Friday, January 26, 2007

Chickens for Cuba

Cuba and Dixie
Chickens for Cuba

Jan 25th 2007 | MOBILE
From The Economist print edition
Southern states are eager to boost trade with Cuba

THE docks in Mobile, Alabama's only seaport, are crammed with lumber,
steel coils, frozen chickens, coal and much else. But few of these
products are bound for Cuba, just 550 nautical miles (1,000km) away. The
state port authority's director, James Lyons, hopes this will change.
"We're trading with Vietnam, we're trading with China. These are both
communist states," he says. "It's silly to have tense relations with a
neighbour that close."

Mr Lyons is hardly the only Southerner who would be glad to see the end
of America's 45-year embargo on trade with Cuba. Trade delegations from
Alabama, Mississippi and other Gulf states have been descending on Cuba
in recent years, hoping for a slice of a potentially lucrative market.
Currently only agricultural products and medicines may be exported from
America (with no Cuban imports permitted). Before 2000, when the embargo
was loosened, nothing was allowed.

In 2005 Alabaman companies did roughly $140m in trade with Cuba,
according to Ron Sparks, the state's agricultural commissioner, who is
aggressively pursuing Cuban business. "We've sold cotton, we've sold
cookies, crackers, fruit juice, mayonnaise, mustard, salad dressing—a
lot of processed foods," says Mr Sparks. Over half of all chickens
exported from America to Cuba come from Alabama, along with almost all
the (wooden) telephone poles. The owner of one Alabaman pole-making
business, which first shipped utility poles to Cuba after Hurricane
Charley in 2004, says that competition is fierce for the Cuban business,
especially since a large-scale electrification project in Cuba has
boosted demand. Helpfully, Alabama has no powerful pro-embargo lobby of
Cuban exiles like the one in Florida.

Volume would be higher still if the embargo were lifted. In Mobile, the
port's trade with Cuba amounts to only a few thousand tons a year—a
fraction of its 50m ton (45m tonne) annual average. Just one or two
ships a week leave for Cuba, as against six or seven in the pre-Castro
days. "There's all manner of things that could be exported," says Mr
Lyons—roofing materials, machinery, cars, even paint, none of which is
currently allowed. Exports from America, it is reckoned, could easily
treble from the current $350m or so a year.

More agricultural goods could also be shipped, but "there are a lot of
people who just don't want to fool with all the paperwork," says Mr
Lyons. Many extra hassles complicate trade with Cuba. Americans cannot
travel there freely, so many businessmen attach themselves to state
officials as part of a delegation (and still must get permits from
Washington). Payment is also an issue. Americans cannot accept money
from Cubans directly, so setting up a third-party payment procedure is
necessary. The transaction must be in cash (which some Americans regard
as a plus). Ships cannot head directly from Cuba to the United States,
though sometimes extra paperwork can circumvent this.

Even if the embargo were to be lifted tomorrow, Mr Lyons cautions that
trade would not boom immediately. "They don't have the currency to buy
what they need," he says. But trade works both ways—so how about some
Cuban cigars and rum for America?

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