(Extracted from the Caribbean Business Report-Jamaica Observer – December 11, 2015)
ENTREPRENEURS are being advised that the ongoing economic embargo against Cuba creates room for Caribbean and Latin American firms to create and strengthen trade links with the Caribbean island before the blockade, which restricts trade by US firms, is lifted.
At the same time, they are being warned that trade with the US itself might be affected, so firms with an interest in investing in Cuba should seek legal advice on how to avoid punitive action.
In December 2014, after over 50 years of a blockade, US President Barack Obama began a series of changes in the USA’s economic and diplomatic policy toward the island. Changes have worked to provide opportunities for increased trade and investment. However, under existing legislation, US firms remain restricted in the gamut of commercial activity which can be pursued.
Diane Edwards, president of the Jamaica Promotions Corporation (JAMPRO), speaking at a Cuba Demystified CEO Forum sponsored by PricewaterhouseCoopers Jamaica, JAMPRO and NCB Capital Markets on December 4, said, based on Jamaica’s “proximity and open, liberal economy, Jamaica has the potential to position itself as a gateway to Cuba specifically in the area of logistics.
“We encourage Jamaican companies to partner with international firms to take advantage of the simpler operating environment in Jamaica and the modern, efficient, port of Kingston, as the warehouse and entrepot port for goods entering the Cuban market from international suppliers, particularly to supply the Cuban hotel sector. Jamaican logistics companies are uniquely placed to leverage our location and trading relationships,” she stated.
She also said local firms could export “sophisticated management services to the Cuban market, from tourism management to market research to telecommunications”.
Other speakers noted that, aside from the laws enforcing the US trade embargo, the Cuban Government itself had its own set of rules that investors should seek advice on.
Cuban law still restricts local entrepreneurs from contracting directly with foreign suppliers or wholesalers; instead, they must contract from State agencies. There is room for trade arrangements; however, so long as they can be shown “to support the Cuban people”.
It was also pointed out that a two-tiered currency system and complex labour laws present a challenge. Companies in the resort and other sectors pay wages to government agencies which in turn pay workers.
Edwards noted there was the possibility of an agreement between Special Economic Zones in the two countries (at both the authority and enterprise level); and cooperation on logistics with special reference to transportation linkages and trade in services.
Other initiatives between Cuba and Jamaica include public-private partnerships to establish trade representation in Havana and the establishment of a Joint Jamaica-Cuba Business Council.
“There has been so much speculation, scaremongering and half-truths about the opening up of Cuba…[however] opening up of the Cuban economy to international business will have a seismic impact on the entire Caribbean which we must understand, benefit from, and adapt to. The Caribbean is becoming one market, breaking down the barriers of language, transport and international law,” Edwards said.
She cited one company, Agri Chemicals, which has established a strong trading relationship with Cuba, adding: “In the past year, we have taken 15 companies on a trade mission to Cuba to meet their counterparts at the Cuban Chamber of Commerce and interact with key Cuban importers.”
Steven Gooden, CEO of NCB Capital Markets, said at the forum that, while some fear the development of a Cuban market, many more are showing strong interest in entering the country and exploring business opportunities.
Despite its modest size, the Cuban economy remains a considerable untapped market for certain businesses,” he said, citing agribusiness and telecommunications.