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Easing of US travel restrictions to Cuba has set of well-publicized and highly politicized debates but to a lesser degree, US – Cuba business relations are progressing smoothly. The US presents mind-boggling potential for Cuban exporters just as Cuba has already been targeted for exports by many US businesses.

On February 12, 2015, a group of US Senators led by Republicans Jeff Blake and Mike Enzi and Democrats Patrick Leahy, Richard Durbin and Debbie Stabenow introduced a bill that would effectively repeal laws prohibiting Americans from doing business in Cuba. A key element of the proposed legislation was that the bill would not repeal laws that address either human rights issues or the many property claims against the Cuban government, a long-standing source of contention.

Havana_-_Cuba_-_0506

It is anticipated that this bill, one of many that will be presented in the near future, will pose challenges for anti-travel and trade advocates like Republican Marco Rubio. US delegates continue to negotiate a number of travel and business resolutions to gradually normalize relations after 60 years of an ineffective blockade. However, with Raul Castro scheduled to retire in 2018 and with Fidel Castro’s lingering health problems, a freer Cuba is most likely on the horizon.

Interested in Cuba’s real estate, telecommunication or tourism industries? Contact Dave at Info@travelguidecuba.com.

Lakers fan in Trinidad

State Owned vs. Privately Owned Trade

On February 13, US News & World Report reported an announcement from the Obama Administration that businesses in Cuba’s small, private sector would be permitted to sell and exports goods to the US. This plan presents logistical and regulatory challenges for Cuba but is certainly a step forward.

The accommodation underscores the difference between the Administration’s support of privately held entities and government owned businesses. There are essentially three types of legal business enterprises on the island;

  • State controlled
    Private businesses
    Private-state integrated businesses or Cooperatives

Under the new arrangement, Cuba’s private sector is permitted to sell anything except food and agricultural products, alcohol, minerals, chemicals, textiles, machinery, vehicles, arms and ammunition. Imports from Cuba to the US must be produced by a 100 percent, privately held Cuba business or an independent individual in any of the dozens of product categories approved by the regime.

Exports away

In a nation of 12 million residents, only about 484,350 inhabitants are employed in the private sector. Obviously, this is an area where the Administration would like to see expansion. Raul Castro originally placed emphasis on development of a larger private sector but, of late, initiatives have stalled. About 25 percent of private sector employment is in the areas of transportation, food sales and housing rentals.

Worker-owned cooperatives, or private-public integrated businesses, pose both potential and obstacles for import trade. On the surface, these entities appear privately run but they are closely linked to the state and therefore not yet eligible for imports. Many Cuban farms fall into this category.

Cuban art 2

Telecom Good to Go

Obama has authorized US telecom companies to deal directly with the state. On Feb 23, 2015, IDT Corp, a New Jersey-based company, sealed the first telecommunications deal with Cuba under the new statutes. IDT employs about 1,100 people and generated about $18.8 million in profits on $1.65 billion in revenue in 2014.

Internet_en_escuela_de_Cuba

IDT will offer international calling cards that can be used in Cuba. Previously, US calls to Cuba have run through third-country providers. like Spain and Italy. The country’s phone rates are the most expensive in the Americas and represent a significant source of income for the state. IDT was hesitant to predict lower rates but this initiative certainly opens the door for better service and more favorable rates down the road.

CEO Bill Pereira told the AP, “We hope that this is the beginning of something of a relationship that will allow us to build and grow and facilitate and ease communication between family members and loved ones.”

Bank Building in the Matanzas City

Coincidentally, Cuba announced significantly reduced Internet fees, as low as $2.00 per hour, last week. Administration believes that opening telecommunications and Internet services is one avenue to a more liberated Cuba. Tourists feel the same way.

Interested in Cuba’s real estate, telecommunication or tourism industries? Contact Dave at Info@travelguidecuba.com.

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    […] US – Cuba Business Game On! – Travel Guide Cuba http://www.travelguidecuba.com/Easing of US travel restrictions to Cuba has set of well-publicized and highly politicized debates but to a lesser degree, US – Cuba business relations are progressing smoothly. The US presents mind-boggling potential for … […]

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