US Department Of State Report On Money Laundering And Financial Crimes: Cuba

United States Department of State
Bureau for International Narcotics and Law Enforcement Affairs
International Narcotics Control
Strategy Report
Volume II
Money Laundering and Financial Crimes
March 2017

Cuba (Page 71)

OVERVIEW

Cuba is not a regional financial center. Cuban financial practices and U.S. sanctions continue to prevent Cuba’s banking system from fully integrating into the international financial system.

The government-controlled banking sector, low internet and cell phone usage rates, and lack of government and legal transparency render Cuba an unattractive location for money laundering through financial institutions. The centrally-planned economy includes limited private activity. A significant cash-based black market operates parallel to the heavily subsidized and rationed formal market dominated by the state.

The Government of Cuba does not identify money laundering as a major problem. Cuba should increase the transparency of its financial sector and expand its capacity to fight illegal activities. Cuba also should increase the transparency of criminal investigations and prosecutions.

VULNERABILITIES AND EXPECTED TYPOLOGIES

Cuba’s geographic location puts it between drug-supplying and drug-consuming countries. Cuba has little foreign investment, a small international business presence, and no offshore casinos or internet gaming sites. Cuba’s first special economic development zone at the port of Mariel in northwestern Cuba was established in November 2013 and is still under development; it is not currently an area of concern. There are no known issues with or abuse of NPOs, alternative remittance systems, offshore sectors, FTZs, bearer shares, or other specific sectors or situations.

KEY AML LAWS AND REGULATIONS

Legislation released in 2013 outlines regulations regarding enhanced customer due diligence of foreign PEPs, although it continues to exempt domestic PEPs from the reach of the legislation.

Cuba has bilateral agreements with a number of countries, including the United States, related to combating drug trafficking. It is unknown if any of these agreements include mechanisms to share information related to financial crimes or money laundering.

The United States and Cuba do not have a formal records-exchange mechanism in place but, under the Law Enforcement Dialogue process, have developed a mutual legal assistance relationship as part of the legal cooperation technical exchange and have established direct communication between DEA and its Cuban counterpart to focus on counternarcotics cooperation.

Cuba is a member of the GAFILAT, a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.fatf- gafi.org/publications/mutualevaluations/documents/mer-cuba-2015.html

AML DEFICIENCIES

Although the risk of money laundering is low, Cuba has a number of strategic deficiencies in its AML regime. These include a lack of SAR reporting to its FIU from financial institutions and DNFBPs and weak supervision and enforcement in the DNFBP and NPO sectors.

These deficiencies stem from Cuba’s opaque national banking and financial sector, which hampers efforts to monitor the effectiveness and progress of Cuba’s AML efforts. Cuba should increase the transparency of its financial sector. Cuba should ensure its CDD measures and SAR requirements include domestic PEPs, all DNFBPs, and the NPO sector, and create appropriate laws and procedures to enhance international cooperation and mutual legal assistance. Cuba also should increase the transparency of criminal investigations and prosecutions.

The U.S. government issued the Cuban Assets Control Regulations in 1963, under the Trading with the Enemy Act. Between January 2015 and October 2016, the Departments of Commerce and the Treasury significantly modified sanctions regulations, with the easing of restrictions on authorized travel, commerce, and financial transactions. The embargo remains in place, however, and the sanctions regulations still restrict travel for “tourist activities,” as well as most investment and the import of most products of Cuban origin. With some notable exceptions, including agricultural products, medicines and medical devices, and certain non-sensitive telecommunications equipment and consumer communications devices, most exports from the United States to Cuba require a license. Additionally, U.S.-based assets in which Cuba or the Cuban government have an interest are blocked by operation of law, in the absence of a license.

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

The Cuban government has run high-profile campaigns against corruption in recent years, investigating and prosecuting Cuban officials and foreign businesspeople. Cuba also is continuing its efforts to investigate and prosecute cases of money laundering. There are press reports of Cuba prosecuting and convicting individuals for money laundering and related offenses as recently as December 2016, but Cuba released no official reports of prosecutions or convictions for money laundering in 2016.

Cuba has agreed to continued cooperation and to the establishment of mechanisms to promote cyber-security and to combat terrorism, drug-trafficking, trafficking and trade in persons, money laundering, smuggling, and other transnational crimes. The United States and Cuba have a Law Enforcement Dialogue with technical exchanges on counternarcotics, cybercrime and cybersecurity, money laundering and associated crimes, counterterrorism, and legal cooperation.

COMPLETE REPORT

US Department Of State Report On Drug And Chemical Control: Cuba

United States Department of State
Bureau for International Narcotics and Law Enforcement Affairs
International Narcotics Control Strategy Report
Volume I
Drug and Chemical Control
March 2017

Cuba (Page 142)

Despite its proximity to the largest exporters of illegal drugs in the hemisphere and the U.S. market, Cuba is not a major consumer, producer, or transit point of illicit narcotics. Cuba’s domestic production and consumption remain low due to active policing, strict sentencing, and nationwide prevention and public information programs. Cuba’s intensive security presence and interdiction efforts have kept supply down and prevented traffickers from establishing a foothold. Cuba concentrates supply reduction efforts by preventing smuggling through territorial waters, rapidly collecting wash-ups, and conducting thorough airport searches. Cuba dedicates significant resources to prevent illegal drugs and their use from spreading, and regional traffickers typically avoid Cuba.

