http://havanajournal.com/business/entry/more_us_companies_exporting_goods_to_nation_despite_white_house_unease/

HavanaJournal.com: Cuba Business

More U.S. companies exporting goods to nation, despite White House unease

Posted March 03, 2005 by Cubana in Cuba Business.
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By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
March 3, 2005

San Diego Port Commissioner Khoroush Hangafarin touched off an uproar last week when he signed a trade pact with Cuba, which was almost immediately renounced by the port.

But the controversy surrounding Hangafarin’s visit has obscured the fact that a growing number of U.S. ports and companies have been exporting goods to Cuba, overcoming hurdles that have been put in place by the Bush administration.

Since 2000, when a 40-year-old ban on exporting goods to Cuba was altered to allow for shipments of food and medicine, U.S. companies have sent $792 million worth of goods to Cuba. When combined with donations, the three-year trade figure tops $800 million.

So far, most of the trade has come from the farmlands of the Midwest, with agriculture giants Archer Daniels Midland and Cargill making most of the exports mainly bulk supplies of corn, wheat, rice, soy products and dry milk.

But California companies have been angling to get some of the business as well, ranging from Vineyards International, a wine distributor in San Pedro that has sent two shipments of California wine to Cuba, to Lozen International, a food wholesaler in Ventura that has sent 80 tons of California grapes.

For most of the businesses, trade with Cuba is relatively minimal. But they hope that by getting their products into the island nation during the earliest stages of its opening, they will be able to rapidly expand as the economy opens up.

“The average Cuban doesn’t have a lot of expendable income, so right now there’s a limited market for California grapes, although they’ve enjoyed what we’ve shipped so far,” said Dean Myring, who oversees Lozen’s trade with Cuba. “But when you’re in a competitive business, it’s nice to be a pioneer in an emerging market. And once it opens up, there’s going to be tons of opportunity, since they’re only 80 miles away from our southern shores.”

The United States imposed sanctions against Cuba in 1963, in the wake of the Cuban Missile Crisis. Those sanctions remained intact until 2000, when Congress voted to allow food and medical sales. But trade did not begin until December 2001.

Since those restrictions were lifted, Cuba has become the 25th-largest market for U.S. farm goods. And the United States now ranks as Cuba’s seventh-largest trading partner.

“Cuba has increased its purchases steadily over the past three years with the goal of using its purchases to influence U.S. policy, with the hope of encouraging the public to push for greater openings for travel and trade,” says John Kavulich, head of the U.S.-Cuba Trade and Economic Development Council, which monitors trade with Cuba.

But the Bush administration which has a powerful political base among anti-Castro Cubans in Florida has felt increasingly uneasy about the trade ties.

Over the past three years, the administration has tried to slow the growth of trade with Cuba. Business travel licenses that were once issued in 48 hours or less now take as long as 30 to 45 days. U.S. banks are now required to have specific licenses to receive funds that are intended to pay for Cuba exports.

The latest restriction came last week, when the administration said Cubans must pay for goods in cash before they are loaded onto ships in the United States. Previously, the Cubans were required to pay for the goods before they reached the docks in Cuba.

“Economic sanctions against rogue nations including denying them access to the U.S. financial system and hard currency can prompt real and positive change by pressuring regimes to change behavior or policies,” reads a Treasury Department policy statement on Cuba and other nations.

But a number of business leaders and economists dispute that view.

“We’ve had trade sanctions in effect for 40 years, and Castro is still in power,” said Jody Frisch, a Cuba specialist with the National Foreign Trade Coalition. “There’s no logical reason why we should continue to have sanctions against Cuba when we’ve dropped them against other countries.”

Despite the restrictions, trade between the United States and Cuba has been advancing at double-digit rates. And California companies are getting into the action.

City Seafoods, a seafood distributor in Los Angeles, sent the first seafood shipments to Cuba in nearly 40 years when it shipped a 20-foot container of frozen fish in 2003. The company sent another container last year and is planning more shipments.

“Considering the percentage of profit we made on the sale, the fact that we received cash in advance and the relative ease we went through in our negotiations, it compares pretty well with our experiences in the rest of the world,” said Joe Heidelmaer, vice president of City Seafoods, whose sales to Cuba have totaled $380,000 so far.

For Chris Nielsen, head of Nielsen Citrus Products in Whittier, recent exports to Havana have restored an old relationship between his company and Cuba. In the late 1950s, before Castro’s revolution, Nielsen’s father sold lemon and lime juice to Cuban hotels, restaurants and bars.

Nielsen returned to Cuba in 2003, making a presentation with the same product, packaging and items. He ended up selling a 20-foot container of juice to the Cubans, and now he’s working on a second shipment.

Nielsen said the main difference between selling his goods to Cuba and other markets is that “you’re selling to a government that’s essentially distributing the product to itself or its people. It’s not a free-market distribution where people go into a store and say, ‘I want this particular item.’ The government decides what they want.”

Not all the businesses that have scouted for trade in Cuba have found what they were looking for. Some such as Bumble Bee Seafoods felt the market was not yet ready for their goods. Others such as C-Shore International, a food exporter in Glendale found the hurdles to doing business a bit too high.

Jacques Isaac, who oversees business development at C-Shore, had a deal to sell 10,000 metric tons of peas and pinto beans to Cuba.

But Isaac found it hard to obtain financing or insurance from his traditional sources, including the Small Business Administration and the U.S. Export-Import Bank.

“Nobody in the federal government would help me out, because they have a problem with Castro,” he said. “In the meantime, there are plenty of farmers in Canada who are shipping pintos and green peas.”

In addition, Isaac said, California companies are at a disadvantage because West Coast ports do not ship goods to Cuba. All exports from California have to be sent by train or truck to New Orleans or other ports on the Gulf Coast, adding to the cost.

“If you put a link between Cuba and a California port whether it’s San Pedro, Long Beach, Los Angeles or Oakland they’ll soon be buying our nuts, wine or any other type of agricultural commodities,” he said.

In the end, Isaac’s deal fell through. But he still touts Cuba as a good market for California farmers.

“Cuba’s a huge market, with 11 million people who are more than happy to buy California goods,” he said. “It’s a huge opportunity for exporters not only in California but all over the United States.”

Member Comments

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On March 03, 2005, jesusp wrote:

Cubans want to buy American goods, Americans want to sell goods to Cuba, the Cuban government will pay cash for goods, so what is the obstacle? I’ll tell you what, the U.S. government can not stomach the fact that Mr. Castro has been able to endure all they have thrown at him for the last 42 years. That is the simple truth.

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On March 03, 2005, YoungCuban wrote:

Good for them for trying to continue to negotiate with Cuba,it is this kind of motivation that will one day open the eyes to the world that a relationship with Cuba is for the best for Cuba/US relations.

To jusy lay down without a fight is worthless for everyone involved.