Tag Archives: Foreign Trade

Nuevo Libro: APUNTES SOBRE ECONOMÍA CUBANAY COVID-19

CENTRO DE ESTUDIOS DE LA ECONOMÍA CUBANA, Universidad de la Habana.

COMPILADORES: HUMBERTO BLANCO ROSALES y BETSY ANAYA CRUZ

Febrero de 2021

ISBN: 978-9945-9278-3-2

Complete Text of Book

INDICE:

A modo de introducción: otra pelea cubana contra los demonios/ Humberto Blanco Rosales y Mayra Tejuca Martínez

Reflexiones en torno a la nueva estrategia para el desarrollo económico y social de Cuba/ Betsy Anaya Cruz

Implementación de la nueva estrategia económica y social: una mirada desde la gestión/ Humberto Blanco Rosales

IED en tiempos de COVID-19: ¿qué podemos esperar?/ Juan Triana Cordoví

Cuba: apuntes sobre comercio exterior y COVID-19/ Ricardo Torres Pérez

Alimentación en Cuba: impactos de la COVID-19/ Anicia García Álvarez

El turismo mundial y en Cuba pospandemia/ Miguel Alejandro Figueras

Teletrabajo en tiempos de COVID-19: oportunidades y desafíos para Cuba/ Dayma Echevarría León

Trabajo por cuenta propia. Pre y posCOVID-19/ Ileana Díaz Fernández

La banca comercial tras la COVID-19/ Francisco Fidel Borrás Atiénzar y Oscar Luis Hung Pentón

De los autores

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THE CUBAN ECONOMIC CRISIS: ITS CAUSES AND POSSIBLE POLICIES FOR THE TRANSITION

Carmelo Mesa-Lago (University of Pittsburgh) and Jan Svejnar (Columbia University)

Florida International University, School of Public and International Affairs, October 2020.

A definitive 2020 analysis of Cuba’s current economic situation.

Full document available here: The Cuban Economic Crisis: Its Causes and Possible Policies for the Transition

 

 

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CUBA: CARTERA DE OPORTUNIDADES DE INVERSION EXTRANJERA, 2017-2018

MINCEX, November 2017

Original Document: MINCEX:  CARTERA DE OPORTUNIDADES DE INVERSION EXTRANJERA 2017-2018

Great opportunities for foreign investors in Cuba!

After nationalizing all foreign investment as well as domestic private enterprise – right down to the street vendors and shoe shine boys in the 1960 to 1968 period –  Cuba is now  courting foreign investors.

Here is the current document from MINCEX listing the possiblde investment opportunities for foreign enterprises,. It was sent courtesy of Jose Luis Rodriguez, (former Minister of Economics and Planning, former Director and currently with the CENTRO DE ESTUDIOS SOBRE LA ECONOMIA MUNDIA).

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WHAT TRUMP’S NEW CUBA POLICY MEANS FOR AMERICAN BUSINESS

By Mimi Whitefield

Miami Herald, June 23 2017

Some U.S. executives that do business with Cuba breathed a sigh of relief after President Donald Trump outlined his new Cuba policy in Miami because it won’t have much impact on their companies. But others have pressed the pause button until they see how the new regulations implementing the changes are written.

Lawyers who help firms navigate the thicket of laws and regulations governing the embargo and dealings with the island have been combing through a memorandum that Trump signed on June 16 as well as three pages of frequently-asked questions issued by Treasury’s Office of Foreign Assets Control (OFAC) and a White House fact sheet to get a sense of the new policy.

Until the regulations are written, that’s all they have to go on. Trump has mandated that the regulation-writing must begin by mid-July.

“Until the regulations change, everything is status quo,” said Yosbel Ibarra, a Miami lawyer on Greenberg Traurig’s Cuba practice team.

How long it will take to write new rules is anybody’s guess, but it isn’t an easy task because multiple agencies and departments will be involved. Some key posts that would have oversight over the new policy also have yet to be filled by the Trump administration, according to lawyers.

Don’t expect a rush by U.S. companies that have proposals pending before the Cuban government to get deals inked before the new rules go into effect, say lawyers and business consultants.

“The way corporations are, when they know rule-making is underway, they are always going to hold up until the regulations are written,” said Robert Muse, a Washington lawyer who specializes in U.S.-Cuba law. “They are not going to set themselves at the far end of the branch based on a Q&A from OFAC.”

There will be important changes in the new policy: it bars most business by U.S. companies with Cuban entities owned or controlled by the military or intelligence services and cuts out people-to-people trips to Cuba by individuals. Group travel in that category is still OK – although there is expected to be more scrutiny of all Cuba travelers to make sure the purpose of their trips isn’t tourism.

The prohibition on doing business with the military is significant because since the 1990s, the Cuban military has been taking control of ever larger chunks of the economy, partly because military managers are viewed as more efficient. Many officers have been sent abroad for business training.

Now the military conglomerate GAESA controls an estimated 40 to 60 percent of the economy, with heavy involvement in the tourism industry, logistics and retail operations.  The military’s Gaviota Tourism Group, for example, controls or has joint ventures with foreign partners in 64 hotels and villas, including many resort hotels as well as the Saratoga, a favorite of visiting Congressional and business delegations, and the new luxury Gran Hotel Manzana Kempinski in Havana.

Even though former President Barack Obama opened up more opportunities for U.S. companies to do business in Cuba, not that many agreements have been finalized. Most are in the transportation sector, the telecommunications industry (notably roaming agreements and Google’s deal to install its servers on the island) and in the hospitality sector.

Some of the U.S. companies have inked deals with military entities. Telecommunications projects, for example, go through ETECSA, the state communications company that is controlled by the military, and Starwood Hotels & Resorts, now a part of Marriott International, has signed an agreement with Gaviota, the military tourism company, to manage a Cuban hotel as a Four Points by Sheraton.

But the administration has said it doesn’t want to hurt American businesses that have engaged in lawful commercial opportunities with Cuba and those agreements will be grandfathered into the new Cuba policy. That’s also true of any other projects that are in place prior to issuance of the new regulations.

Meanwhile, the coming prohibition on doing business with the Cuban military has prompted calls from clients who want to make sure exactly who their Cuban counterparts and business partners are, said Ibarra.

But even companies looking at business that seemingly have nothing to do with the Cuban military are wary.      “I’ve already had a client from New York call and say I guess I’m not going forward [in Cuba],” said Charles Serrano, a Chicago business and travel consultant who has taken clients on more than 130 trips to Cuba.