The most recent maritime seizure statistics are from calendar year 2015, during which the Cuban government seized 906 kilograms (kg) of all illegal drugs, including 182 kg of cocaine, 700 kg of marijuana, and 24 kg of hashish oil. During this period, Cuban authorities detected the territorial incursion of 48 suspect “go-fast” boats along the country’s southeastern coast. In 2015, Cuban customs reported disrupting 59 drug possession cases at airports, seizing a total of 82 kg of illegal drugs, including 50 kg of cocaine. Except for two cases involving travelers in transit, all suspects arrested at the country’s airports apparently intended to introduce drugs locally. In July 2016, Cuban judicial authorities sentenced 11 Cuban nationals to 15-30 years imprisonment for smuggling marijuana from Jamaica through Cuba to the Bahamas; this included the extradition of the principal organizer from Jamaica.

With respect to international cooperation, the Cuban government reports 40 bilateral agreements for counterdrug cooperation, including the new U.S.-Cuba counternarcotics arrangement that was signed in July 2016. The U.S. Embassy maintains a U.S. Coast Guard (USCG) liaison to coordinate with Cuban law enforcement. USCG and Cuban authorities share tactical information related to vessels transiting Cuban territorial waters suspected of trafficking and coordinate responses. In addition, direct communications were formally established between the U.S. Drug Enforcement Administration (DEA) and their Cuban counterparts within the Ministry of the Interior’s National Anti-Drug Directorate (DNA) in July. Cuba also shares real-time tactical information with the Bahamas, Mexico, and Jamaica.

Cuba has assisted in U.S. judicial proceedings by providing documentation, witnesses, and background for cases in U.S. state and federal courts. The United States and Cuba continue to hold semi-annual expanded bilateral discussions on law enforcement and counternarcotics cooperation. Enhanced communication and cooperation between the United States, international partners, and Cuba, particularly in terms of real-time information-sharing, may lead to increased interdictions and disruptions of illegal drug trafficking.

COMPLETE REPORT

Former Georgia Governor Sonny Perdue At Confirmation Hearing Supports Exports To Cuba

Inside U.S. Trade
Arlington, Virginia
23 March 2017

Perdue also supported measures that would allow Cuban buyers of U.S. agriculture exports to have credit extended to them. The administration has not yet made its stance on such provisions clear.

“I think if we can get the private financing done there -- and there's some proposals already to do that -- I think American agriculture both in the Upper Plains and in the Gulf Coast and the East Coast have a wonderful opportunity,” he said in response to a question from Sen. Amy Klobuchar (D-MN) about lifting the Cuban embargo. “That's a country that's hungry. I led a delegation there in 2010 in Georgia and they wanted our product. They could just not afford it and pay for it there based on the financial crisis that they were in. So, hopefully we can mitigate that.”

Rep. Rick Crawford (R-AR) is spearheading House legislation that would allow U.S. agricultural exporters to extend credit to Cuban buyers. Crawford said on March 9 that his bill is gaining support in Congress and is being reviewed by the Trump administration. -- Brett Fortnam (bfortnam@iwpnews.com)

Farm Journal's AgPro
Philadelphia, Pennsylvania
24 March 2017

Several senators asked about opening trade to Cuba. Perdue said he welcomed that country as a customer but based on a prior trade visit he attended, he said the real issue is Cuba’s ability to pay for those commodity exports.

the Fence Post
Bellvue, Colorado
23 March 2017

Asked by Sen. John Boozman, R-Ark., for his views on Cuba, Perdue noted he had led a Georgia delegation to Cuba in 2010. Cuban officials had told him they cannot afford to buy U.S. food products because current U.S. law requires them to go through Europe for financing and they have to take "a financial haircut," he said.

Perdue took the moment to note his knowledge of ag outside the South, saying that Cuban exports are important not only to southeastern states that produce rice but to Midwestern states that produce edible beans and that "private financing" needs to be improved.

The Honorable John Boozman (R- Arkansas)
United States Senate
Washington, DC
23 March 2017

Boozman Promotes Cuba Trade in Confirmation Hearing of Ag Secretary

WASHINGTON – U.S. Senator John Boozman (R-AR), a member of the Senate Committee on Agriculture, Nutrition and Forestry, questioned Governor Sonny Perdue, President Trump’s nominee to serve as Secretary of the United States Department of Agriculture during his confirmation hearing today about the need to open new markets for American agriculture products.

Boozman shared the importance of trade to the Arkansas agriculture industry, the state’s largest economic sector, and promoted Cuba as a market to increase business for American farmers and ranchers.

“We would love to have Cuba as a customer,” Perdue said. “They would love to have our products.” 

Perdue said that as governor of Georgia, he led a delegation to Cuba in 2010 and heard one big problem was the ability to finance. He encouraged Congress to take action on lifting private financing restrictions on U.S. agriculture exports to Cuba.

Boozman and Sen. Heidi Heitkamp (D- ND) reintroduced the Agriculture Export Expansion Act last month. This legislation would lift the ban on private banks and companies from offering credits for the sale of agriculture exports to Cuba. 


Background- U.S. Food Product/Agricultural Commodity Exports To Cuba

Since December 2001, more than US$5.3 billion in agricultural commodities and food products have been exported directly from the United States to the Republic of Cuba on a cash-in-advance basis as required by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.  

No United States company which has exported product(s) to the Republic of Cuba since 2001 has publicly stated what payment terms it would currently provide if authorized by statute.  

The government of the Republic of Cuba prefers to purchase food products and agricultural commodities from government-operated exporters where either the exporter or the government of the Republic of Cuba accesses government export-payment guarantee programs.

Government of Vietnam-operated Vinafood (1 & 2) have provided payment terms to Republic of Cuba government-operated Alimport of two (2) years to pay for rice (25% to 30% broken).  

