Warmer relations with U.S. mean new ways to export to Cuba

Warmer relations with U.S. mean new ways to export to Cuba
By Paul Guzzo | Tribune Staff
Published: September 27, 2015

TAMPA — More Cubans living in the United States are making it back to
the island to visit relatives, bringing with them love, family photos —
and the occasional chainsaw or flat-screen television.

Travel has loosened up more than trade since the U.S. imposed an embargo
on Cuba five decades ago, so visitors assume the role of pack mules,
hauling along small mountains of sought-after goods from America on
charter planes.

This bloat of luggage headed toward departing flights at airports in
Tampa, Miami and Orlando has emerged as a symbol of the unusual
relationship between the U.S. and Cuba. But as relations improve under
the Obama administration, the mountain soon will start to shrink.

"The average American will notice the difference in the airports and
luggage," said Antonio Martinez II, a New York attorney specializing in
Latin America relations. "Seeing things like a dishwasher going to Cuba
on a plane will decrease or at least not be the norm."

The reason: There will be other ways to bring such cargo to Cuba under
new U.S. policies announced Sept. 18, with more changes expected in the
coming weeks or months.

Today, direct shipping options to Cuba for individuals are limited to
taking items on charter planes with them. Only licensed exporters use
the cargo ships sanctioned by the U.S. government.

But under the new policies, the U.S. will allow cruise ships, ferries
and privately owned sea vessels to travel to Cuba and carry authorized
goods as part of their baggage.

It is now up to Cuba to reciprocate on a general or case-by-case basis.

In addition, direct mail to Cuba — cut off in 1963 after the embargo was
imposed — is expected to start by the end of the year. No official
announcement has been made yet, so mail from the U.S. to Cuba still must
pass through a third nation first.

Meanwhile, the parade of products continues through the passenger
terminals of Cuba-bound flights.

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On a recent Thursday morning at Tampa International Airport, the 63
passengers arriving on one charter flight from Havana filled just one
cargo trailer with their checked baggage, largely small duffel bags and
suitcases.

Later that day, the 89 passengers taking the same plane to Havana needed
four trailers for their luggage. Goods that made their way to the cargo
hold included a chainsaw, microwave, shower curtain and bike, as well as
items stuffed into bags and beneath layers of plastic wrap that weighed
up to 70 pounds.

There is little you won't see loaded onto charter planes bound for Cuba,
said Tom Popper, president of New York-based Insight Cuba, which has
been taking American tour groups to Cuba since 2000.

"TVs, strollers, garbage cans, car parts, cables, toilets — anything we
take for granted in the U.S.," Popper said.

❖ ❖ ❖

Some of the goods already are available in Cuba, said Johannes Werner,
editor of Cuba Standard, an online publication based out of Sarasota
that follows Cuban business news. But they come at a high price through
a government-owned store with limited supplies or competition.

"Sometimes buying in the U.S. and taking them back on a plane is more
affordable," Werner said.

Charter company Cuba Travel Services, operating the Thursday flights
from Tampa, charges $20 for each piece of luggage — plus $2 for every
pound over 44 pounds of total luggage. That includes carry-on.

The company also charges $3 a pound for boxes or baggage deemed to be an
irregular size.

It is not yet clear what it will cost to take luggage on a ferry or
cruise or to mail it.

❖ ❖ ❖

Still, Popper said those who want their friends and family in Cuba to
enjoy products purchased in America may prefer bringing the goods with
them on boats and planes rather than using the post office.

"There is a security in that you are actually delivering it to the
home," Popper said. "There is always a fear when shipping things abroad
that it may not make it there.

"There is also tremendous satisfaction in bringing a giant flat screen
to their mom in Cuba and seeing her face when they set it up and turn it
on. To make your mom so happy is as good as it gets."

Still, with more options for delivering goods, expect passenger planes
to carry less of them, said Peter Quinter of Miami, head of the
international trade-law group for Orlando-based GrayRobinson.

And Quinter predicts that when these new opportunities become reality,
more Cubans will visit Florida with shopping lists and send shopping
lists to friends and relatives here.