He is helping four other companies that have signed agreements, have submitted proposals or are in negotiations. But Serrano, managing director of The Antilles Strategy Group, said: “This will slow the interest of American businesses in exploring opportunities in Cuba. They calculate risk based on real things.”

The next battleground is how the new regulations are written.   “After the announcement there was a little sense of relief because companies now know more or less what the landscape will look like and the direction policy is going,” said Pedro Freyre, chairman of Akerman’s international practice, which includes clients doing business or trying to do business in Cuba. “But now the next level of anxiety is about what the regulations will look like. Depending on how they are crafted, they could shut down a lot of business activity.”

Hardliners can be expected to make the case that the rules should be written so as much U.S. business activity as possible is precluded. But the Cuban Study Group, which includes executives and professionals who favor engagement, wants the administration to narrowly interpret what it means to do business with the Cuban military.

“There is a vast difference between a Fortune 500 company forming a joint venture with the Cuban military and a U.S. humanitarian worker buying a water bottle at a government-run store,” said the group in a statement. Among the military’s holdings are retail stores where visitors often buy bottled water.

“Nothing stops business like uncertainty,” said Ibarra. “The more clear and transparent the new regulations are, the better.”

Eventually, the State Department is expected to publish a list of military concerns that are off limits for U.S. companies.

Despite military links to airport and seaport operations in Cuba, the new policy allows cruise lines from the United States to continue to call at Cuban ports, U.S .airlines to keep on flying and limited legal trade, under exceptions to the embargo, to keep flowing.  “Carnival Corp. is pleased that the policy changes announced by the Trump administration will allow our ships to continue to sail to Cuba,” said spokesman Roger Frizzell. He said Carnival plans to review how the tightening of travel rules potentially might affect its passengers.  But he said all cruise passengers since Carnival’s social impact line Fathom inaugurated the first regular cruise service by a U.S. line to Cuba in March 2016 have been traveling under permissible categories for travel to Cuba.  Carnival Corp. has discontinued its Fathom service to Cuba, but its Carnival Cruise Line currently calls in Cuba and its Holland American Line plans to begin sailing there in December.

Other cruise lines also have jumped into the Cuban cruise market. With current sailings and service that is planned, nearly 200,000 travelers are expected to sail from the United States to Cuba this year.

American Airlines, which offers 70 flights weekly to six Cuban cities, doesn’t expect too much impact from the new Cuba policy. Because all but one of its flights — a Charlotte-Havana route — depart from Miami, they have proved popular with Cuban Americans whose travel is not restricted by the new policy.  “Because Miami is the heartland of Cuban exiles, we have a strong market of passengers visiting family and friends in Cuba,” said Martha Pantin, an American spokeswoman.  Since it began regular scheduled flights to Cuba last year, American has opened a ticket office in Havana, begun selling tickets at the Havana airport and installed self-service kiosks there too. “By July, we expect to have self-service check-in at all the airports we serve in Cuba,” said Pantin.

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CHINA PILES INTO CUBA AS VENEZUELA FADES AND TRUMP LOOMS

Reuters, Tue Feb 14, 2017 | 8:17 PM EST

Original Article: China piles into Cuba

CUBA ISN’T WAITING AROUND FOR U.S. WHEN IT’S GOT CHINA

By Marc Frank | HAVANA

From buses and trucks to a $500 million golf resort, China is deepening its business footprint in Cuba, helping the fellow Communist-run state survive a crisis in oil-benefactor Venezuela and insulate against a possible rollback of U.S. detente.

Cuban imports from China reached a record $1.9 billion in 2015, nearly 60 percent above the annual average of the previous decade, and were at $1.8 billion in 2016 as the flow of oil and cash slowed from Venezuela due to economic and political turmoil in the South American country.

China’s growing presence gives its companies a head start over U.S. competitors in Cuba’s opening market. It could leave the island less exposed to the chance U.S. President Donald Trump will clamp down on travel to Cuba and tighten trade restrictions loosened by his predecessor Barack Obama.  A deterioration in U.S.-China relations under Trump could also lead Beijing to dig in deeper in Cuba, some analysts say.

“If and when the Trump administration increases pressure on China … China may decide to double down on its expanding footprint in the United States’ neighborhood,” said Ted Piccone, a Latin America analyst at the Brookings Institution think tank.

China, the world’s second largest economy, sells goods to Cuba on soft credit terms. It is Cuba’s largest creditor and debt is regularly restructured, though amounts and terms are considered state secrets.  While Cuba does not publish investment data, the state press has been abuzz with news of Chinese projects lately, covering infrastructure, telecoms, tourism and electronics.

Yutong (600066.SS) buses, Sinotruk (3808.HK) trucks, YTO (600233.SS) tractors, Geely (0175.HK) cars, Haier (1169.HK) domestic appliances and other products are prominent in Cuba, where the main U.S. products on display are cars dating back to the 1950s, thanks to the ongoing economic embargo.

Cubans flock every day to hundreds of Huawei supplied Wi-Fi hot spots and the firm is now helping to wire the first homes.

“Business is really booming, more than we could have ever imagined,” said the manager of a shipping company which brings in Chinese machinery and transport equipment and who asked not to be identified.

The foreign ministry in Beijing described China and Cuba as “good comrades, brothers, and partners,” and said the relations “were not influenced by any third party,” when asked whether U.S. policy was encouraging China to deepen its presence.  “We are happy to see that recently countries around the world are all expanding cooperation with Cuba. I think this shows that all countries have consistent expectations about Cuba’s vast potential for development,” Chinese Foreign Ministry spokesman Geng Shuang told reporters.

The U.S. State Department and White House did not immediately respond to requests for comment.

INCREASED INVESTMENT

Over the past two decades, China has become a major player in Latin America and the Caribbean, second only to the United States in investment flows and diplomatic clout.  But the Asian giant was reluctant to invest in Cuba because of the poor business climate and fear of losing opportunities in the United States, according to Asian diplomats in Havana.

That began to change after Obama moved to normalize relations two years ago and Cuba sweetened investment rules, sparking new interest among U.S. businesses and competitors around the world.  China was well placed because the local government preferred doing business with long-term friends offering ample credit to work with state-run firms.

In return, Cuba has shared contacts and knowledge about the region, and taught hundreds of Chinese translators Spanish.

A report on the government’s official Cubadebate media web site last month said the two countries agreed to strengthen cooperation in renewable energy and industry, with 18 Chinese firms taking part in a three-day meeting in Havana.