United States producers can provide this product; however, payment terms, if statutorily permitted, without the use of United States government guarantee programs, would be cash-on-delivery to 30 days; and for credit-worthy customers, generally not exceed sixty (60) days to ninety (90) days according to United States exporters.  

RELATED BLOG POST LINKS

http://www.cubatrade.org/blog/2017/3/19/i7zxic4x9yweb1q0u1fqn6idmstyko

http://www.cubatrade.org/blog/2017/3/8/naqwf4sownekzbxahs76oysizs5p20

http://www.cubatrade.org/blog/2017/3/1/u4m9xhe3bc9iurkasacffinm2pc12m
 

How Does This Advance The Interests Of The United States Business Community? It’s vulgar to dismiss the impact of DNA upon anyone’s beliefs.

How Does This Advance The Interests Of The United States Business Community? 

It’s vulgar to dismiss the impact of DNA upon anyone’s beliefs. 

A Washington, DC-based self-described “grassroots” activist/lobbyist has in a statement to The Miami Herald introduced a particularly nasty, foolish and vulgar element by attributing the Republic of Cuba-focused policy positions of The Honorable Mario Diaz-Balart (R- Florida) as solely the (by)product of a “family feud” with his relatives (above ground and below ground) who reside in the Republic of Cuba. 

“Mr. Diaz-Balart is playing politics with his constituents’ healthcare in order to settle a family feud,” said James Williams, president of Engage Cuba, a group that advocates for closer U.S.-Cuba ties. “Our U.S.-Cuba policy should be guided by what’s in the best interests of the American and Cuban people, not one congressman’s personal agenda.”

How does this statement advance the interests of the United States business community in the United States Congress as those interests relate to the Republic of Cuba and for other issues of equal or greater significance in the United States Congress to the United States business community?

This individual has made the calculus that Representative Diaz-Balart, and by extension his relatives (and potentially his friends and colleagues), is an opponent of all, unavailable and incapable to consider, negotiate and compromise.  How is this belief consistent with the following:

In July 2016, there was this statement in conjunction with legislative efforts by The Honorable Mark Sanford (R- South Carolina): “… a historic compromise” and “major step forward,” said Washington, DC-based EngageCuba, adding “reached an agreement to find a long-term solution to provide credit for the export of agricultural commodities to Cuba.”  And who was among those Members of the United States Congress with whom a “long-term solution” was to be negotiated?  Principally, Representative Mario Diaz-Balart.   [See complete blog post below].  

There are six members of the United States Congress who are of Cuban descent, five are members of the Republican Party and one is a member of the Democrat Party.  As a group, they are generally consistent in their commercial, economic and political positions relating to the Republic of Cuba.  United States companies generally oppose these positions. 

The positions of the six members of the United States Congress are supported by The Honorable Paul Ryan (R- Wisconsin), Speaker of the United States House of Representatives, and The Honorable Mitch McConnell (R- Kentucky), Majority Leader of the United States Senate…. and potentially by the President of the United States. 

How does magnifying differences, in advance of publication by the Trump Administration of its commercial, economic and political strategy relating to the Republic of Cuba assist in any meaningful manner of changing the distance between what United States companies may desire and what they don’t want to happen? 

Issues relating to the Republic of Cuba are expressive of personal values, not only to Members of Congress who are of Cuban descent, but also to Members of Congress who are not of Cuban descent.   

For those with connective DNA, the discussion is from the inside outward- which makes the journey so much more challenging and impactful and necessary.  It’s vulgar to dismiss the impact of DNA upon anyone’s beliefs. 

In a perverse way, continuing friction rather than seeking agreement only serves to preserve existing statutes, regulations and policies… which means that “grassroots” activists/lobbyists continue to have employment.  That should not be a strategy. 

The Miami Herald
Miami, Florida
22 March 2017

Scramble for GOP healthcare votes suddenly puts Cuba policy in play

The showdown in Congress over House Republicans’ healthcare bill might have nothing to do with Raúl Castro — if it weren’t for Miami.

Thursday’s planned vote on the American Health Care Act is so razor tight that House GOP leaders and the White House are leaning hard on every single shaky Republican for their support. One of them: Rep. Mario Diaz-Balart of Miami, whose foremost want is to overturn the Obama administration’s Cuba opening — and who has recently taken it upon himself to outline a possible Cuba policy for the Trump administration.

Perhaps Diaz-Balart and the White House would engage in a little old-fashioned horse trading — a “Yes” vote on healthcare for swift action on Cuba?

The New York Times reported Wednesday that Diaz-Balart wanted assurances from White House officials that President Donald Trump would keep his campaign promise to take a harder Cuba line. There was no explicit discussion about trading a healthcare vote for a Cuba promise, The Times said after initially reporting otherwise.  “I wish that they would’ve given me a commitment on something, but that is just made up,” Diaz-Balart told McClatchy, the Miami Herald’s parent company, on Wednesday.

He added that he’s still undecided on the healthcare bill, mostly based on concerns about insurance coverage and premium costs for older Americans.  “I am very concerned that particularly that population is not being dealt with yet in a way that is giving me a lot of comfort,” he said.  Politically, he noted, it’s better not to be a hard “Yes” or “No”: “Once I do that, then I’m out of the loop.”

But there’s no denying that Diaz-Balart has brought up Cuba every time he’s had a chance to speak to the White House, where he’s closest to Vice President Mike Pence. And the Trump administration has spent two days openly wooing Republicans who, like Diaz-Balart, are on the fence about healthcare. (The Washington Post reported Wednesday that the bill lacks the votes to pass the House on Thursday.) Diaz-Balart was the tie-breaking vote approving the bill in the Budget Committee last week but has said he nevertheless leans against it.  Diaz-Balart said Wednesday he hasn’t talked to Trump — but wouldn’t say if he’s spoken with Pence.

