New York, New York

309 Pages·2015·8.31 MB·English

by  John Kavulich

U.S.-Cuba Trade and Economic Council, Inc.
New York, New York
Telephone [phone] • E-mail: [email protected]

Internet: http://www.cubatrade.org • Twitter: @CubaCouncil
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CEO Update
Washington, DC
13 November 2015
Pittsburgh Tribune-Review
Pittsburgh, Pennsylvania
17 November 2015

Western Pennsylvania leaders explore potential in Cuba

By Aaron Aupperlee

In the streets of Havana, alongside exquisite architecture, Allegheny County Executive Rich Fitzgerald
saw ways Pittsburgh could help. Crumbling buildings, peeling paint and sagging infrastructure showed
decades of neglect.

“Obviously, this country has needs for a lot of things,” Fitzgerald said Monday upon his return from a
weekend in Cuba. “Our companies could provide a lot of those products if we could sell down there.”

He was accompanied on the trip by U.S. Rep. Mike Doyle, D-Forest Hills; Pittsburgh Councilwoman
Natalia Rudiak of Carrick; PPG Industries executives; representatives from three universities; and others.
Their goal was to lay the groundwork for trade and other opportunities on the island.

The trip, organized by the Pittsburgh-Matanzas Sister Cities Partnership, took them to Havana and to
Matanzas, a coastal city about 70 miles west of Havana. The sister cities partnership paid for Fitzgerald's
trip. The Hibernian Celtic Athletic Fund paid for Doyle's trip.

The delegation met with the officials from the Ministry of Trade and the Ministry of Energy and Mines,
among others. With aviation officials, they discussed a possible charter flight from Pittsburgh
International Airport to Havana. University officials talked about preservation efforts.
Pittsburgh Mayor Bill Peduto visited Cuba six months earlier with representatives from companies. The
island republic has a population of 11.38 million and a gross domestic product of $77.15 billion in U.S.
dollars.

President Obama in December restored diplomatic relations with Cuba, and the country opened an
embassy in Havana for the first time in more than a half-century.

Pittsburgh's politicians and business leaders are among several from across the U.S. to visit Cuba. They're
not alone: National Basketball Association star Steve Nash led a delegation of basketball players through
Cuba in April. Penn State University's baseball team is scheduled to travel there this month for exhibition
games.

Doyle's trip is the first by a Pennsylvania congressman, according to data from the U.S.-Cuba Trade and
Economic Council in New York.
“A lot of challenges, but a lot of potential,” Doyle said of Cuba. “There's tons of opportunity on the
energy side and the telecommunications side.”

John Kavulich, president of the trade council, said travel to Cuba has increased more than 30 percent
since Obama eased the travel ban — some of it questionable.

“Ninety percent of the business delegations that have gone in 2015 include individuals who have no need
to visit Cuba for commerce,” he said. “Most of it is aspirational and curiosity, as opposed to a rational
business need.”

But Kavulich didn't scoff at Fitzgerald's and Doyle's trip. Cuba wants goods like those made by H.J.
Heinz Co., PPG Industries, Mylan and other food, manufacturing and health care companies in Western
Pennsylvania.

That doesn't guarantee that Cuba will buy U.S. products. Cuba buys rice from Vietnam, for example, and
is given two years to pay for it, Kavulich said.

Pam Martin, a consultant at Molimar Export Consultants in Upper Dublin in Montgomery County, who
organized Peduto's trip to Cuba, said the political and business visits aren't media stunts but genuine
opportunities to make first impressions.

“It's very important to get your foot in the door now, because (otherwise) when it really opens up and
anyone can go, the Cubans won't know you,” she said.

Tony Plantz, national sales manager for Charleroi-based Ductmate Industries, went to Cuba with Peduto
and continues to pursue business there. He sent proposals to the Ministry of Trade and private industries.
His company makes heating and air conditioning systems and sees a need in Cuba.

“It's good to develop relationships as much as you can,” said Plantz, who hopes to return to Cuba in
February. “I know as soon as that embargo is lifted, everyone is going to try and get their piece of that
pie.”