Plans for several projects were signed, including a joint venture with Haier to establish a renewable energy research and development facility, the report said.  A few weeks earlier, Cuba opened its first computer assembly plant with Haier with an annual capacity of 120,000 laptops and tablets, state media reported.

Other projects include pharmaceuticals, vehicle production, a container terminal in eastern Santiago de Cuba, backed by a $120 million Chinese development loan, and Beijing Enterprises Holdings Ltd. (0392.HK) venture for a $460 million golf resort just east of Havana.  Shanghai Electric (601727.SS) is providing funds and equipment for a series of bioelectricity plants attached to sugar mills.

Barrio Chino, La Habana

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Oficina Nacional de Estadisticas y Informacion, ANUARIO ESTADISTICO de CUBA 2016; SECTOR EXTERNO and CUENTAS NACIONALES

Attached are the Chapters of the ANUARIO ESTADISTICO DE CUBA 2015 on the National Accounts and the External Sector.  The Chapter of the ONEI Anuario on the External Sector includes information up to and including 2015, data that has not been available for the last few years.

These are not yet up on the ONEI web site but were sent by Dr. Jose Luis Rodriguez, Minister of  Economics and Planning from 1998-2009.

Attached here is the complete document.

ANUARIO 2016, CAPITULO 8:    onei-aec-2015-sector-externo

ANUARI0 2016, CAPITULO 6:   onei-aec-2015-cuentas-nacionales

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CANADA-CUBA ECONOMIC RELATIONS: AN UPDATE

By Arch Ritter                                                                                                  October 5, 2016

 Canada and Cuba have maintained a normal and mutually beneficial economic relationship from Colonial times to 2016.  With the beginning of Cuba’s “Special Period” in 1990 and its modest moves towards a mixed market economy in the 1990s, Canadian participants were optimistic about future economic relations.  In the 2000’s, this was replaced by some skepticism, but with the reforms of 2010-2012 and the beginning of the normalization of US Cuba relations, optimism has returned. This article provides an update on Cuban-Canadian economic relations, including trade, foreign investment, development assistance and migration and some speculation concerning the future of the relationship.

Canada-Cuba Trade Relations

Since the start of Cuba’s revolution, normal trade relations between Canada and Cuba have been maintained. However, trade has waxed and waned over the years as can be seen in Chart 1. The chief feature of the trade relationship in the 1980s was the large volume of Canadian exports which were mainly wheat. Trade expanded steadily in the 1990s with the ending of the special trade relationship with the Soviet Union, as Cuba’s economy began to recover and as it began to diversify its export markets and sources of imports.

q1After 2001, Cuba’s exports to Canada expanded and began to exceed Canada’s exports to Cuba due to high nickel volumes and prices. Canadian exports to Cuba have more or less stagnated since 2001 while other countries have increased their market shares.  By 2015, Canada was the fourth ranking exporter to Cuba following Venezuela, China, and Spain (Table 1.) In contrast, Canada was the second largest export market for Cuba after Venezuela in 2015, accounting for 11% of Cuba’s exports.

r1

Cuba’s exports to Canada have consisted almost totally of nickel concentrates, with cigars, rum, seafood and copper scrap (presumably a quirk in 2015) as very small foreign exchange earners (Table 2.).

By 2015, Canada’s exports to Cuba were reasonably diversified (Table 2.) Its agricultural exports remained significant, though overwhelmed by US agricultural exports. Minerals (sulfur for Cuba’s nickel industry, potash for fertilizer), metals (copper products for Cuba’s electrical system mainly) and machinery of various types have all been significant in the 2010s.

r2 Tourism

Cuba’s best and most faithful friend is the brutal Canadian Winter, which has driven millions of Canadians to warmer Caribbean climes during the December to April period. Canada has been the largest single national source of tourists consistently from 1990 to 2015 and accounted for almost 40% of all tourist arrivals in 2015.  But when US tourism opens up completely, there will likely be a deluge of US winter-escape tourism as well as curiosity tourism, convention tourism, medical tourism, March-break tourism and retirement relocation. The result will likely be that prices rise, and Canadian winter time tourism may well be squeezed out of Cuba into lower cost destinations.

q2Canadian Enterprises in Cuban Joint Ventures

In 1991, Cuba opened itself to foreign investment in joint venture arrangements with state firms. By the end of 1999, there were 72 joint ventures or “economic association” agreements between Canadian firms and Cuban state enterprises but few seem to have ever come to life.

Sherritt International has been by far the most successful Canadian-Cuban joint venture.  Its formula for success is one that cannot likely be replicated by any other enterprise.  In effect, it exchanged 50% of its ownership in the nickel refinery in Alberta Canada for 50% ownership of the Moa mine and concentrator in Cuba and shared in the ownership of the marketing enterprise.  This made Cuba a significant foreign investor in Canada!  The Sherritt experience was explored in the previous issue of this publication.

A number of mineral exploration companies established joint ventures in Cuba by 1994 in association with Geominera S.A. It was thought that Cuba was an ideal location for mineral exploration because much of the country had been covered by aero-magnetic and geological surveys in the Soviet era.  Among the enterprises involved in exploration projects in joint ventures with Geominera were Holmer Gold Mines, Joutel Resources, CaribGold Resources, Northern Orion, and MacDonald Mines. Unfortunately, the exploration undertaken from 1992 to 2007 yielded disappointing results and none of the exploration projects led to producing mines. This suggests that either the quality and/or magnitude of the deposits are lower than in other regions of the world. Alternatively, perhaps the investment conditions, the policy environment and/or the political risk situation were worse than elsewhere. It would be surprising if there were another mineral exploration rush in the medium term future, unless mineral prices were to rise to very high levels.

Canadian enterprises in real estate development have also had difficult experiences in Cuba. One project announced in October 1998 by an association between Cuba’s luxury hotel chain, Gran Caribe and Cuban Canadian Resorts International proposed U.S. $250 million set of four condominiums with hotel and resort facilities. It would have opened up an important new type of tourism for Cuba.  However, in May 2000, the Ministry of Foreign Investment and Cooperation announced a prohibition of foreign ownership of condominium units killing this and other such projects for the time being.

Another project was that of Leisure Canada for the construction of some 11 hotels and two golf courses, a marina. (Leisure Canada Incorporated, 2000). This project fizzled out. In 2011 Leisure Canada, having changed its name to 360 VOX Corporation, was bought out by Dundee Corporation in May 2014.  Any mention of this project has disappeared.