The suggestion that Diaz-Balart or the White House might even consider cutting a deal on Cuba to pass healthcare prompted immediate criticism from advocates of U.S.-Cuba engagement and from the Democratic Congressional Campaign Committee, which said the AHCA would “cost tens of thousands of his own constituents access to healthcare, blow the roof off of others’ premiums, and slap an age tax on older South Floridians.”

“Mr. Diaz-Balart is playing politics with his constituents’ healthcare in order to settle a family feud,” said James Williams, president of Engage Cuba, a group that advocates for closer U.S.-Cuba ties. “Our U.S.-Cuba policy should be guided by what’s in the best interests of the American and Cuban people, not one congressman’s personal agenda.”

The White House has yet to make any commitments on Cuba, a congressional source told the Miami Herald and el Nuevo Herald on Wednesday — in part because Trump has yet to appoint No. 2s at the State Department and National Security Council to handle Western Hemisphere affairs.

In the absence of any high-level policy officials, Diaz-Balart has recently circulated a two-page memo to other Cuban Americans in Congress outlining a possible Trump approach to Cuba. The memo, titled “A Good Deal that Upholds the Law and Protects National Security,” has also been passed around the White House.

The memo lists no author, and Diaz-Balart’s office would not confirm Wednesday that he wrote it. Diaz-Balart, however, rattled off the same proposals — practically verbatim — in a November interview with el Nuevo Herald. Another congressional source confirmed Wednesday that the memo had come from Diaz-Balart.

The memo doesn’t go as far as calling for a return to restrictive Bush-era Cuba policy. Instead, it seeks to undo former President Barack Obama’s actions from December 2014, when he announced the reestablishment of diplomatic relations with the island’s Communist regime.

Cuba would get 90 days to meet criteria set by Congress in the 1996 Helms-Burton Act, including schedule free, multiparty elections, respecting political and civil rights, and making “demonstrable progress” on returning property confiscated from Americans or compensating them for it. Failure to do so would result in returning Cuba to the U.S. list of state sponsors of terrorism, allowing lawsuits against confiscated Cuban property, and eliminating the October 2016 Obama guidance to federal agencies on normalizing U.S.-Cuba relations.

“The top priority is that sanctions must be tightened at least to those that were in place prior to President Obama’s changes announced in December 2014,” the memo says, in a line that is bold and underlined. “In addition to that fundamental change, President Trump has other opportunities listed here which together will generate a better deal for the American and Cuban people that furthers U.S. law and vital national security interests.”

Cuba- Last Week’s Mistakes By Members Of Congress/Advocates Could Hurt U.S. Companies
July 12, 2016

http://www.cubatrade.org/blog/2016/7/12/cuba-last-weeks-mistakes-by-members-of-congressadvocates-could-hurt-us-companies?rq=mark%20sanford

Cuba- Last Week’s Mistakes By Members Of Congress/Advocates Could Hurt U.S. Companies
Cuba Advocacy & Lobbying Can Be Effective…. Usually Ensuring More Next Year
Failure Now Creates Revenue Opportunities For Advocates & Lobbyists
192 Days Remaining….

"There is real momentum," said The Honorable Mark Sanford (R- South Carolina), a member of the United States House of Representatives, last week.  He then had no mention of the events of last week on his www.house.gov page as of 9 July 2016. 

“…a proper path forward and we agreed to find a solution that does a number of things,” said The Honorable Rick Crawford (R- Arkansas), a member of the United States House of Representatives, last week.  He also shared “a long-term solution,” “thorough examination,” and “deliberative process across each relevant committee of jurisdiction.” Representative Crawford then had no mention of the events of last week on his www.house.gov page as of 9 July 2016.  

“… a historic compromise” and “major step forward,” said Washington, DC-based EngageCuba, adding “reached an agreement to find a long-term solution to provide credit for the export of agricultural commodities to Cuba.” 

And, the organization’s president, Mr. James Williams, offered this to those who have opposed his efforts, “their position is no longer tenable.”  Is this a winning-votes strategy by a grass-roots organizer or a self-professed effective advocate/consultant/lobbyist? 

“…redouble its efforts with this Congress,” said Ms. Devry Vorwerk of the Washington, DC-based U.S. Agriculture Coalition for Cuba.  Would this be the 114th Congress about to recess for the upcoming elections, with few remaining legislative days before formally adjourning in December 2016? 

The government of the Republic of Cuba could not have been enthusiastic when their advocates engineered not one, but two, legislative failures within twenty-four (24) hours. 

The result all but assures no legislation in the 114th Congress and simultaneously harms the foundations for advocacy in the 115th Congress- during which issues relating to the Republic of Cuba will again not be a priority for the leadership in either the United States House of Representatives or the United States Senate; or probably the next president.

Why are advocates focusing upon legislation when regulation and policy change are more efficient mechanisms by which to expand the commercial, economic and political relationship between the United States the Republic of Cuba during the remaining 192 days of the Obama Administration? 

One reason, jobs- their own that is.  Did the Members of Congress coordinate their efforts with the self-appointed Republic of Cuba policy advocates?  If so, how should responsibility for the failures be apportioned?

COMPLETE DOCUMENT IN PDF FORMAT

Representative Mario Diaz-Balart (R- Florida)

Representative Mario Diaz-Balart (R- Florida)

Cuba Becomes Entangled In Healthcare Legislation Process

Politico
Arlington, Virgnia
22 March 2017

NYT: Trump won one key vote by pledging to revisit Cuba policy. The president told Rep. Mario Diaz-Balart (R-Fla.) that he'd stick to his promise to potentially reverse former President Barack Obama’s opening with Cuba, the NYT reports.