The Des Moines Register
Des Moines, Iowa
14 November 2015

Vilsack: Cuba is great opportunity for U.S. agriculture

Christopher Doering
(Photo: Carolyn Kaster, AP)

WASHINGTON — The United States stands to gain a significant portion of Cuba’s import market,
Agriculture Secretary Tom Vilsack said Friday.

Vilsack, who is in Cuba to meet with government officials and tour agricultural operations in the country,
said Cuba’s food imports are about $2 billion annually, with the U.S. holding about 16 percent of that
total. Before sanctions were put in place, the U.S. was responsible for nearly half.

“There is no reason why if barriers can be reduced and eliminated that we wouldn’t be in a very
competitive circumstance,” Vilsack told reporters from Cuba. He said a number of U.S. agricultural
products could be attractive in Cuba, including several produced in Iowa such as pork, corn, soybeans and
poultry.

The White House announced last year plants to expand trade, increase travel, and establish diplomatic
relations with Cuba's communist regime. Trade sanctions against Cuba have exempted food and
agricultural exports since 2001. But even agriculture is slowed by obstacles — products must be paid for
in dollars and Cubans do not have access to credit when purchasing American products — that have
limited opportunities.

Vilsack said these challenges must be addressed in Washington for U.S. producers to benefit from eased
relations with Cuba. During his visit, Vilsack said Cubans have embraced organic agriculture, one of the
fastest-growing food segments in the United States. Cuba, he said, has a strong organic sector because it
hasn't had access to chemicals and pesticides.

“They had no other alternative but to be organic,” Vilsack said. “I did emphasize this is an … opportunity
for them because only 1 percent of America’s land mass is committed to organic production. There is
no question the demand is there.”

Agricultural shipments to Cuba have remained volatile during the last decade, peaking at around $700
million in 2008. In 2013, shipments totaled nearly $350 million, with frozen chicken making up 41
percent of the figure, according to the U.S.-Cuba Trade and Economic Council. Soybean oil cakes, corn
and soybeans made up an additional 48 percent.
The Washington Post
Washington, DC
9 November 2015

Obama’s olive branches are lifelines for authoritarian regimes

President Obama and Cuban President Raúl Castro at the United Nations
Headquarters on Sept. 29. (Andrew Harnik/Associated Press)
By Jackson Diehl Deputy editorial page editor

At the heart of President Obama’s foreign policy is a long bet: that American engagement with previously
shunned regimes will, over time, lead to their liberalization, without the need for either a messy domestic
revolution or a bloody U.S. use of force. By definition, it will be years before we know whether the policy
works.

It nevertheless is becoming clear that the regimes on which Obama has lavished attention have greeted his
overtures with a counter-strategy. It’s possible, they calculate, to use the economic benefits of better
relations to entrench their authoritarian systems for the long term, while screening out any liberalizing
influence. Rather than being subverted by U.S. dollars, they would be saved by them.

So far, the dictators’ bet is paying off. The latest evidence of that came Sunday in Burma, when the
generals who still rule the country staged an election carefully structured to preserve their power. The
constitution under which it was held bans opposition leader Aung San Suu Kyi from becoming president
and reserves a quarter of parliamentary seats for the military.

Obama might claim that the lifting of U.S. sanctions and the two trips he made to the country helped
prompt this limited democratic opening. The generals see it another way: The restricted system, and the
inflow of U.S. and European investment it enables, makes their political supremacy sustainable for the
long term. As proof, they can point to the fact that they rebuffed U.S. appeals for constitutional reforms
before the election with no consequence for the new economic relationship.

That Iran’s supreme leader is pursuing a similar course became clear in recent days as the arrests of two
businessmen with U.S. citizenship or residency came to light. Having allowed reformist president Hassan
Rouhani to negotiate the nuclear deal with Obama, Ayatollah Ali Khamenei and the Revolutionary Guard
intend to pocket the $100 billion or so in proceeds while forcibly preventing what they call the
“penetration” of Western influence that Obama hopes for.
Hence the taking of more U.S. hostages. To the imprisonment of The Post’s Jason Rezaian and two other
Iranian Americans, add Nizar Zakka, a U.S.-based Internet specialist, and Siamak Namazi, an Iranian
American who has publicly advocated for better relations between the countries. The lack of any U.S.
response means that the open season on Americans will continue in Tehran.

