Cuba's trade prospects challenging

Cuba's trade prospects challenging

U.S. exports to Cuba are strictly limited to agricultural products, but
that can mean everything from wooden telephone poles to M&Ms.
Posted on Wed, Sep. 19, 2007
BY JANE BUSSEY
jbussey@MiamiHerald.com

Though Cuba's economy is small -- close to the size of that of the
Mexican city of Guadalajara -- it still offers interesting prospects for
commerce, trade experts said Tuesday.

Without a nod to the highly charged political issues that usually swirl
around Cuba, the SeaCargo Americas Conference dissected the Cuban
economy and its trade and economic potential in a roundtable Tuesday.

''It is limited,'' said John Price, president of the business consulting
group InfoAmericas. ``But Cuba is interesting as a trading partner.''

According to Price, because the Cuban economy doesn't have a lot of
productive sectors, it has to import about $10 billion a year in goods.
Oil products account for about a third of those imports.

Despite the U.S. trade embargo, the United States is still one of the
largest exporters to Cuba, though its exports -- largely food and
agricultural products -- reach only about $350 million a year and have
fallen slightly as Cuba has turned to other countries for food imports.

But Cuba is riding the same crest of commodity exports that is buoying
economies in much of South America, helping its economy to grow 9.5
percent in 2006 and 8.5 percent in 2005, Price said.

RECENT IMPROVEMENT

Although some economists question Cuba's reported economic growth, there
is no doubt that the Cuban economy has performed much better in the past
few years than over the previous decade.

Part of that growth comes from a huge jump in the price of nickel, which
is being exported for the rapidly growing stainless-steel industry in
China -- the world's No. 1 producer of stainless steel.

Subsidized oil products exported from Venezuela also have reduced the
vulnerability of the Cuban economy, Price said.

The well-attended panel came on the final day of a two-day meeting that
looked at challenges facing the sea cargo industries, ranging from
security issues to the changing marketplace.

''This presentation is about business and not politics,'' said moderator
Manuel Almira, the assistant director for business Development at Port
Everglades, as he introduced the Cuba panel.

The U.S. embargo against Cuba means that all U.S. exports to the
country, whether express packages or shiploads of rice, wheat and corn,
must receive a U.S. license and the Cuban government must pay before the
goods are shipped, said Jay Brickman, vice president of Crowley Liner
Services in Fort Lauderdale. Crowley runs a weekly container service to
Cuba.

MUST BE AUTHORIZED

U.S. exports are limited to authorized agricultural products, Brickman
added.

'The question we were asked constantly was `Does it include M&M'S
[candies]?' '' Brickman said. ``And the answer is yes.''

Brickman also noted that the United States is a big exporter of
telephone poles -- also considered agricultural products -- heading
south to Cuba on barges.

Despite Crowley's regular service to Havana, Brickman said containers
return empty because they are not authorized to carry any goods from
Cuba to the United States. He noted that Cuba's main import agency,
Alimport, handles the logistics and negotiates competitive
transportation contracts along with the goods.

''When they sit down to negotiate their contracts, they come very well
prepared,'' Brickman said, adding that Alimport has offices in Europe,
Asia and Canada and knows transportation pricing.

Like the rest of the region, Cuba faces major challenges in how to
stretch its limited resources.

Price pointed out that nickel prices are falling and that the tourism
sector has the worst record in the Caribbean in attracting return visitors.

Capital for future investments will need to come from outside Cuba, and
the future depends on Cuba's ability to attract those investments, Price
said. U.S. companies are not allowed to invest in Cuba and U.S. service
firms also do no business there.

http://www.miamiherald.com/news/americas/cuba/story/242591.html