That pledge secured Diaz-Balart's vote in the House Budget Committee hearing last week — and it turned out to be crucial, given that Republicans only passed the bill out of the budget committee on a 19-17 vote.

PoliticoPro
Arlington, Virgnia
22 March 2017

By Sergio Bustos

MIAMI — In exchange for his support in favor of the GOP American Health Care Act, Republican South Florida Congressman Mario Diaz-Balart sought President Donald Trump’s promise to reverse former President Barack Obama’s policies toward Cuba, the New York Times reported Wednesday.

But Diaz-Balart refuted the Times reporting, saying it’s “categorically and factually incorrect.”

“Once again, the New York Times is categorically and factually incorrect in their reporting,” he said in an emailed statement to POLITICO Florida. “If they had done their basic journalistic duty and placed a simple, 30 second call to my office, they would have known their facts were wrong.”

The newspaper, quoting an unnamed White House official, said Diaz-Balart wanted assurances that Trump would keep his pledge on Cuba. The congressman was critical of Obama’s opening of diplomatic and economic relations with the Cuba.

In January, Diaz-Balart condemned the Obama administration ending the longstanding wet-foot/dry-foot policy for Cubans wanting to illegally migrate to the U.S. from the communist island country. He called it a “betrayal” of the Cuban people.

"President Obama's numerous concessions and extension of diplomatic recognition to the murderous Castro regime does not constitute an achievement,” said Diaz-Balart. “To the contrary, his policy has been a succession of betrayals of America's longstanding commitment to human rights and freedom, and a betrayal of the Cuban people who have suffered under oppression for far too long.”

Diaz-Balart voted in favor the GOP health care bill, known as the American Health Care Act, as a member of the House Budget Committee. Following the vote, he said his support did not mean he was going to vote for the final bill on the House floor. It is schedule for a vote on Thursday.

The New York Times
21 March 2017
New York, New York

POLITICS

Trump Warns House Republicans: Repeal Health Law or Lose Your Seats

Excerpts.... "For other House members, the health bill has been an opportunity to deal. As part of the discussions, Representative Mario Diaz-Balart, Republican of Florida, made it clear to White House officials that he wanted assurances that the president would hold to his pledge to consider reversing President Barack Obama’s opening with Cuba, the White House official said. Mr. Diaz-Balart backed the measure in the Budget Committee last week, although the official said there had been no explicit discussion of trading his vote for a promise on Cuba.

Correction: March 22, 2017

An earlier version of this article incorrectly stated that a White House official said President Trump had promised Representative Mario Diaz-Balart, Republican of Florida, to hold to his pledge to consider reversing President Barack Obama’s opening with Cuba if Mr. Diaz-Balart backed the health care measure. The official said that Mr. Diaz-Balart had made it clear to the White House that he wanted assurances that Mr. Trump would keep that promise, but he never spoke to the president and there was no explicit discussion of trading his vote on the health measure for it."
 

Cuba companies seek payment terms of 1-3 years; Exporters market invoices at 14% to 20% discount. U.S. companies had opportunities- US$110 million & 35 Offices; Cuba Hesitate(d)(s)

Republic of Cuba government-operated companies request payment terms of 1-3 years for imports, regardless of product value; Exporters market invoices at 14% to 20% discount. 

U.S. companies had opportunities- US$110 million & 35 Offices; Cuba Hesitate(d)(s)

Almost every country that exports products to Republic of Cuba government-operated companies has companies that have used invoice-at-a-discount transactions.  The countries with the largest number of companies using these options are Canada, Italy, Panama and Spain.  No United States company has reported using invoice-at-a-discount-transactions. 

Approximately 50% of companies exporting to Republic of Cuba government-operated companies have used invoice-at-a-discount transactions.  Approximately 20% of their account receivables from Republic of Cuba government-operated companies use invoice-at-a-discount transactions and 80% of their account receivables from Republic of Cuba government-operated companies are non-eligible receivables (not considered creditworthy to obtain invoice-at-a-discount options) and where exporters have the financial means to absorb delay-of-payment and/or losses. 

The use of invoice-at-a-discount transactions has remained consistent during each of the last three years.  The government of the Republic of Cuba prefers government-to-government transactions which are less transparent and have opaque repayment flexibility.

Republic of Cuba government-operated companies have been requesting payment terms of one (1) year to three (3) years, whether the product value is US$5,000.00 or US$1,000,000.00 or more.

There is an increasing use by suppliers of products to Republic of Cuba government-operated companies offloading the account receivable on a non-recourse basis to a third-party financier, which purchases the receivable at a discount to its face or future value.  The discount has generally ranged from 14% per annum for Republic of Cuba government-operated companies with consistent repayment histories to 18%-20% for those with problematic repayment histories.

For example, if the product to be exported is priced at US$1,000,000.00, and the Republic of Cuba government-operated company, which is requesting one-year terms, has a poor repayment history, a third-party purchaser of the account receivable in conjunction with the transaction might require an 18% discount, so the exporter would receive US$820,000.00 (loan-to-value advance rate) for a product valued at US$1,000,000.00 unless the sales price has been increased by US$180,000.00, which is often the result so that the exporter is fully-compensated in the transaction.

