Once done right, tapping into the Cuban market is going to be nothing but lucrative for TT

The US Government’s decision to exclude Cuba from the Free Trade Area of the Americas (FTAA) has done nothing to dampen this country’s appetite for trade with the island.

In the face of US opposition, TT, along with other members of Caricom, have instead sought to strengthen relations with a Fidel Castro’s country, a virtual pariah in the international community. Local manufacturers have set their sights on the TT$90 million to be derived from trade between the two countries. The TT Manufacturers’ Association (TTMA), in collaboration with TIDCO and Republic Bank Limited has organised a trade mission to Cuba, scheduled for June 25. This is the second such mission, the first having taken place in the year 2000. TT is hoping to increase its exports to Cuba past the $79 million figure of last year.

President of the American Chamber of Commerce (AmCham), David Chaney, expressed his support for TTMA in its efforts to boost trade with the communist island. He noted that 75 percent of AmCham companies were local businesses seeking to expand their trade and investment opportunities and market access. Additionally,  many of the Chamber’s members were members of the TTMA. “If Cuba presents itself as a good market for trading in TT goods and services, then any benefit from expanding business opportunities in Cuba will rebound to AmCham members,” he said. “So we see the TTMA trade mission to Cuba as a positive initiative, one that we will encourage our members to take advantage of.” Chaney could not see the initiative having any negative effect on TT business relations with the US. Many of the US’s trading partners in the Western Hemisphere have recognised that Cuba offers good business potential and have been working on building bi-lateral relations with Cuba, he said.

With respect to Cuba/US Unilateral Sanctions, Chaney disclosed that AmCham’s parent organisation, the Association of American Chambers of Commerce in Latin America (AACCLA), has long argued that unilateral sanctions do not achieve their intended objectives and often undermine US national interest. “Such sanctions,” Chaney asserted, “make martyrs out of tyrants and benefit non-US companies by clearing the field of some of their strongest competitors.” “A more effective approach is to expand the international rules-based training system and broaden US engagement,” he said. Cuban Ambassador to TT, Felix Rojas, expressed his happiness with the decision of local manufacturers to take their business to his country. He said that his government had long desired to establish a solid relationship with its Caribbean counterparts, especially Trinidad and Tobago, which had much to offer.           

“It has not been easy to reach this point,” he maintained. “Cuba has undergone some very difficult times, probably more difficult than many other countries. Nevertheless we have reached the acceptable level to warrant business from TT. According to TTMA President Anthony Hosang, Cuba is potentially the largest market near at hand and a prime destination for local manufacturers. He lamented the fact the largest economic trading block (FTAA) will not include the largest Caribbean island. Cuba’s exclusion is based on the USA’s refusal to recognise the Communists as Cuba’s legitimate government, having stressed that only democratic governments can participate in the agreement. But critics point to China, where the US lobbied for the communist country to join the WTO. It’s no secret that US companies are looking at China’s untapped market.

Communists have governed Cuba since 1959. The US initiated a trade embargo on the country in 1962 and has constantly criticised Cuba’s human right’s record. Castro has never been allowed to participate in the Summit of the Americas. The US Government has also discouraged its hemispheric allies from establishing relations with Cuba, specifically with the Helms-Burton law which penalises companies which do business in both Cuba and the US. Nevertheless, local manufacturers seem intent on taking their business into Cuba. Hosang was unperturbed by this law, noting that there were many European and Canadian companies who continue to do business with Cuba. Additionally, he stated, Caricom had signed a trade agreement with the country in spite of this US policy.

Canada is believed to be the biggest single foreign investor in Cuba in dollar terms. In sharp contrast to the US, Canada has strengthened economic links to Cuba, becoming its biggest trade and investment partner. Two-way trade was estimated at more than Can $700 million in 1997. In some cases, investment by Canadian companies has directly increased Cuba’s output namely in the nickle and oil industries. Hosang said, “people who have visited Cuba have spoken of a country with different political and business systems, but one which is running successfully. It is a Caribbean country which has problems like any other country.” In 1994, only 500 American business people travelled to Cuba, whereas last year more than 3,500 reportedly entered the country. An increasing number of US cities and towns would like to establish ties with Cuba. More than 30 twin-city relations are in the process of being established. Among the US cities involved are Mobile (AL), Pittsburgh (PA), Bloomington (IN), Madison (WI), Tacoma (WA), Oakland (CA), Richmond (CA), Seattle (WA) and West Hollywood (CA).
Foreign companies are gearing up to position their brand names before American companies arrive in large numbers in Cuba. Since the early 1990s, the government’s decentralisation policy has led to an increase in the number of Cuban enterprises that now import a wide variety of products and services. Free trade zones have been created in anticipation of an opening-up of trade between Cuba and the US.

