Commercial service to Cuba is expected to begin a few months later.
“We’ll evaluate this after we’ve started scheduled flights,” Miller said in an email, speaking of an Admirals’ Club.
Claver-Carone said he believes that once an evaluation is complete, the decision will be, “No.”
The location of the Jose Marti airport is property that was nationalized by the government in the years following the revolution of Fidel Castro. The last owners of airport property fled the island nation.
José Ramón López, heir to the land, now lives in the U.S.
Though his relatives were not American citizens when the land was seized, the Helms-Burton Act that codifies the U.S. embargo says the president can allow Cubans now living in the U.S. to seek legal recourse if a U.S. business profits from the seized property.
This adds more potential consequence for Cuba to the question of who is elected U.S. president.
And that makes operating a business anywhere on the island nation is risky, Claver-Carone said, especially considering all the land nationalized by Castro’s government.
“If I am a compliance officer for a major company I am not signing off any deal that could involve stolen properties,” Claver-Carone said.
Then there is the issue of civil judgments levied against the Cuban government by American courts — $4 billion plus interest, primarily in favor of Floridians whose families suffered from Cuba’s actions while it remained on the U.S. State Sponsors of Terrorism list from 1982-2015.
The plaintiffs may be able to freeze money transferred between a U.S. company and Cuba if that cash makes its way through the American banking system.
Asked if he would attempt to do so, Andrew Hall, a Miami lawyer representing a South Florida man who is owed the lion’s share of the judgments — $3.2 billion — sent a simple reply via email: “Yes.”
“It is a real concern and something we have been following,” said Florida Produce attorney Hunt. “My impression is that it has been a topic of much discussion between the U.S. and Cuban governments.”
U.S. State Department and Cuban officials began negotiating in December on settling the civil judgments as well as property claims made by American citizens against the island nation.
U.S. businesses slow to expand to Cuba
Through a series of executive orders by President Barack Obama during the past year, U.S. citizens are finding it easier to do business in Cuba than at any time in five decades.
Americans can now sell and export items such as materials, equipment and tools for construction or agriculture, on credit if they choose, to the Cuban private sector. They also can establish a presence on the island nation and hire its citizens.
Still, no deals have been struck yet — raising concerns that without brick-and-mortar progress on the ground, the U.S. president who will be sworn in Jan. 20 could wipe away Obama’s orders with a stroke of a pen.
The same clock is ticking on a measure by U.S. Rep. Kathy Castor, the Tampa Democrat, calling for Congress to lift the embargo on travel and trade that Obama’s orders have whittled away. There is pressure, Castor has said, to pass her Cuba Trade Act during the term of a president she knows would sign it into law.
An established U.S. business presence in Cuba, though, with millions already invested, would prove a major obstacle if the next president seeks to walk back the steps toward normalization that Obama has taken.
Still, can enough of an investment be made in the next 11 months?
Two U.S. businesses seem close to finalizing a deal with Cuba — Alabama-based Cleber LLC, which would sell tractors to farmers, and Tampa’s Florida Produce, which would operate a distribution warehouse for all American goods that can legally be sold on the island nation.
Both ventures have been approved by the U.S. government.
Saul Berenthal, co-founder of Cleber, said the Cuban government verbally OK’d his company’s proposal to open a manufacturing and distribution center in the Mariel special economic development zone, an area covering 180 square miles west of Havana.
Berenthal will formally file the necessary documents with the Cuban government to receive official approval when he returns there March 11 for the International Agricultural Fair.
He expects the approval process to take 60-90 days. His company would then begin building a $5 million to $10 million tractor manufacturing center by end of the year with a goal of starting production in the first half of 2017.
“We are not afraid,” Berenthal said, considering the prospect of a new U.S. president. “We believe this is an important step in improving the relations with the two countries and is something that can help the Cuban people. So it is worth the risk.”
Florida Produce and its owners, Manuel Fernandez and Mike Mauricio, will give their formal presentation to the Cuban government March 29, said Tim Hunt, their attorney, with Tampa law firm Hill Ward Henderson.