The following example is where commercial terms are a single payment of US$1,000,000.00 to be made twenty-four (24) months after shipment of the product to the Republic of Cuba.  This commercial credit could be evidenced by any of the following:  

(1) A written promise in the contract to make payment of US$1,000,000.00 using electronic transfer on the appointed date.  Assignment of this type of transaction requires notice to and consent by the purchaser.

(2)  A Bill of Exchange (Promissory Note) drawn on the Republic of Cuba government-operated company for US$1,000,000.00, with a payment date of twenty-four (24) months after shipment of the product to the Republic of Cuba.  A Bill of Exchange is a stand-alone negotiable statutory instrument, regulated and enforced under Republic of Cuba law.  Its endorsement to a third-party financier neither requires notification nor consent of buyer/debtor, but it must be collected into an account at a Republic of Cuba government-operated financial institution in the Republic of Cuba. 

(3) A deferred-payment Letter of Credit issued at the request of the Republic of Cuba government-operated company using a Republic of Cuba government-operated financial institution in favor of the exporter, specifying via SWIFT message, payment of US$1,000,000.00 on a date twenty-four (24) months after shipment of product to the Republic of Cuba.  Letters of Credit are internationally-regulated standard bank obligations, in theory with recourse to SWIFT arbitration, etc.  Assignment of proceeds is perfected via notification by the exporter to the issuing bank, which must confirm the assignment to the new creditor, and therefore, de facto, exercises control and consent over the assignment. 

Each of the above-referenced instruments may be transferred to a third-party financier willing to make payment to the exporter: cash today, against the transfer of the collection rights arising from the sale of the product to the Republic of Cuba government-operated company. 

Do companies that export to the Republic of Cuba that make use of a third-party to unload the debt obligation also seek third-party insurance on their remaining account receivable exposure?  In the transactions outlined above, repayment is based upon the good faith of the Republic of Cuba government-operated company and Republic of Cuba government-operated financial institution. 

A Chief Financial Officer (CFO) of a company might have concerns since the purchaser is seeking one to two years to make payment and the company has already determined risk necessitates off-loading the account receivable at a discount to a third-party; and thus the likelihood of repayment as promised is defined as uncertain.

According to an insurance marketplace expert, “…there are credit insurance companies/brokers, but they are usually small and challenging to locate.  A policy written by these insurance companies/brokers can be problematic- if there is an issue, the policy generally does not pay-out, only extends the cover (at no further cost) until the matter is resolved.  Large commodity trading companies are generally the sole users of this type of insurance as their ability to place a portfolio of global risks makes them attractive counterparts for the insurers; they use most of what limited capacity exists in this marketplace.”  Generally, an account receivable is sold without recourse to a vendor or a receivable is insured and retained by a vendor.

Under provisions of some United States statutes and regulations and policies, durables and non-durables may be exported directly from the United States to the Republic of Cuba if the end-user complies with requirements of, individually or collectively, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, Bureau of Industry and Security (BIS) of the United States Department of Commerce, and United States Department of State (DOS).

The most expansive payment-term latitude for direct product exports/imports and provision of services opportunities from the United States to the Republic of Cuba are 1) healthcare (medical equipment, medical instruments, medical supplies, pharmaceuticals, research collaboration, product testing, product marketing) and 2) individuals working independently and those registered and/or unofficially operating among the 205 categories of authorized self-employed in the Republic of Cuba and 3) agricultural interests where there is a substantive component of independence (defined by the OFAC/BIS/DOS) in terms of ownership and/or operation (thus far, the sourcing of coffee and charcoal have qualified for direct export to the United States). 

Payment for the export of products relating to the aforementioned categories do not require payment of cash-in-advance; payment terms may be extended by the exporter and/or through third-parties (within or outside of the United States).  The government of the Republic of Cuba does not permit self-employed individuals and independent/quasi-independent entities (primarily agricultural-related cooperatives) to directly import products on their own account, directly export on their own account, nor do self-employed individuals have access to wholesale marketplaces.

Had the government of the Republic of Cuba authorized United States companies to engage the full range of regulatory and policy changes implemented by the Obama Administration from 17 December 2014 through 20 January 2017 at the OFAC, BIS and DOS, approximately US$110 million could have been delivered (as exports to self-employed/cooperatives and as Direct Foreign Investment(DFI)) throughout the Republic of Cuba, but primarily in the city of Havana and approximately thirty-five (35) United States companies (including law firms) would have established representative offices in the Republic of Cuba and hired three hundred (300) to five hundred (500) Republic of Cuba nationals to provide direct and indirect services.

Representatives of United States companies who discussed opportunities with representatives of the government of the Republic of Cuba believe there are solutions to encountered management/operational issues, some of which involve Republic of Cuba nationals establishing legally-operating entities (rather than as licensed self-employed) with personnel hiring and import authorization. 

However, the government of the Republic of Cuba has thus far been unwilling to authorize Republic of Cuba nationals to establish legally-operating entities from which to engage hotel management, ground transportation, delivery, product sales, product distribution, and product service.  There are Republic of Cuba government-operated companies that representatives of United States companies believe inefficient, inflexible and incapable of achieving consistent standards because they are “government-operated.”   

NOTE: Government of Vietnam-operated Vinafood (1 & 2) have provided payment terms to Republic of Cuba government-operated Alimport of two (2) years to pay for rice (25% to 30% broken).  United States producers can provide this product; however, payment terms, if statutorily permitted, without the use of United States government guarantee programs, would be cash-on-delivery to 30 days; and for credit-worthy customers, generally not exceed sixty (60) days to ninety (90) days.  No United States company which has exported product(s) to the Republic of Cuba since 2001 has publicly stated what payment terms it would currently provide if authorized by statute.  Since December 2001, more than US$5.3 billion in agricultural commodities and food products have been exported directly from the United States to the Republic of Cuba on a cash-in-advance basis as required by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.  The government of the Republic of Cuba prefers to purchase food products and agricultural commodities from government-operated exporters where either the exporter or the government of the Republic of Cuba accesses government export-payment guarantee programs.  Approximately US$18 million in healthcare products have been directly exported from the United States to the Republic of Cuba since 1992 under provisions of the Cuban Democracy Act (CDA); healthcare product exports within provisions of the CDA are not subject to cash-in-advance requirements.