In 1999, the US Department of State reported that an estimated total of US $1.7 billion had been invested in Cuba since 1990. The largest sectors receiving foreign investment were telecommunications with US $650 million, Mining with US $350 million and Tourism with US $200 million. Since the 2000 trade mission, Hosang said numerous manufacturers have seen their businesses peak. They have continued to do business there in spite of the fact that regional policy of the last 50 years has left Cuba sealed off from her closest neighbours, making the communist nation virtually inaccessible. “However,” he went on, “the Caribbean knows that Cuba is an important part of our economic community and we are fortunate that it continues to welcome its Caribbean island neighbours with open arms.” He said that the TTMA was seeking to get over 18 companies from different sectors to participate in the mission. In a previous interview, former TTMA President and prominent businessman, Stuart Dalgleish, noted that there were numerous benefits to be derived from reciprocal trade with Cuba. Figures show that in 2002, TT exports to Cuba stood at TT $79M, while imports amounted to TT $1.4 M.

Major export products to Cuba included ammonia, bars and rods and petroleum products. Toilet and facial tissue, cigars and corrugated paper were among the major imports. However, Dalgleish cautioned that there were a number of economic differences between the two countries, ‘this is why I will advise caution where establishing a reciprocal trade is concerned.’ Deputy Managing Director of Republic Bank Limited, David Dulal-Whiteway, is optimistic that TT can capitalise on cementing trading relations. He said that there was presently in excess of TT $90M worth of trade between TT and Cuba. This was expected to increase significantly over the next few years once the proper linkages were formed. Republic Bank, he stated, has been conducting business in Cuba for over five years and last year established a representative office in the country, making Republic the first banking institution in the region to take this step. “So far, relations with the Cuban business community have been excellent,” he said, noting that Cuba is a large economy and offers significant opportunities for the manufacturing sector of TT.

Cuba presently has a population of approximately 11 million persons, 70 percent of which are centred in urban areas. Its workforce numbers 4.5 million — 30 percent being employed in government and services, 22 percent in Industry, 20 percent in agriculture, 11 percent in commerce and 11 percent and six percent in construction and transportation and communication respectively. The unemployment rate stands at 4 percent. Hosang knows that when Cuba’s ports are eventually opened up, there is going to be a surge in trade. “With its wealth of culture, history and high standard of scientific application whether as a consumer or producing nation, it is therefore incumbent for us, the business community and manufacturers of TT, to strengthen our business ties, trading and cultural relations with the Caribbean’s big sister.” His point was emphasised by Vishnu Dhanpaul, Acting President of TIDCO, who also stressed the importance of tapping into the Cuban market. “TIDCO’s mandate is to proactively promote inward investment, search out new markets and expand existing ones, one of which is the Cuban market,” he asserted. “We have already embarked on a pre-mission to the country,” he went on, “which revealed a strong friend, a large market and people with a very strong work ethic, a strong manufacturing sector and a tourism sector which is poised for take-off.” Minister of Trade and Industry, Ken Valley, complimented the Trade Mission noting that it was an imperative converting TT into a major manufacturing platform and a base for financial activity.

He noted that TT placed too much emphasis on the oil and energy sector without recognising the need for diversity. This was highly important in the present face of uncertainty in light of the war with Iraq. “If the US gets ahold of Iraqi oil, what will happen to the price of oil?” he asked. “The oil sector is important but right now it is marked with uncertainty,” he said, adding, “we need to emphasise at all times the non-oil sector of the economy for continued growth.” A Cuban delegation is expected to visit TT on May 8 and 9, just before the TT Trade Mission planned for late June.