One successful venture was the construction of five airports in Cuba, including Varadero and Havana International Airports by Intelcan Technosystems of Ottawa. The CDN$ 52 million investment in the Havana Airport, was financed in part by Canada’s Export Development Corporation (33%) and 15% from Intelcan. Since 2000, the ultimate payment has come from international passengers who pay U.S. $25.00 (CUC 25.00) as an airport tax on departure.

Unfortunately brilliant successes for Canadian-Cuban joint ventures seem to be few and far between.  Indeed, a number of executives of Canadian trading enterprises and joint ventures, Cy Tokmakjian and Sarkis Yacoubian, were jailed and tried on corruption charges –a cooling factor in the foreign investment process. The moral of the story is that establishing a joint venture in Cuba can work, but it must be done with patience, intelligence, and scrupulous awareness of Cuban regulations and processes and with clear benefits for the Cuban partner enterprise and the Cuban people.

Canadian Development Assistance

The Canadian International Development Agency (CIDA) has provided some interesting development assistance to Cuba since 1994. A major proportion of this has been “economic” in character, aimed at the “modernization of the state.”  Some has been used to support the initiation of projects by Canadian enterprises with Cuban counterparts or to promote Canadian exports. Some of the economic programs were micro-enterprise tax administration, economic management, support for technical training and computer acquisition at the Central Bank, a program to help strengthen administration and professional economics at the Ministry of Economics and Planning and training/certification programs for tradesmen in some basic industrial areas. Various types of commodity assistance were provided as well. Much of the assistance provided by NGOs was aimed at community level activities.  A small amount of assistance was directed towards human rights and governance initiatives including a “Human Rights Fund Pilot Project” and “Dialogue Fund” with multiple Canadian and Cuban partners.

r3Canada’s active development assistance projects in Cuba as of mid-2016 are listed in Table 3. The annual expenditures of these multi-year projects for 2014-2015 was $CDN 2.42 million, a very

 International Migration

 An interesting dimension of Canadian-Cuban relations is migration. As indicated in Chart 3, Cuban migration to Canada has risen from levels in the hundreds in the 1980s to around 1,400 in 2014-2015. However, an unknown number of the Cuban immigrants to Canada move on to the United States, especially Florida, reflecting the attraction of the large Cuban-American population there and the weather.

 q3

Detailed sociological information on Cuban migrants is not available. However, my impressions are that, generally speaking, they are relatively well-educated, industrious, self-activating and entrepreneurial. They also seem to be relatively young, for the most part, many having recently finished their education and just starting out on their careers. Many Cuban immigrants seem to have done reasonably well and have found work in their professional areas, something that is not easy in a new society, culture and language.  This migration represents a “brain drain” or a loss of human capital for Cuba and a corresponding gain for Canada.

 Prospective Canadian-Cuban Economic Relations

The future economic relationship between Canada and Cuba will be shaped mainly by three factors: the strength and durability of Cuba’s economic recovery; the nature of Cuba’s economic policies affecting trade, and foreign investment; and the character and timing of complete normalization of relations with the United States.

A sustained recovery of the Cuban economy would promote a deepened and broadened economic relationship with Canada. A growing Cuban economy would permit increases in imports from all trading partners, including Canada.  At the same time, economic recovery in Cuba also requires expansion of its exports of goods and services.

Is an enduring recuperation of the Cuban economy probable in the next decade or so? First, the driving force for the Cuban economy, namely export earnings, at this time depends mainly on tourism, medical services and nickel exports.  Nickel and tourism should continue to be strong, but the obscured subsidization from Venezuela is over. Cuba’s medical service exports will likely be transitory as other countries develop their own medical systems and increase medical personnel.  Pharmaceutical exports may hold promise in the longer term but have been somewhat disappointing relative to the high hopes once placed in their prospects. Little progress appears imminent regarding the expansion of other merchandise exports. New exports of manufactured products have not appeared on the scene in a significant way and are obstructed by some public policies.

Some continuing problems may prompt skepticism regarding Cuba’s economic prospects in the near future. Among the difficulties often cited are: a dual exchange rate system with negative consequences for export diversification and expansion; a blockage of people’s initiatives, energies and entrepreneurship due to the unwillingness to extend further the reform process especially for medium scale enterprise; and the deterioration of parts of the infrastructure, most notably housing.

The second set of factors that will shape Canada’s future economic relations with Cuba in is Cuba’s policies relating to trade, foreign investment and tourism. These policies are unlikely to undergo dramatic change under Raul Castro’s leadership. This implies that the basic Canadian-Cuban economic relationship should not be affected seriously by changed Cuban policies in the next few years. The state-trading that in part characterizes these relationships is not intrinsically beneficial for Canada.

Thirdly, the complete normalization of U.S. – Cuban relations especially regarding trade and US investment in Cuba, will have a major effect on the Canada-Cuba economic relationship. Complete normalization will permit expansion of Cuban exports, US foreign investment in Cuba, US tourism in Cuba, financial flows and the possibility of open and vigorous collaboration of Cuban-America and Cuban citizens in business activities.  Greater prosperity will be the result.

Normalization with the United States will lead to expanded exports of goods and services to Cuba from the U.S. and vice versa.  This is due to geographic and transport factors.  More frequent freighter connections, high speed hydrofoil passenger boat connections, a re-connection of U.S. and Cuban railway systems and a proliferation of airline connections will lead to a reintegration of the two economies. The diversified U.S. economy can provide a broad range of consumer and capital goods and services competitively with other countries and with low transport costs and quick delivery times.

Canadian exporters to Cuba therefore will face a challenge after US – Cuban normalization. The location and logistical advantages of U.S. exporters, plus the interest, activism and advantages of the Cuban-American business community will outweigh any lingering “goodwill effect” with Canada. Overnight or next-day delivery of products ordered from the U.S. makes continuation of some types of exports from Canada difficult, as delivery from Canada currently may take up to two weeks or more on ships leaving Canada every week or ten days on average.

On the other hand, some of Canada’s current exports to Cuba are competitive with U.S. products and should increase in a post-embargo Cuban economic recovery. This might include fertilizers (potash), cereals, animal feed stocks, lumber, wood and paper products and fabricated non-ferrous metals products. Canada also is competitive in certain types of capital equipment such as minerals machinery and equipment, some paper making equipment, Bombardier aircraft, railway rolling stock and equipment, urban transit vehicles, communications equipment, electrical generation and distribution equipment, and some specialized vehicles. However, some Canadian exports may be threatened by U.S. competition.