COMPLETE DOCUMENT IN PDF FORMAT

Statements From The White House About Cuba.... Chronology

THE WHITE HOUSE
Office of the Press Secretary
19 March 2017

 
Readout of the President’s Day        
 
....  He spoke to President Michelle Bachelet of Chile to discuss our bilateral relationship, including our close cooperation on trade and security issues.  President Trump expressed concern over the situation in Venezuela, and the leaders agreed on the importance of advancing democratic principles throughout the Western Hemisphere. 

EFE
Washington, DC
8 March 2017

Excerpts from interview with Ms. Helen Aguirre Ferre, Special Assistant to the President and Director of Media Affairs at The White House....

"The president has been very clear that they are going to evaluate all the agreements that the prior administration (of Barack Obama) made with Cuba," said Aguirre Ferre, who is of Nicaraguan heritage.

...in Trump's judgment, "Cuba did not offer any concessions, with all that it was given in what has been the normalization and reestablishment of agreements and diplomatic behavior."

Cuba is hosting "fugitives from US justice, it has to turn over those people and also talk about the importance of free elections and free political prisoners," Aguirre Ferre said.

Trump's adviser avoided commenting on whether there has been any contact as yet between the Trump administration and Cuba, saying that that it a question for the State Department.

The White House
Office of the Press Secretary
For Immediate Release
16 February 2017
Remarks by President Trump in Press Conference

East Room
12:55 P.M. EST

THE PRESIDENT:  ... We had dinner with Senator [Marco] Rubio [R-Florida] and his wife, who is, by the way, lovely.  And we had a really good discussion about Cuba because we have very similar views on Cuba.  And Cuba was very good to me in the Florida election as you know, the Cuban people, Americans.  

The White House
Office of the Press Secretary
3 February 2017

Press Briefing
12:37 P.M. EST

Mr. Spicer:  With that, I’m going to go my first Skype question seat.   Jackie Nespral from NBC 6 in South Florida.  Jackie.

Question:  Good afternoon.  On behalf of the viewers of South Florida, thanks so much for this opportunity.  You know, a lot of focus on foreign affairs this week, a new sanctions announced today against Iran, and of course Miami, as you know, is home to the largest Cuban-American community in the country.  And during the campaign, President Trump talked about his discontent with the warming of U.S.-Cuba relations implemented by President Obama.  And in the last days of his administration, he ended the "wet foot, dry foot" policy, leaving thousands of Cubans in limbo.

So my question is twofold.  A, has there been any contact between your administration and the Cuban government?  And B, are there any plans to change the current policy right now?

Mr. Spicer:  Thanks, Jackie.  We are in the midst of a full review of all U.S. policies towards Cuba.  The President is committed to an agenda of ensuring human rights for all citizens throughout the world.  And as we review those policies in Cuba, that will be forefront in their policy discussions, but there is nothing that we have on that front at this point.

The White House
Office of the Press Secretary
Washington, DC
24 January 2017

Press Briefing
36:18 of 45:26

Question:  Does the President have any plans to change US policy towards Cuba there are a lot of changes that took place during the last Administration and the Executive Orders as it relates to US-Cuba relations?

Mr. Spicer:  I have to follow-up with you we've got nothing that we're ready to announce at this point.

Committee on Foreign Relations
United States Senate
Washington, DC
21 January 2017

Written answers by Mr. Rex Tillerson, nominee to be United States Secretary of State, as published by the Committee on Foreign Relations.

Question: Despite the Obama Administration’s controversial and misguided decision to normalize relations with Cuba and its hope that this could lead to improved governance and human rights, Cuban officials continue to arrest dissidents and violate the rights of citizens, and tourism revenues benefit only government officials and a small minority of the population. How do you plan to approach the United States’ relationship with Cuba? How will you support human rights defenders and democracy activists in Cuba? What bilateral and/or multilateral pressure will you exert to lessen authoritarian rule in Cuba?

Tillerson: If confirmed, I will engage with Cuba but continue to press for reform of its oppressive regime. I will support human rights defenders and democracy activists in Cuba, empower civil society, defend freedom of expression, and promote improved Internet access and I will ask our allies to do the same.

Will you continue to support programs that promote democratic voices and initiatives in Cuba like Radio and TV Marti?

Yes, if I am confirmed.

What steps will you take to pressure the Castro regime to return American political fugitives like New Jersey cop-killer Joanne Chesimard?

If confirmed, I will engage bilaterally and multilaterally to bring these fugitives to justice.

Will you work with the Treasury Department to ensure that no revenue from American businesses goes directly toward supporting the Cuban military and the regime?

Yes, if I am confirmed.

NOTE: On 9 June 2016, The Honorable Paul Ryan (R-WI), Speaker of the United States House of Representatives, issued a statement entitled, "Achieving U.S. Security Through Leadership & Liberty"  The second paragraph of the document included this sentence: "A first step should be to ban financial transactions with the Cuban military."  http://www.cubatrade.org/blog/2016/6/11/speaker-of-the-house-paul-ryan-wants-to-rescind-starwood-hotel-management-agreement?rq=Paul%20Ryan

What steps will you take to encourage the government of Cuba to release political prisoners, artists, journalists, and other Cubans being detained for politically-motivated reasons?