Khamenei, however, doesn’t get the prize for the best jujitsu on Obama. That goes to Raú l Castro, the
84-year-old ruler of weak and impoverished Cuba, who has managed to transform the resumption of U.S.-
Cuban relations into an almost entirely one-sided transaction.

Since announcing the end of the 50-year freeze between the countries 11 months ago, Obama has twice
loosened restrictions on U.S. travel and investment in Cuba. Thanks to that, tourism arrivals are up 18
percent this year, and billions in fresh hard currency are flowing into the regime’s nearly empty treasury.
The White House has dispatched a stream of senior officials to Havana, including Commerce Secretary
Penny Pritzker. The deputy secretary of homeland security, Alejandro Mayorkas, last month paid court to
the general who heads Castro’s repressive internal security apparatus.

In response to this, Castro has done virtually nothing, other than reopen the Cuban Embassy in
Washington and allow a cellphone roaming agreement . His answer to repeated pleadings from U.S.
officials for gestures on human rights has been to step up repression of the opposition. According to the
independent Cuban Commission for Human Rights and National Reconciliation, there were at least 1,093
political detentions in October, the highest number in 16 months.

Castro has meanwhile shunned offers from U.S. businesses and dramatically cut U.S. imports. Pritzker
did not sign a single deal during her high-profile visit last month. Instead, Cuban officials are using the
prospect of increased U.S. trade and investment as “chum” to strike bargains with other countries,
according to a report by the U.S.-Cuba Trade and Economic Council. While imports of U.S. food are
down 44 percent this year, imports from China are up 76 percent.

Remarkably, the administration appears happy to accept this. The latest high-level envoy, State
Department senior adviser David Thorne, told Reuters in Havana last week: “The pace is really going to
be set by the Cubans, and we are satisfied with how they want to do this.” What about the lack of progress
on human rights? “As in other parts of the world,” Thorne grandly replied, “we are really trying to also
say: Let’s find out how we can work together and not always say that human rights are the first things we
have to fix before anything else.”

So the message is: It’s okay to capture U.S. dollars while excluding U.S. business and cracking down on
anyone favoring liberalization. No wonder the dictators are winning.

Newsday
Melville, New York
6 November 2015

Cuba's new appeal to LI businesses: A tale of two islands

By JAMES T. MADORE

The re-establishment of full diplomatic relations between the United States and Cuba offers Long Island
businesses that rarest of opportunities: access to a brand-new market.

JFI Jets, which operates from East Farmingdale's Republic Airport, is already flying to Cuba.

The air charter service began taking passengers, including some from here, to Havana in August. The cost
of the plane, which typically picks up passengers at Kennedy or another major airport after leaving Long
Island, starts at $35,000 to $40,000 for a round-trip.

JFI Jets executives expect to have completed about a dozen flights by Dec. 31. They predicted Cuba
would be among their top destinations next year.

"Cuba is a place of incredible opportunity. . . . I wanted to be in on the ground floor," said David J.
Rimmer, who began researching the Caribbean island in January after being named company president.
"We are pioneering a new market, and that's an advantage we want to preserve for as long as we can."

Rimmer, like the heads of companies across the United States, was spurred to look at Cuba after the
surprise announcement on Dec. 17 that diplomatic relations would be fully restored, ending more than a
half-century of hostility.

In the past 11 months President Barack Obama has eased restrictions on U.S. companies doing business
with Cuba.

Even though numerous hurdles remain, deals are being struck. Netflix is streaming U.S. movies and
television shows. Americans can now use Airbnb to book a room in Cuba. And JetBlue Airways Corp.,
based in Long Island City, is flying weekly to Havana.

In April, JetBlue participated in a first-of-its-kind trade mission to Cuba led by Gov. Andrew M. Cuomo.
"We placed New York State businesses at the front of the line for new prospects in Cuba, and that will, in
turn, support jobs and economic activity here at home," he said in May.
Trade opportunities seen

On Long Island, executives are optimistic about doing business in Cuba, a country with a population of
11 million. A May workshop by the Long Island Import Export Association on trade opportunities in
Cuba and elsewhere in Latin America drew about 80 people to a Woodbury catering hall, according to
association founder Pat Moffett.