In summary, the recovery of the Cuban economy and the increase in foreign exchange receipts that U.S.-Cuban normalization in time should bring about will be of benefit for some Canadian exporters while others may be replaced by U.S. suppliers.  Will the “expansionary effect” outweigh the costs of the “displacement effect” for Canadian exporters?  Perhaps, but this is not assured.

Normalization will also induce U.S. enterprises to invest in Cuba. With no further changes to the foreign investment law and within the current policy environment, one can imagine some but not many U.S. firms entering joint ventures.  But with policy liberalization in a post-Raul Castro situation, one can imagine large numbers of U.S. enterprises investing in Cuba. Cuban-Americans would also enter Cuba to set up small businesses or to finance business ventures with their Cuban relatives or counterparts.  The “geo-economic” gravitational pull of the U.S. will be strong. After U.S.-Cuba rapprochement Canadian trade and investment as a proportion of total trade and investment will likely diminish even though both might increase in absolute terms.

To conclude, there are future uncertainties and challenges regarding the Canadian-Cuban economic relationship.  The character and intensity of future economic performance in Cuba, Cuba’s policy environment and the timing of the complete normalization of relations with the United States are still ambiguous and uncertain. These factors will have mixed effects, but effects that on balance should be positive for Canada and Cuba.

Bibliography

Citizenship and Immigration Canada.  http://www.cic.gc.ca/english/resources/statistics/facts2014/permanent/10.aspAccessed October 23, 2016

Cuban Club Resorts. 2000. Web site: www.cubanclubresorts.com

Global Affairs Canada, Cuba – International Development Projects, http://www.acdi-cida.gc.ca/cidaweb/cpo.nsf/fWebCSAZEn?ReadForm&idx=00&CC=CU.  Accessed 3 October 2016

Industry Canada, Trade Data Online (TDO), Trade by Product (HS Codes) http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home

Leisure Canada Incorporated. (2000, August, 17). Press Release. Reproduced in   www.cubanet.org

Nolen, Stephanie. 2015. In tourist-deluged Cuba, Canadian firms are noticeably absent. The Globe and Mail December 13.

Oficina Nacional de Estadisticas, Cuba.  Anuario Estadistico de Cuba. (Various issues) http://www.one.cu/ . Accessed various times and October 4 2016.

Sequin Rob. 2013. Leisure Canada now a defunct Cuba real estate development brand.  Havana Journal September 25,

 

 

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THE SHERRITT–CUBA JOINT VENTURE: UNCERTAINTIES FOR BOTH PARTNERS

By Arch Ritter  

September 6,  2016

Cuban nickel production and the Sherritt-Cuba joint venture should have good prospects in view of Cuba’s large and low-cost reserves of nickel. Sherritt’s technology and probable future demand.  However, there are a number of looming issues that darken the horizon for Sherritt and to a lesser extent for Cuba including high transportation costs – shipping nickel/cobalt concentrate from Cuba to Fort Saskatchewan Alberta – together with the “Helms-Burton” status of the mine, and future price levels and volatility..

The Moa mine and processing facility, with a 25,000 ton capacity, were initially constructed by US interests – the Moa Bay Mining Company, a subsidiary of Freeport Sulphur. They used proprietary technology from Sherritt, which had pioneered hydrometallurgy processes at their plant in Fort Saskatchewan Alberta. Extraction and processing began in 1959.

The Government of Cuba then expropriated the operation without compensation in August, 1960 and restarted it in 1961 producing concentrate for the Soviet Union.  The US Foreign Claims Settlement Commission (US FCSC) valued the company at US$ 88.4 million at the time of the expropriation.

Sherritt’s direct connection with Cuba began in 1991 with purchases of Cuban nickel concentrate for its Alberta refinery.  Sherritt had had insufficient volumes of concentrate for many years and in 1990 a refining contract with INCO expired. In 1994, Sherritt International and the Compania General de Niquel of Cuba established a 50/50 joint venture, which now owns the Moa extraction, processing, and smelting operation, the Alberta refinery and the international marketing enterprise. The former President of the company, Ian Delaney, also negotiated agreements with the Cuban Government, permitting Sherritt to enter other sectors of the economy, including electric energy, oil and gas, agriculture, tourism, transportation, communications, and real estate. By 2000, Sherritt International had become a major diversified conglomerate in Cuba.

In this deal, the Cuban Government became and is currently a foreign investor in Canada, as the Compania General de Niquel owns 50% of the nickel refinery, a fact not well known in either Cuba or Canada.

The joint venture between Sherritt International and the Government Cuba is a cooperative masterpiece.  It has generated great benefits for both parties.

 I.         The Nickel/Cobalt Operation

The linking of the Moa nickel deposit and part of Cuba’s processing capacity with the Alberta refinery and its access to attractive energy sources was a stroke of genius and/or good luck for Sherritt and Cuba.

Cuba acquired a market for its nickel concentrate. It acquired access to the technological improvements that have occurred from 1959 to 2016.  These have generated improvements in productivity, energy efficiency, environmental impacts, and health and safety.  It acquired Sherritt’s managerial know-how which. Together with technological improvements, have increased production from around 12,500 tons in the early 1990s to around 34,000 tons in the 2010s.zzzzz3The Government of Cuba is now the joint owner of a vertically integrated nickel operation, from extraction and concentrating through to refining and international marketing. Cuba also has obtained new technologies and managerial skills for oil and gas extraction and utilization, as well as electricity generation.  Cuba’s nickel reserves are fifth largest in the world and production volumes are 10th largest.[i] Nickel has been Cuba’s largest merchandise export since the collapse of sugar by 2002. Foreign exchange earnings from the Sherritt-Cuba joint venture’s share of nickel and cobalt exports have averaged about 40% of total nickel/cobalt exports.

It is not surprising that Ian Delaney became known as “Fidel’s Favorite Capitalist”!

For its part, Sherritt has been able to maintain its Canadian refinery and to use its base in nickel to enter other sectors in Cuba. Its earnings from its Cuban operations are significant. The joint venture has been able to increase metal production and achieve high net operating earnings, which have been in the area of 40 to 50 percent of the company’s gross revenues for most years, depending on international nickel prices.  The following chart illustrates Cuba’s total nickel production volumes.  The impact of Sherritt’s innovations in increasing production volumes in the second half of the 1990s is apparent.