"It's already the market of Latin America. People from all over Latin
America look to Florida for what they need," Quinter said. "So have
Cubans, but on a limited scale. Now, we may finally add Cuba to that mix
on a grand scale."

The changing U.S. policies may also usher in a day when Cubans can shop
for American-made products in their own country, said John Kavulich,
president of the New York-based U.S.-Cuba Trade and Economic Council.

One new policy already allows for American companies to have a physical
presence in Cuba as long as their business falls into one of the
categories allowed by the U.S. government.

These include agriculture, health care, communication devices, and home
improvement and construction supplies.

A physical presence could include retail outlets or distribution warehouses.

That means Cuba might see stores operated by companies like Home Depot,
Verizon, Sysco and Grainger, Kavulich said.

"It all depends on how broadly the Commerce and the Treasury departments
look at this," he said. "What we know is the president has said since
January to these departments to find ways to say yes rather than no when
companies come with license applications."

❖ ❖ ❖

What's more, Cubans will have access to more cash for making purchases
thanks to another of the policy changes announced Sept. 18, removing
limits on remittances that can be sent from the U.S. to Cuba.

"This is all staggering," Kavulich said. "But it also puts immeasurable
pressure on Cuba."

The Cuban government has not reciprocated with corresponding policies of
its own for U.S. business interests. It has yet to approve a U.S. ferry,
for instance, or announce whether it will allow U.S. corporations to set
up shop there.

And there is no guarantee Cuba will act soon. Rather, its government
could use the prospect of U.S. businesses and products flooding the
market as a bargaining chip to win favorable deals with other nations,
some already in business there.

Cuba already has taken this approach with trade, Kavulich said.

Even as relations between the two countries return to normal, there was
a decrease of 40 percent in food and agricultural exports from the U.S.
to Cuba for the first six months of 2015 compared with the same period
the year before.

Cuba used the threat of turning to the U.S. in order to get better deals
from other nations, said Kavulich.

Tend Tudo, Brazil's version of Home Depot, is already in negotiations to
open stores in Cuba and will likely be first to the market there, said
Werner of Cuba Standard.

"Tend Tudo would be the first time Cubans have access to washing
machines and power tools and whatever else is needed to start a business
or renovate a home at more affordable prices," Werner said. "That may be
the first challenge to shipping stuff from the United States to Cuba."

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Whatever happens with trade, travel already is increasing from the U.S.
to Cuba.

Through August, the number of passengers flying to Cuba from Tampa
International was 66,504, already eclipsing 2014's total of 61,408.

Suzanne Carlson of Carlson Maritime Travel attributes this to the ease
of travel since January, when the U.S. began issuing general licenses to
travel to Cuba for 12 reasons. These include educational activities and
support for the Cuban people.

"The mainstream perception previously was that it was totally illegal
for U.S. citizens to travel to Cuba," Carlson said.

In addition, the changes in U.S. policy announced Sept. 18 allow family
members of the qualifying traveler to make the trip as well.

Another big bump in travel is likely once commercial airlines begin
scheduled flights to Cuba. The industry is hoping to see this by December.

"The biggest change that you will notice is that Havana and other Cuban
cities that you cannot book on aa.com today will become part of our
network," said Howard Kass, American Airlines vice president of
regulatory affairs.

Kass predicts scheduled flights will take to the air by the "first half
of 2016 if not sooner."

Once this happened, he added, veterans of travel to Cuba can expect to
see an improvement in luggage service.

Today, with travel limited to charter flights, passengers have to haul
their own checked luggage back through security to the right gate if
they are flying into an airport with service to Cuba. There is no
baggage connection between charters and other carriers.

The transfer will be seamless, however, with commercial flights.

"It will be just like flying from Washington to anywhere else in the
Caribbean," Kass said. "I'll change planes, walk down a few gates, get
on the next airplane and go. Bags will transfer automatically."

pguzzo@tampatrib.com

(813) 259-7606

Source: Warmer relations with U.S. mean new ways to export to Cuba |
TBO.com and The Tampa Tribune -
http://www.tbo.com/news/cuba/warmer-relations-with-us-mean-new-ways-to-export-to-cuba-20150927/