Trade experts identified transportation, health care, agriculture and hospitality as local industries that
could benefit from ties to Cuba over the next few years.

"Cuba represents an excellent medium- to long-term business opportunity," said Antonio C. Martinez II, a
trade attorney of counsel to the Garden City law firm of Gerstman Schwartz & Malito.

At this point, the key is laying the ground work, said Martinez, who has been traveling to Cuba since
1999. "You need to go down there, meet the people, see how the business structure works there. You have
to establish relationships. . . . The Cubans are only going to do business with people that they know,"
Martinez said.

To be sure, obstacles abound. Congress has yet to lift the 55-year-old trade embargo, which, among other
things, stipulates that Cubans pay for imported goods before receiving them. That's difficult because Cuba
has two currencies, one for Cubans and one for foreigners, and cash is hard to come by when monthly
wages average just $22 per person.

President Raúl Castro is loath to take steps that could weaken the Communist Party's grip on power.

The Cuban legal system also doesn't yet provide adequate protections for foreign investors, experts said.
And the creaky infrastructure, particularly the absence of cellphone and Internet service in some areas,
makes communications difficult.

Still, the Cuban government has expanded what can be imported, allowed for entrepreneurship, and
permitted joint ventures in telecommunications.

Martinez said Long Island firms shouldn't hesitate: "I see Cuba being a major trading partner with New
York State."

State officials forecast that sales to Cuba could eventually equal those to the nearby Dominican Republic,
which totaled $218 million last year.

New York exported $88 billion worth of goods and services in 2014, according to U.S. Commerce
Department data, with Canada and Hong Kong being the largest buyers.

Jon Cooper, president of Westbury-based Spectronics Corp., is hoping to sell his company's automobile fluid leak detection kit in Cuba. Cooper
poses with the kit in the manufacturing area of the plant on Friday, Oct. 16, 2015. Photo Credit: David L. Pokress

Westbury-based Spectronics Corp. is looking to sell its leak-detection equipment in Cuba, part of a plan
to double the company's annual sales to $50 million by 2020.
The maker of ultraviolet lighting and fluorescent dyes already exports to 120 countries. Next year Spectronics plans to secure distributors in Cuba
to supply the repair shops that fix airplanes, automobiles and farm equipment. Photo Credit: David L. Pokress

The maker of ultraviolet lighting and fluorescent dyes already exports to 120 countries. Next year it plans
to secure distributors in Cuba to supply the repair shops that fix airplanes, automobiles and farm
equipment.

Cuban mechanics can use the lights and dyes to find leaks of oil, coolants and industrial fluids. The
equipment could be extremely popular in a country where 1950s-vintage American cars are still a major
form of transportation.

"The rest of the world is doing business with Cuba," said Jon Cooper, president of Spectronics, which has
185 workers. "It's just the United States that has been left out, and that makes no sense because we're the
closest to Cuba."

Cuban mechanics can use the lights and dyes of Spectronics' kit to find leaks of oil, coolants and industrial fluids. The equipment could be
extremely popular in a country where 1950s-vintage American cars are still a major form of transportation. Photo Credit: David L. Pokress

He said he's patient about expanding in Cuba: The embargo is "a straitjacket which President Obama has
loosened, but it's still there."

Embargo vote possible

Experts such as Diego Moya-Ocampos of the research firm IHS Country Risk don't expect Congress will
remove the embargo before 2018, when Castro has said he will step down. Key stumbling blocks are
reparations for U.S. assets seized in the Cuban revolution of the 1950s and Cuba's claim to the
Guantanamo Bay Naval Base.

Rep. Tom Emmer (R-Minn.), lead sponsor of an embargo-lifting bill, said a vote could come next year.
Democrats in both houses of Congress would join with small groups of Republicans to back the bill if
U.S. businesses clamored for its approval, he said in Manhattan.