 II.        Petroleum, Natural Gas and Electric Power

Sherritt International’s petroleum and natural gas activities also have been successful. New sources of oil and gas have been discovered and extraction rates have increased through enhanced recovery techniques from 1996 to 2000. Natural gas recovery and utilization has also been improved through the construction of two processing plants, a feeder pipeline network, and a 30 Kilometer pipeline to Havana (Sherritt International, Annual Report, 1997, 13).

Sherritt invested CDN $215 million for the construction of two integrated gas processing and electrical generation systems. The natural gas feedstock previously had been flared and wasted. Commissioned in mid-2002, these operations had a combined capacity of 226 megawatts and generated a significant proportion of Cuba’s electricity. At the same time they reduced sulfur emissions, a potential problem especially at the Varadero site, which is adjacent to the hotel zone. By 2007, installed electricity generation capacity had been further increased to 375 mega watts, following an 85 MW expansion that came on stream in early 2006.

In February 1998, Sherritt acquired a 37.5 percent share of Cubacel, the cellular telephone operator in Cuba for $US 38 million, but this was resold. “Sherritt Green,” a small agricultural branch of the company, entered market gardening, cultivating a variety of vegetables for the tourist market. Sherritt also acquired a 25 percent share of the Las Americas Hotel and golf course in Varadero and a 12.5 percent share of the Melia Habana Hotel, both of which were managed by the Sol Melia enterprise but these also have been divested.  By 2010, Sherritt’s Cuban operations were large and growing. Gross revenues reached CDN $1,040 million in 2008.

 III.      Energy Costs, Transport Costs and Potential Relocation

However, there are a number of clouds on the horizon for Sherritt. First, Cuban nickel concentrate is transported by ship to the east coast of Canada and then overland to the Alberta refinery. This makes some sense economically when energy prices are low.  So far, the existence of the refinery there has compensated for high transportation costs. However, if – or when –transportation costs rise with higher energy prices or when full normalization with the United States occurs or when the existing plant reaches the end of its useful life, would a different location become more attractive?   Energy sources are also available in Venezuela as well as the Gulf of Mexico region of the United States or could be transported to Cuba itself in future.  At some point it will likely make sense to relocate a refinery to a locale closer to the nickel ore body.

 zz3

So far, Cuba is tied to the Canadian location through its 50% joint ownership of the Alberta refinery. But would Sherritt relocate the refinery to a lower-risk Cuba at some time in the future, or to the post-embargo United States or a post-Maduro Venezuela?  Perhaps. However, Alberta will continue to have competitive energy prices and low risk to compensate for its locational disadvantage for some years to come.

 IV.       “Helms-Burton” Status of the Mine Properties.

The second possible problem for Sherritt is that the Moa mine and the concentration plant are “Helms-Burton” properties for which there are US claimants. What would be the current value of the Using the US FCSC interest rate of 6% per year of non-payment, the 2016 compounded value would be a whopping US$ 2,054.6 million. Obviously there will be a negotiations problem for this and all other such claims.

Resolution of the compensation claims issue with full US-Cuba normalization may require Sherritt and the Government of Cuba to negotiate some sort of compensation package for the original US owners.  In one scenario, the US claimants would simply take over the Cuba-Sherritt operation in Cuba. But this would not be reasonable because at this time, the refinery for Cuban nickel is in Alberta and it is jointly owned by Cuba. My guess, however, is that Sherritt, the Government of Cuba and the US claimants will negotiate an arrangement that will be reasonable for all parties.

In any case, the claim of US interests on the mine property generates ambiguities and uncertainties and will be problematic at some time in the future. Sherritt International may well be one of the few economic interests that perhaps could lose from US-Cuban complete economic normalization. A resolution of the property claims issue may turn out to be very expensive for Sherritt. .

 V.        “Nickel Pig Iron”

A technological advance in the production of “Nickel Pig iron” (NPI), a substitute for refined nickel-steel alloys for some uses where high quality is less necessary.  “Nickel pig iron” may well have already captured a portion of the nickel market for low quality alloys.  In future, it may reduce the demand for nickel thereby placing downward pressures on nickel prices. This will likely reduce and Cuba’s foreign exchange earnings and Sherritt’s revenues and profits from nickel exports in future.

As illustrated in Chart 2, nickel prices spiked in the boom of 2003-2007 – helping to generate a period of relative prosperity for Cuba – then declined in the recession of 2008.  What is striking at this time is that in real inflation adjusted terms, the price of nickel in 2015 and 2016 is pretty much where it was in the 1990s. A number of factors are contributing to this of course, especially the growth rate deceleration in China reducing the demand for nickel.  Is “nickel pig iron” also contributing to weak demand for nickel at this time?  What will be its impact in future?

 zzzzz2

Source: United States Geological Survey, Minerals Information, Nickel: Statistics and information., various years. The “real” or “inflation adjusted” price is the US consumer price deflator.

In conclusion, Sherritt has had a great run in Cuba, contributing to improved nickel production and exports, higher foreign exchange earnings for Cuba and high revenues and profits for itself, especially in the 2004-2014 decade.  The future may be less brilliant for both with the uncertainties of resolving the property claims issue and a possible slow=down in international demand for nickel generated in part by “nickel pig iron.”

[i] United States Geological Survey, Commodity Surveys, Nickel, 2016. http://minerals.usgs.gov/minerals/pubs/commodity/nickel/mcs-2016-nicke.pdf

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CUBA’S SOUTH KOREAN AND NORTH KOREAN CONNECTIONS

SOUTH KOREA AND CUBA MOVE TOWARD ESTABLISHING DIPLOMATIC RELATIONS

June 7, 2016 – Hankyoreh

http://english.hani.co.kr/arti/english_edition/e_national/747159.html

During a meeting with his Cuban counterpart in Havana on June 5, South Korean Foreign Minister Yun Byung-se apparently communicated Seoul’s sincere desire to normalize diplomatic relations with Cuba. Yun is the first South Korean Foreign Minister to visit the country.

There were no reports about the initial reaction offered by Cuba, which has a special relationship with North Korea and considers the North a “brother country.” Rather than moving directly into negotiations about normalizing relations, South Korea and Cuba are likely to follow up the meeting of foreign ministers with a number of subsequent deliberations.

Yun met Cuban Foreign Minister Bruno Rodriguez at the Palacio de Convenciones, a Cuban government building in Havana, on Monday.  “I emphasized that the time has come to further realize the potential that our two countries have, and I expressed our intention of moving in that direction,” Yun told reporters immediately after the meeting. Yun’s use of the phrase “the time to realize our potential” presumably expressed a desire to normalize diplomatic relations.

