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HavanaJournal.com: Cuba Business

Cuba Trade: ‘Don’t Ask, Don’t Tell’

Posted June 17, 2005 by Cubana in Cuba Business.
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Embassy, June 15th, 2005
NEWS STORY
By Sarah McGregor

Canadian firms manage to do business with Cuba in the shadow of restrictive U.S. policy

Carpets, computer hardware and newsprint are some of the household items crammed into large containers and loaded onto one of four cargo ships that leave the port of HaIifax on a non-stop Atlantic voyage to Havana each month. “Cuba needs a lot of products,” said Bill Shatner, a sales representative for the Cuban-based shipping company Melfi Container Lines. “It’s not an easy market to deal with, but it’s been busy.”

Canada is Cuba’s third-largest trading partner, with about $900 million in two-way exchange in 2004, behind only Venezuela and Spain.

But it’s a trade statistic many in the Canadian private sector are loath to admit for fear it could rattle much more lucrative trade deals with the United States. The U.S. has in place an almost 45-year economic embargo against Cuba, and anti-Cuban legislation reaches beyond domestic zones. The toughest is a rarely enforced American law that punishes foreign companies doing business in Cuba. It has had a “chilling effect” on the expansion of Canadian commercial ties with the Caribbean nation, according to International Trade Canada.

An American presidential waiver every six months blocks a section of law that allows U.S. citizens to sue foreign investors in Cuba that exploit property seized by Fidel Castro’s regime. Another provision of the so-called Helms-Burton Act allows the U.S. to deny visas to businesspeople with links to Cuba.

Canada responded to the legislation in the early 1990s by passing a blocking order, ensuring that Canadian companies only abide by national laws and regulations not those of a foreign country. But these measures, for the large part, are untested. Sherritt International is the only Canadian company found to have disobeyed the U.S. law by taking property once owned by Americans.

“We have no problems dealing with Cuba,” said Andre Lemay, a spokesperson for ITCan. He explained the chilling effect to be: “If you have Canadian companies that slow down or pull back from dealing with Cuba because there is concern that their business with the United States will take a hit. It’s like a sword hanging over your head. You do one thing… and it could come down or not.”

Last month, ITCan helped the Cuban government promote an economic seminar attended by about 80 Canadian businesspeople over two days in both Montreal and Toronto. Cuban trade officials traveled to Canada to convince executives that the investment climate is warming. But some corporations are weary of possible legal pitfalls.

A representative, who asked not to be identified, of a large-scale distributor based in Canada said his company delivers products to a separate Canadian company that makes shipments to Cuba. This sales chain presents a legal grey area because his firm is a wholly owned subsidiary of an American corporation.

Diversifying trade

Nickel accounted for 96 per cent of Cuban exports to Canada last year, and also included seafood, cigarettes or cigars, copper, spirits, fish and coffee. “Our goal is to diversify the variety of products to be exported,” said Sonia Noa Valdes, a Canadian desk officer of the Cuban Ministry of Foreign Trade. The expansion could include non-traditional items such as organic produce, diet and antioxidant products. Canada ships mostly machinery, sulfur, computers parts and newsprint. Meanwhile, Canada is the top source of tourism for Cuba, providing about 500,000 visitors in 2003.

The trade relationship is showing signs of improvement as Cuba has reopened its border to beef imports, including live cattle since March, according to Mary Carmen Arencibia Vazquez, a commercial affairs counselor with the Cuban Embassy in Ottawa.

Bryan Whittaker, of Bryan Distribution of Montreal, said he was dining on Japanese food in Cuba when the absence of ginger a staple of the cuisine shone a light on potential opportunities. “It’s those small things missing that you hear people complaining about,” he said. “There is money to be made.” But he admitted that the restrictions on “freedom” in the nation are an enormous barrier. “It’s not easy to get products to them,” he said. “But the States don’t bother me one bit.”

Gaston Jacques, of the Ministry of Economic Development for the Quebec government, said he leads a trade mission of about 10 provincial companies to Cuba annually. “They are afraid that the U.S. could cut their trade with them,” he conceded. “Even if they are afraid, they do it anyway. The American government hasn’t really been a block for our Canadian companies yet.”

International trade promoters in Havana said that Canadian companies are usually curious about the “discriminatory” economic embargo against the island nation of 11.2 million people. But that doesn’t stop the relationship from blossoming, said Nidia Banos Ojeda, of the marketing division of the Centre for Export Promotion of Cuba. “I think Canadians feel independent that’s from my point of view as a Cuban,” she said.

This year, Canada and Cuba mark 60 years of diplomatic relations.

“This is a minor issue and every once in awhile it erupts,” said Michael Hart, a fellow of the Centre for Trade Policy and Law at Carleton University. “We are not dealing with a major trading power in the Caribbean.”

The United States maintains that the Helms-Burton law doesn’t prohibit free trade with Cuba but rather protects illegally confiscated American property. Economic sanctions were implemented almost 45 years ago in an attempt to foster change in the nation.

Canada believes that political reform, and greater respect for basic human rights, will coincide with deeper economic integration in Cuba.

Member Comments

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On June 18, 2005, jesusp wrote:

A simple statement that says it all, “Canada believes that political reform and greater respectfor basic human rights will coincide with deeper economic integration in Cuba”.