In Cuba, Long Island businesses have access to a brand-new market. Photo Credit: Newsday / Ned Levine photo illustration

December's diplomatic thaw started a race among businesses from Asia, Europe and South America to
strengthen their positions in Cuba before corporate America arrives. U.S. companies that wait for the
embargo's cancellation risk seeing competitors from other nations capture the lion's share of Cuban sales.

"U.S. companies that take advantage of the Cuban market in the early stages will have a much better
position than those that wait to see what's going to happen," said Robert P. Imbriani, international
executive vice president for Team Worldwide, a Texas-based freight forwarder. From his Valley Stream
office, Imbriani is helping businesses navigate the process of selling to the Caribbean island.
Robert P. Imbriani, executive vice president of Team Worldwide, at its warehouse in Rosedale, Queens on Wednesday, Nov. 4, 2015. Photo
Credit: Linda Rosier

Some experts are worried the Castro government's reluctance to remove trade barriers suggests the regime
is using the enthusiasm of U.S. businesses to get better deals from those of other nations.

"The U.S. business community is being used as bait," said John S. Kavulich, president of the Manhattan-
based research group U.S.-Cuba Trade and Economic Council Inc.

Local firms should continue preparing for a more open Cuba, but not spend money going there unless it
and the United States have approved a transaction, said Kavulich, who has provided research to local
makers of medical care products.

Asked about the slow pace of change under Castro, a professor from the University of Havana's Center
for the Study of the Cuban Economy said considerable progress has been made, if one takes the long
view.

Products that are part of Westbury-based Spectronics Corp.'s automobile fluid leak detection kit. Photo Credit: David L. Pokress

"You don't get everything you want at the beginning," economist Ileana Díaz Fernández said last month at
a meeting of the Americas Society/Council of the Americas, Manhattan-based groups calling for an end to
the embargo. Officials at the Cuban embassy in Washington did not respond to requests for comment.

NY officials optimistic

New York officials said businesses across the state are likely to "realize benefits over time" from trading
with Cuba.

"There is no shortage of interest among the Cuban people for rapid change," said Howard Zemsky, the
state's economic development czar who accompanied Cuomo on his trade mission to Cuba.

Zemsky, a Buffalo businessman raised in Woodbury, said Long Island executives "would be warmly and
eagerly received. But you have to respect the fact that you are doing business in a different culture. Be
adaptable and be patient."
Holding a Cuba cigar is David J. Rimmer, president of JFI Jets, inside one of his company's charter jets, which began flying groups to Cuba in
August, at the hangar in Farmingdale on Oct. 9, 2015. Photo Credit: Uli Seit

At JFI Jets in East Farmingdale, Rimmer, the company's president, said his flight crews have been treated
well in Cuba. "We were just another private jet flying into their airspace," he said.

JFI Jets can accommodate groups of eight to 14 people -- but none can be tourists. The U.S. Treasury
Department issues licenses for only 12 categories of travel to Cuba, including research and professional
meetings, educational activities and family visits.

"I'm pleasantly surprised by the demand" for flights to Cuba, Rimmer said. "It really has caught on
quickly."

CCTV
Washington, DC
4 November 2015
How US manufacturing plans to help Cuban agriculture
By Michael Voss

Cuba has agreed to allow a U.S. company to assemble low cost tractors on the island. If the deal is
approved by Washington, it would become the first American manufacturing company to operate in Cuba
in more than half a century.
The tractor was on display at this week’s Havana International Trade Fair. It’s cheap to build and simple
to maintain.
Many of Cuba’s farmers still rely on oxen to plow their fields. Those with access to tractors mainly rely
on old Soviet models in constant need of repair.
U.S. President Barack Obama has authorized the sale of agricultural equipment to Cuba’s private farmers
and co-operatives.
The Cuban authorities have approved a plan to assemble the machines at the new tax free Special
Development Zone around the port of Mariel, but when it comes to food imports, it’s the Cubans who are
holding back.
More details:
Washington has allowed US food companies to sell produce to Cuba for more than a decade but now that
the two countries have restored diplomatic relations, Cuba is buying less than before.
There are 25 American companies and trade organizations represented at this year’s Havana International
Trade Fair, the first since Cuba and the United States restored diplomatic relations.