In Cuba’s economy today, U.S. companies are largely like actors who can only watch the drama play out while companies from Europe, Brazil and elsewhere steal the show.
They should band together to let President Barack Obama know that they don’t want their hands tied anymore, a Cuban embassy official told Global Atlanta Monday.
“(Companies) are aware that they have opportunity there, that they are losing opportunity there because the rest of the world (has) no restrictions to go to Cuba,” said Rubén Ramos Arrieta, minister counselor handling the country’s economic affairs in Washington.
While warming ties between the longtime foes have made Cuba one of the hottest potential markets for opportunistic American firms, the economy largely remains closed to U.S. investment, and remaining regulations often mystify executives.
“There is more openness, space and steps that have been made by the current administration that we consider positive, but at the same time we are considering they are not enough,” Mr. Ramos said during an interview in Atlanta.
In December 2014, the two sides announced talks on normalization. They achieved that by opening respective embassies in July. Mr. Obama visited the Communist-led island this March to “bury the hatchet” of the Cold War.
Still, the economies are far from interlinked, despite the fact that looser travel restrictions have seen businesses flocking to the island to explore opportunities. Reforms in Cuba have increased the role of private enterprise in the economy.
Trade is proscribed by a more than 50-year-old embargo that shows no sign of being lifted by the Republican-controlled Congress anytime soon. But those sectors explicitly covered by the sanctions or “blockade,” as Cubans call it, “you can count on the five fingers of your left and right hand. The rest depend on government, on the current administration,” Mr. Ramos said.
Clif Burns, an attorney at Bryan Cave LLP in Washington specializing in export controls, said President Barack Obama has a lot of leeway in loosening restrictions outlined in the Helms-Burton Act, which prevents him from removing the embargo but allows the executive branch to license certain economic activities through the Treasury Department‘s Office of Foreign Assets Control.
“The president has a wide berth as long as he leaves some of the sanctions in place so he can’t be said to have eliminated the embargo,” Mr. Burns told Global Atlanta, joking that he could likely cancel export restrictions on everything except chia pets and still be within his powers.
While Mr. Obama has opened the door for more travelers and the reestablishment of commercial flights, allowed for correspondent banking relationships and paved the way for export of goods to help Cuba’s private entrepreneurs, he’s also moving in a measured way to keep some diplomatic leverage and to avoid animating the anti-Cuba lobby in Congress, Mr. Burns said.
The idea is that once many Americans have traveled to the country, the likelihood of a future president reversing course (even Donald Trump) is slim. And people-to-people exchanges are seen as a way to help Cuba gain exposure to democratic ideals without imposing them at a government level.
“That will do more than the clearly unsuccessful ploy of 60 years of economic sanctions,” Mr. Burns sadi.
As it is, Mr. Ramos said Americans are falling behind in some of the hottest sectors for inbound investment, like hospitality, infrastructure development and health care, and he urged businesses to lobby the federal government for clear changes in policy.
“They have to make a critical movement in order to convince Congress and government that this change is necessary for the benefit not only for the companies but for the benefit of U.S. citizens” they employ, Mr. Ramos said, saying a new foreign investment law treats U.S. firms the same as those from other countries. It also guarantees against expropriation and offers tax incentives, he said.
That said, Cuba does require approval for some investments, and even if companies were clear on the new regulations, especially on the financial side, it would take awhile for American banks feel comfortable risking running afoul of sanctions for marginal profits. For a long time, the “gospel” of the Office of Foreign Assets Control has been “chilling economic activities by regulatory uncertainty,” said Mr. Burns, who also authors the Export Law Blog.
Mr. Ramos was speaking Monday just after meeting corporate leaders from the real estate sector in Atlanta during a roundtable arranged by law firm Taylor English Duma LLP.
He said it was his first time to spend an extended period in Atlanta, which he said was showing itself as welcoming to him as to the prospect of better ties with Cuba, which has a long trading relationship with Georgia through exempted agricultural goods like poultry.
Mr. Ramos later was slated to attend a similar lunch forum put on by the Georgia Chamber of Commerce in collaboration with Engage Cuba, a coalition of organizations pushing for an end to the trade and travel embargo.