The missing business boom for U.S. companies in Cuba

The missing business boom for U.S. companies in Cuba
November 1, 2016, 8:48 AM

HAVANA - For a while Saul Berenthal and Horace Clemmons were the
70-something poster boys of U.S.-Cuba detente.

The retired software entrepreneurs made worldwide headlines by winning
Obama administration permission to build the first U.S. factory in Cuba
since 1959. Cuban officials lauded their plans to build small tractors
in the Mariel free-trade zone west of Havana. But after more than a year
of courtship, the Cuban government told Berenthal and Clemmons to drop
their plans to build tractors in Cuba, without explanation, Berenthal
said Monday.

A month-and-a-half ago, their first tractors started rolling off the
assembly line -- in the town of Fyffe, Alabama, population about 1,000.

"Producing the tractors in Mariel was not going to happen," Berenthal said.

He said the company is already selling tractors to customers in the U.S.
and Australia, and has had inquiries from Peru, Mexico and Ethiopia. He
also still hopes to sell to Cuba.

Two years into President Barack Obama's campaign to normalize relations
with Cuba, his push to expand economic ties is showing few results.
Apart from a few marquee deals for big U.S. brands, formal trade between
the two countries remains at a trickle.

The mood was subdued among U.S. companies exhibiting Monday at the
International Fair of Havana, the island's biggest general-interest
trade fair. As Cuba trumpeted new deals with Russia and Japan, U.S.
corporate representatives staffing stands at a pavilion shared with
Puerto Rico said they saw little immediate prospect for doing business
with Cuba.

"We know we have to be here, to show our willingness to be here," said
Diego Aldunate, Latin America director for Illinois-based Rust-Oleum paints.

He and a colleague, Oscar Rubio, said they were waiting for potential
clients from Cuba's small worker-owned cooperative sector to stop by
their stand, but by midafternoon no one had appeared.

The Cuban government maintains a monopoly on importing, exporting and on
virtually all sales of products inside the country, making the state
bureaucracy the final arbiter of what business gets done.

"The complicated thing is that the distributor is the government, and we
don't know how that will work," Rubio said.

Obama has enacted six rounds of regulations punching holes in the
half-century-old U.S. trade embargo on Cuba, allowing imports and
exports, sales to the socialist government and limited U.S. investment
on the island. Cuba has allowed Airbnb, Starwood (HOT) hotels and 10
U.S. airlines to set up operations.

Cuban officials blame the remaining provisions of the embargo as the
true obstacle to greater trade with the U.S., placing constant and heavy
emphasis on what they call "the blockade."

"The blockade remains in force, the absurd commercial and financial
blockade," Cuban Commerce Secretary Rodrigo Malmierca said at the
ceremony opening the fair Monday. "This is causing great damage to the
Cuban people, and it's the principal obstacle to the normalization of
relations between Cuba and the United States."

Observers note that Cuba's small but growing private sector has been
able to flourish and produce tens of thousands of new jobs despite the
strictures of the embargo. Untold millions of dollars have flowed into
Cuba over the last two years, funding thousands of new private
bed-and-breakfasts and dozens of new restaurants in the capital as
detente with the U.S. sets off a boom in tourism to the island.

Some see the stagnant state of official trade with the U.S. as a
conscious decision by the Cuban government to limit commerce to a few
high-profile bites of the apple while funneling most business toward
European and Asian companies, in order to keep the U.S. business
community hungry for more and pushing Congress to do away with the embargo.

"The Cuban government is using the interest by U.S. companies as bait to
entice the interest of companies in other countries," said John Kavulich
of the U.S.-Cuba Trade and Economic Council, a private group that
produces mostly skeptical analyses of the prospects of U.S.-Cuba trade.
"The Cuban government is saying, 'Let's not give any more than
absolutely necessary to U.S. companies,' so that the companies will
continue to salivate toward illusory potential opportunities. There's
far more inspiration and aspiration than reality."

Source: The missing business boom for U.S. companies in Cuba - CBS News
-
http://www.cbsnews.com/news/the-missing-business-boom-for-u-s-companies-in-cuba/