Conversations he already had with Cuban government officials left Hunt confident that Florida Produce will win approval of its proposal once all the paperwork is filed and bureaucratic channels navigated.
Florida Produce would then lease a warehouse from the Cuban government in Havana.
Hunt said he could not estimate yet how much his clients will invest, but it would include installation of proper refrigeration and other components of a warehouse. Nor did Hunt have a timeline for beginning operations, except to say they prefer to open before Obama leaves office.
“I think the more we can implement, the harder it will be for the next president to unwind the executive orders,” Hunt said.
Nothing would stand in the way of a president who wishes to rescind Obama’s orders in the view of another Cuba observer, Mauricio Claver-Carone, director of the Washington, D.C.-based U.S.-Cuba Democracy PAC.
The president’s job, Claver-Carone said, is to uphold the law and he believes Obama’s policies violate the law by circumventing the embargo. Only Congress can change the embargo and allow even limited trade with Cuba, he said.
The only trade Congress allows now is for U.S. companies to sell Cuba agriculture and medical devices, and on a cash-only basis, Claver-Carone said.
Congress also allows U.S. companies to establish telecommunication services with Cuba’s state-run ETECSA, but sale of devices these services require is prohibited, as are investments in the island nation’s domestic infrastructure.
Obama’s executive orders permit commercial exports of limited telecommunications to Cubans, those necessary for communicating with people in the U.S. and the rest of the world.
In addition, telecommunications providers are allowed to establish in Cuba the necessary mechanisms, including infrastructure, to provide commercial telecommunications and Internet services.
“Some of the transactions that Obama is giving a wink-and-nod to today can easily be considered sanctions violations tomorrow,” Claver-Carone said. “Many of the regulations altered already stretch the bounds of the law.”
The companies closing in on a deal with Cuba, Claver-Carone noted, would establish small operations that a new president would feel little compunction to honor. He doesn’t envision any major corporations investing in Cuba under current conditions.
Even American Airlines, with plans to take advantage of a non-binding arrangement allowing as many as 110 commercial U.S. flights to Cuba each day, has no plans yet for one of its signature Admiral’s Clubs in Havana’s José Martí International Airport.
American Airlines is focused on applying for scheduled services through the U.S. Department of Transportation, spokesman Matt Miller said.
That process ends March 21. Commercial service to Cuba is expected to begin a few months later.
“We’ll evaluate this after we’ve started scheduled flights,” Miller said in an email, speaking of an Admirals’ Club.
Claver-Carone said he believes that once an evaluation is complete, the decision will be, “No.”
The location of the Jose Marti airport is property that was nationalized by the government in the years following the revolution of Fidel Castro. The last owners of airport property fled the island nation.
José Ramón López, heir to the land, now lives in the U.S.
Though his relatives were not American citizens when the land was seized, the Helms-Burton Act that codifies the U.S. embargo says the president can allow Cubans now living in the U.S. to seek legal recourse if a U.S. business profits from the seized property.
This adds more potential consequence for Cuba to the question of who is elected U.S. president.
And that makes operating a business anywhere on the island nation is risky, Claver-Carone said, especially considering all the land nationalized by Castro’s government.
“If I am a compliance officer for a major company I am not signing off any deal that could involve stolen properties,” Claver-Carone said.
Then there is the issue of civil judgments levied against the Cuban government by American courts — $4 billion plus interest, primarily in favor of Floridians whose families suffered from Cuba’s actions while it remained on the U.S. State Sponsors of Terrorism list from 1982-2015.
The plaintiffs may be able to freeze money transferred between a U.S. company and Cuba if that cash makes its way through the American banking system.
Asked if he would attempt to do so, Andrew Hall, a Miami lawyer representing a South Florida man who is owed the lion’s share of the judgments — $3.2 billion — sent a simple reply via email: “Yes.”
“It is a real concern and something we have been following,” said Florida Produce attorney Hunt. “My impression is that it has been a topic of much discussion between the U.S. and Cuban governments.”
U.S. State Department and Cuban officials began negotiating in December on settling the civil judgments as well as property claims made by American citizens against the island nation.
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