“The meeting ran for 75 minutes – an unusually long period of time – and the mood was very amiable, serious and candid,” Yun emphasized.  “They talked about issues of mutual interest, including bilateral issues, global cooperation and personnel exchange. We said everything that we wanted to say, and the Cubans were seriously engaged in the conversation,” said a source who was present at the meeting.

During the meeting, Yun explained the significance of his visit to Cuba by quoting Neil Armstrong, the first person to set foot on the moon: “That’s one small step for man, one giant leap for mankind.”  “The Cubans were very pleased by Yun’s remark,” the source said.

Yun did not say exactly how Rodriguez had responded to the idea of normalizing Cuba‘s relations with South Korea. “Personally, I felt that a tacit bond was forming between us,” he said.

“As they say, well begun is half done. Moving forward, we’re thinking about following up with a variety of deliberations,” Yun said, suggesting that the two countries had not immediately initiated negotiations for establishing official diplomatic relations.

The two countries are likely to use a number of ongoing deliberations, including meetings between senior officials, to speed up the normalization process.

In Feb. 2015, Yun announced to the National Assembly that he would push to normalize diplomatic relations with Cuba.  The South Korean government made its first official overture to Cuba about discussing the establishment of diplomatic relations in 2000, during the presidency of Kim Dae-jung.

THE NORTH KOREA-CUBA CONNECTION

June 07, 2016 – The Diplomat – Samuel Ramani

http://thediplomat.com/2016/06/the-north-korea-cuba-connection/

On May 24, 2016, the Korea Times reported that senior officials from North Korea’s governing Workers’ Party of Korea (WPK) and the Communist Party of Cuba held talks on strengthening ties between Pyongyang and Havana. This meeting followed Cuba’s congratulatory rhetoric toward Kim Jong-un after his re-election during last month’s historic Workers’ Party Congress. That congress was the first such-meeting since 1980.

While relations between North Korea and Cuba have been close since the Cold War, this revelation is an embarrassing blow to the Obama administration’s attempts to normalize relations with Cuba. North Korea’s close ties to Cuba can be explained by a shared normative solidarity against American values and perceived American imperialism. This ideological bond is formed out of historical experience and has occasionally manifested itself in symbolically significant shipments of arms and manufactured goods. These trade linkages persist to this day, despite tightened UN sanctions and strides towards a less confrontational U.S.-Cuba relationship.

North Korea and Cuba: A Cold War-Born Ideological Alliance

Over the past half-century, Cuba has been one of North Korea’s most consistent international allies. This alliance has caused Havana to resist diplomatically recognizing South Korea, despite growing economic cooperation with Seoul. Cuba’s firm pro-Pyongyang stance has deep ideological underpinnings, stemming from both countries’ shared Communist experiences. In 1960, Che Guevara visited North Korea, praising Kim Il-sung’s regime as a model for Fidel Castro’s Cuba to follow.

While both regimes preserved authoritarian systems and the trappings of a planned economy, their ideological synergy did not translate into convergent governance trajectories, as Guevara predicted. As Wilson Center expert James Person argued in a July 2013 BBC article, North Korea wanted to avoid Cuba’s dependency on Soviet weaponry following Khrushchev’s retreat from confrontation during the Cuban Missile Crisis. This resulted in North Korea transitioning toward a military-first policy, to the detriment of the country’s economic development. Meanwhile, despite visiting North Korea in 1986, Fidel Castro avoided creating a cult of personality resembling Pyongyang’s, as he felt that statues erected in his honor were incompatible with the Soviet Marxist-Leninist principles that he adhered to.

Despite their divergent development courses, both countries have remained close allies to this day, and there are signs that the bilateral relationship has strengthened further under Raul Castro’s rule. Panama’s interception of a North Korean ship in 2013 containing Cuban arms concealed under bags of sugar represented the most significant Havana-Pyongyang commercial linkage since the 1980s. Despite Cuban attempts to downplay the controversy, Panama’s foreign minister regarded this action as just part of a much larger Cuba-North Korea arms deal. U.S. Ambassador to the United Nations, Samantha Power, also condemned Cuba for violating international sanctions.

The U.S.-Cuba normalization has done little to shake Cuba’s close ties with North Korea. In March 2015, Cuban Foreign Minister Bruno Rodriguez declared that Cuba maintained solidarity with the North Korean regime, despite Pyongyang’s increased international isolation. Rodriguez justified his stance on the grounds that Cuban foreign policy is based on upholding just principles and resisting Western interference into the internal affairs of countries.

While leading North Korea expert Andrei Lankov interpreted these statements as proof that Cuba’s criticisms of U.S. imperialism would continue unabated despite the normalization, some NK News analysts have contended that Cuba’s show of support for North Korea may be more rhetorical than substantive. Cuba is mentioned only sporadically by the North Korean state media, and in a limited range of contexts. This suggests that the Obama administration’s Republican critics may have overblown the strength of the Havana-Pyongyang bilateral linkage.

Even if the extent of the relationship has been periodically exaggerated, Cuba’s September 2015 and May 2016 reaffirmations of an alliance with North Korea suggest that the ideological partnership remains alive and well. South Korean Foreign Minister Yun Byung-se’s visit to Cuba for the Association of Caribbean States (ACS) summit on June 4 and Seoul’s open calls for normalization with Cuba are unlikely to cause illicit trade between Cuba and North Korea to diminish or become more covert. This is because the symbolic significance of arms shipments and small-scale trade deals between the two countries still outweighs the economic benefits Cuba could glean from enhanced South Korean capital investments.

How Illegal Trade Persists Between Cuba and North Korea

Despite the immense international controversy resulting from Cuba’s 2013 arms sales to North Korea, sporadic trade linkages between the two countries have continued largely unhindered. In January 2016, Cuba and North Korea developed a barter trade system, which officially involved transactions of sugar and railway equipment.

According to Curtis Melvin, an expert at the Washington D.C.-based U.S. Korea Institute, barter trade is an effective way for Cuba and North Korea to evade international sanctions without depleting their hard currency reserves. Cuba’s use of sugar as a medium of bilateral trade has close parallels with Myanmar’s historical use of rice in exchange for North Korean military technology assistance. This form of trade has been vital for the North Korean regime’s survival in wake of the Soviet collapse and more inconsistent patronage from China.

