By Michael Jones (email@example.com)
When I started blogging for TSI Global Consulting, the very first article series that I wrote was on the U.S.’s relationship with different embargoed countries, one of which was Cuba. At the time, the relationship between the two countries was still tense, mostly unchanged since the animosity began at the height of the Cold War. This historic animosity is the main reason why any thaw in relations between the U.S. and Cuba is so strange and jarring, much less the bombshell that was recently dropped by the Obama Administration. For those who are unaware, roughly a week ago, President Obama revealed that the U.S. and Cuba had been having secret meetings for the last year, which were brokered by Pope Francis and the Vatican, for the countries to normalize relations. Indeed, this is a huge step forward for these countries; however, it is also a drastic change from the status quo for those of us in the International Trade business. Based on the limited information that we have so far, this article will attempt to clarify what the current and potential future trade stance with Cuba is, as well as what potential business can be done there.
So what changes are happening in the U.S.-Cuban relationship? Well, many of you may be aware that this is not the first major change that President Obama has made in the U.S.’s Cuba policy during his terms; a few years ago, the President eased some restrictions on travel and the sending of remittances to Cuba, specifically for Cuban-Americans. While seemingly minor at the time, we can now see that this change was used as a basis for one of the current changes: as a result of these talks, President Obama has promised that free travel and spending in Cuba will be allowed for all Americans. This means that, should everything go as planned, American businesses will eventually be able to do business with Cuba. Tied to this change is the U.S. Government’s re-evaluation of Cuba as a State Sponsor of Terrorism – while no official change has occurred, President Obama seems to predict that those in charge of this re-evaluation will rescind it as well. If Cuba is no longer considered a State Sponsor of Terrorism, then many of the military and civilian components of the U.S. embargo will likely be lifted as a result. These two changes that were announced are the most general; however, more specific changes were included as well.
Two industries were specifically mentioned in the President’s explanation of the changes regarding Cuba. According to President Obama, the U.S. financial sector will be encouraged to begin working with the Cuban financial sector in order to promote the expansion of other U.S. businesses in Cuba when the time comes for them to be set up there. Additionally, the President noted that the U.S. will be encouraging telecommunications companies to go into Cuba in order to connect the isolated country with the outside world. What this means for those in these fields is that, while you have an excellent opportunity to become pioneers in the untapped market that is Cuba, you should be extra careful . Check and double check your exports and business with Cuba to make sure it is acceptable to both governments, at least until more formalized rules come into place.
That about sums up the changes that were announced last week – however, those without official confirmations about a future in Cuba would do well to plan as well. Of course, one of Cuba’s strongest economic sectors is its famed medical field, with pharmaceuticals projected to be Cuba’s largest export in the near future. For U.S. medical companies, this means an opportunity to collaborate with both Cuban pharmaceutical companies and doctors, but also with Cuba’s network throughout Latin America. Cuba has a history of supplying doctors throughout Latin America, and any business partners that you make in Cuba might have some valuable contacts in other parts of the region for you to develop. Additionally, since the embargo has blocked the entrance of U.S. drugs into Cuba, U.S. pharmaceutical companies would likely have a new market as well. Those in the industry of tourism would do well to prepare as well – Cuba’s tourism industry has been touted by its government as the “heart of the economy”, and many U.S. based hotels and travel agencies could stand to profit from Cuba’s opening.
Many opportunities lie in this tiny island nation – the U.S. estimates that, under the embargo, the U.S. lost 1.2 billion dollars each year: hopefully, with it lifted, some of that money can be yours. However, as exciting as the changing relationship between the U.S. and Cuba is, one still needs to keep in mind that these negotiations are not set in stone, and that the changes have not yet begun to occur. If your company is still interested in pursuing connections in Cuba, give TSI Global Consulting a call at 210-757-0618 for a consultation.