Friday, November 26, 2010

Cuba-Texas Trade Is Languishing in Poor Economy

The Texas Tribune
Cuba-Texas Trade Is Languishing in Poor Economy
Published: November 25, 2010

When the global shipping giant CMA CGM announced in April that it had
obtained a license to ship container vessels to Cuba via the Port of
Houston, business executives and trade experts marveled: Unabashedly
Republican Texas would soon become the Communist island nation's leading
United States trade partner.

Seven months later, the relationship between two very different kind of
red states has not quite lived up to expectations.

As of September, fewer than 20 percent of the large containers that were
expected to leave Houston for Cuba had set sail, said George Armaos, the
director of strategic accounts at CMA CGM in Houston. Though the company
planned to move 200 to 300 containers by October, so far just 30 or 40
have gone — the result, Mr. Armaos said, of Cuba's insistence on
engaging only with like-minded governments in a foundering global economy.

"Venezuela may be influencing the Cubans not to buy too much from the
U.S. producers," he said. "We spoke with some shippers here in the U.S.,
and they do have some orders, but finances are coming very, very slow."

Countries like Venezuela, China, Brazil and Vietnam offer more trade
incentives to the Cuban government than the private sector in the United
States does, said John S. Kavulich, a senior policy adviser with the
U.S.-Cuba Trade and Economic Council Inc., a nonprofit based in
Washington that deals directly with the Cuban government. Cuba is
"focusing on countries that will give them substantial government
credits that they know they won't have to pay back," Mr. Kavulich said.

According to the economic council's latest report, those countries
provide more "favorable payment terms and less publicity when those
payment terms are not honored," which is expected given the lack of
foreign investment.

"There is absolutely no incentive for the government of Raúl Castro to
seek any re-engagement with the United States," Mr. Kavulich said,
"because any re-engagement with the United States has one guarantee, and
that is uncertainty."

Although Texas only recently got permission to ship large containers to
Cuba, it has consistently traded in smaller shipments. In 2009 it
trailed only Louisiana in terms of the value of cargo that left its
ports for Cuba. But trade with Cuba at both the state and national
levels has slipped in the last year.

C. Parr Rosson III, director of the Center for North American Studies at
Texas A&M University, said that in 2009, $85 million in goods left Texas
bound for Havana, compared with $143 million in 2008. These goods are
not necessarily manufactured in Texas but depart from there, Dr. Rosson
said, creating jobs and boosting the state's economy.

From January through September this year, Texas ports shipped $18.2
million to Cuba, but Dr. Rosson estimated that only $354,000 of that
left through large container shipments from Houston.

Meanwhile, the United States as a whole sent $528 million in goods to
Cuba in 2009, a dip from the $710 million shipped in 2008. Should the
trend hold for 2010, it would represent the third consecutive year in
which Cuba's trade with the United States has diminished. The U.S.-Cuba
Trade and Economic Council estimates total American trade with Cuba this
year through September is about $288 million — just slightly more than
half of last year's total.

Dr. Rosson said a contributing factor was the steady decline of the
price of nickel, Cuba's leading commodity, which makes the country less
likely to engage in trade.

Despite the downward trend, Todd Staples, the Texas commissioner of
agriculture, said the state should continue to expand the dialogue — and
trade opportunities — between Cuba and the United States.

"I support allowing Texas farmers and ranchers to engage in fair
competition when selling their agricultural products to Cuba," Mr.
Staples said in a statement. "Texans will benefit through job growth,
and Cubans can see the success of democracy and a free-market society."

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