While Cuba’s ability to use North Korean railway equipment remains unclear, NK News reported in January that Kim Jong-un was planning to modernize the DPRK’s railway networks, This development initiative could result in heavy industry production that can be bartered to Havana.

While trade in civilian goods between Cuba and North Korea appears to be on the upswing, trade in illicit arms continues to be the most symbolically potent and controversial form of bilateral trade. A 2013 Stockholm International Peace Research Institute (SIPRI) report noted that a large number of North Korean arms brokers speak fluent Spanish. This language training demonstrates the importance of Cuba as a trade destination for the DPRK. The SIPRI report notes that Cuban arms dealers are especially attractive because they can deal with North Korea with a sense of impunity. This contrasts sharply with a British arms dealer who faced prison time in 2012 for purchasing North Korean weapons.

While the 2013 incident remains the most recent confirmed incident of weapons trading between Havana and Pyongyang, recent revelations of a lost U.S. Hellfire missile turning up in Cuba have sparked fresh concerns about a revival of the long-standing arms trade.

Cuba has consistently insisted that its arm shipments to the DPRK are for repair purposes, and therefore do not violate sanctions, which only ban one-way arms transfers. But Mary O’Grady of the Wall Street Journal recently speculated that Cuba’s intelligence sharing and close cooperation with the DPRK constituted a highly pernicious blow to the prospects of U.S.-Cuba normalization.

While the Obama administration has removed Cuba from the state sponsors of terrorism list and taken a big stride toward lifting the Kennedy-era embargo on Cuba, Havana’s continued cooperation with Pyongyang is an alarming blow to the normalization process. The current linkage between anti-Americanism and the Cuban Communist Party’s regime security makes a shift in Havana’s North Korea policy unlikely in the short-term. It remains to be seen if Castro’s planned retirement in 2018 will take Cuban foreign policy in a more pragmatic direction, and allow South Korean diplomatic overtures to finally be successful.

 

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CUBA’S FAST-GROWING MARIEL TARGETS TRANSSHIPMENT CARGO

JOC, MAY 19, 2016

Greg Miller

Original Article: http://www.joc.com/port-news/international-ports/cuba-port-plans-be-transshipment-hub-after-us-lifts-embargo_20160518.html

Cuba’s Mariel container terminal has already planned its transformation into a major transshipment hub after theU.S. trade embargo ends, according to TC Mariel General Director Charles Baker.

In an address to the Caribbean Shipping Association Executives’ Conference held near Port Canaveral, Florida, Baker described surging growth at TC Mariel, its short- and long-term expansion plans and strategy to diversify beyond domestic cargo into transshipment.

The PSA International-operated terminal opened in January of 2014. Throughput at Mariel grew 35 percent in 2015, reaching 330,000 twenty-foot-equivalent units, and is up 29 percent year-to-date this year as a result of Cuba’s “booming” tourism trade, Baker said.

The container terminal has four gantry cranes, 2,296 feet of quay and a capacity of roughly 800,000 TEUs annually. In the next two to three years another 984 feet of quay will be added so that two neo-Panamax ships may berth simultaneously. Mariel’s channel, deep enough for Panamaxes at present, will be dredged to neo-Panamax depths by 2017. Over the longer term the terminal will add another 5,577 feet of quay and boost annual capacity to 3 million TEUs. There are also plans to add general cargo, dry bulk and roll-on, roll-off terminals to the port.

Much hinges on Mariel’s location in Cuba’s far northwest.

Skeptics of the port have argued that this location is unsuitable to transshipment because the east-west services that pass through the Caribbean on their way to the U.S. pass by Cuba’s southeast corner, near Guantanamo Bay. They believe the additional transit time to Mariel would be too great.

Baker, however, believes that Mariel can use its location to its advantage.

He said Mariel aims to be the first port of call for neo-Panamax container ships after passing through the Panama Canal to the U.S. East Coast, with feeder services providing direct connections from Mariel to Gulf Coast ports in Tampa, Florida; Mobile, Alabama; New Orleans, Louisiana; Houston, Texas and Altamira, Mexico.

“It will be a challenge to attract the bigger vessels (that will serve the region after Panama Canal expansion) to circle into the U.S. Gulf, because there would not be enough time in their schedules,” he said, explaining why carriers would prefer to use a hub to serve Gulf ports. Dropping cargo off in Mariel and feedering it to Gulf ports would also be more attractive to shippers, given “vastly improved” transit times, he said. “Today, to ship to Mobile, you’ll have to wait for the vessel to sail in and out of Houston and New Orleans before it gets there.

“When we talk to the carriers and the ports, they do recognize (the benefits of) our geography, but they also recognize very clearly that the U.S. embargo stands in the way of the opportunity we have here,” he said.

Although the embargo is the biggest hurdle to Mariel increasing its transshipment business, another issue is current U.S. law, which dictates that a vessel regardless of flag cannot call at a U.S. port within 180 days of calling in Cuba. This effectively prevents transshipment from Mariel because any vessel deployed for feedering would lose the flexibility to call in the United States for an extended period, and more importantly, mainline vessels cannot sail to final destinations in the United States after dropping off transshipment cargo (bound for non-U.S. destinations) in Mariel.

A repeal of that 180-day rule would be “tremendous” for TC Mariel, Baker said. “It would allow us to enter the international transshipment market.” Baker recently traveled to Washington, D.C., to meet with Congressional staffers and push for an end to the rule.

TC Mariel also benefits from its location within the enormous Special Development Zone of Mariel, or ZED Mariel. “This zone is very, very important and very high on the agenda for the Cuban government,” said Baker. “It has a special set of laws and regulations that are very advantageous to investors and it is the first part of Cuba that allows 100 percent foreign ownership. It is 465 square kilometers (180 square miles) in size, which is half the landmass of Singapore. It is probably the largest greenfield industrial development zone in the world — and it really is green. There is literally nothing there today,” he said, noting how rare it is to have a major port adjacent to a huge expanse where logistics, assembly, industrial and warehousing facilities can be developed without space restrictions.

Interest in ZED Mariel continues to grow and more investments are being made.

“There is a lot of European interest now because they have realized that if the embargo disappears, they will be facing intense pressure in a market where they’ve been well protected from U.S. exporters for the last 54 years,” said Baker. “Some of them are realizing that the way to maintain their market share is to plant themselves in Cuba (before the end of the embargo). They also realize that going forward, there will be a wonderful opportunity to export to the world’s largest consumer market, only 90 miles away.”\Mariel Port, Cuba zz zz1

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