If confirmed, I will press Cuba to meet its pledge to become more democratic and consider placing conditions on trade or travel policies to motivate the release of political prisoners.

What steps will you take to promote judicial reform in Cuba?

I will work bilaterally and multilaterally to identify training and technical assistance opportunities to assist with judicial reform, if I am confirmed.

On October 12, 2016, PEOTUS Donald Trump stated, “The people of Cuba have struggled too long. Will reverse Obama’s Executive Orders and concessions towards Cuba until freedoms are restored.” Do you stand by PEOTUS Trump’s commitment to reverse the Obama Administration’s Cuba regulations until freedoms are restored on the island?

Yes. There will be a comprehensive review of current policies and executive orders regarding Cuba to determine how best to pressure Cuba to respect human rights and promote democratic changes.

On October 14, 2016, VPEOTUS Mike Pence reiterated this commitment by stating, “When Donald Trump and I take to the White House, we will reverse Barack Obama’s executive orders on Cuba.” Do you stand by VPEOTUS Pence’s commitment to reverse the Obama Administration’s Cuba regulations?

Yes, if I am confirmed.

United States Secretary of State Designate Rex Tillerson
United States Senate Committee on Foreign Relations
Confirmation Hearing Opening Statement
11 January 2017

Excerpts…..

Good morning.

I am honored to have the backing of Senator Cornyn and Senator Cruz from my home state of Texas. I also want to thank Senator Nunn for his commitment to nuclear non-proliferation, and Secretary Gates for his service to eight presidents and his own leadership as President of the Boy Scouts of America.

Chairman Corker, Ranking Member Cardin, and Members of the Committee, it is an honor to appear before you today as President-elect Trump’s nominee for Secretary of State and to seek the approval of this Committee and the full Senate for my confirmation.

But our leadership demands action specifically focused on improving the conditions of people the world over, utilizing both aid and economic sanctions as instruments of foreign policy when appropriate.

And we must adhere to standards of accountability. Our recent engagement with the government of Cuba was not accompanied by any significant concessions on human rights. We have not held them accountable for their conduct. Their leaders received much, while their people received little. That serves neither the interest of Cubans or Americans.

Abraham Lincoln declared that America is “the last best hope of Earth.” Our moral light must not go out if we are to remain an agent of freedom.

Silver Airways Suspending Cuba Service On 22 April 2017; May Seek Frontier's MIA-HAV Route

From the company:

"Fort Lauderdale, Florida-based Silver Airways has maintained from the beginning that these smaller Cuba markets – which are similar to its successful network and fleet strategy in Florida and the Bahamas – are best suited for Silver’s smaller aircraft type.   

While the actual total number of passengers currently traveling to and from Cuba on all carriers combined is in line with what Silver originally projected, other airlines continue to serve this market with too many flights and oversized aircraft, which has led to an increase in capacity of approximately 300% between the U.S. and Cuba. 

In addition to overcapacity, distribution through online travel agencies and codeshare agreements have been unavailable since airlines began servicing Cuba last fall.  Now, six months later, this issue is still not fully resolved, resulting in depressed demand.   

This lack of demand coupled with overcapacity by the larger airlines has made the Cuban routes unprofitable for all carriers.   

As a result, Silver has made the difficult but necessary decision to suspend its Cuba service effective April 22, 2017.  It is not in the best interest of Silver and its team members to behave in the same irrational manner as other airlines.  However, Silver will continue to monitor Cuba routes and will consider resuming service in the future if the commercial environment changes. 

Silver continues to focus efforts on their longer-term strategy of growing its successful Florida and Bahamas network and its fleet transition strategy that will allow the airline to serve many more markets further into the Caribbean and other destinations from its key hubs with longer range aircraft. 

In addition, we have learned today that Frontier has loaded a schedule showing they are exiting their Miami – Havana route after June 4, 2017.  As a result, Silver is considering re-applying for rights to serve Havana."

Frontier Airlines Ending MIA-HAV Route On 4 June 2017

Frontier Airlines Ending MIA-HAV Route On 4 June 2017

Denver, Colorado-based Frontier Airlines is not showing its currently-operating Republic of Cuba route from Miami International Airport (MIA) to Jose Marti International Airport (HAV) as of 4 June 2017.

From the company: "Frontier Airlines is committed to offering 'Low Fares Done Right to more than 60 destinations in the United States, Mexico, Cuba and the Dominican Republic on nearly 300 daily flights. Headquartered in Denver, Frontier’s hard-working aviation professionals pride themselves in delivering the company’s signature Rocky Mountain hospitality to customers. Frontier Airlines is the proud recipient of the Federal Aviation Administration’s 2014 Diamond Award for maintenance excellence and was recently named the industry’s most fuel-efficient airline by The International Council on Clean Transportation (ICCT) as a result of superior technology and operational efficiencies."
 

United States Companies With A Presence In Cuba Since 17 December 2014

United States Companies With A Presence In Cuba Since 17 December 2014
No Manufacturing/Assembly/Offices/DFI
Many Licenses Issued By OFAC/BIS Not Yet Disclosed & Implemented

United States-based companies engaged in export of products, import of products and provision of services, including publicly-confirmed memorandum of understanding (MOU).  The listing does not include travel agents and tour operators, most of whom have arrangements with Republic of Cuba government-operated Havanatur Celimar, Asistur, Gaviota and other Republic of Cuba government-operated companies to market itineraries.  

This listing does not include United States-based companies that have exported food products and agricultural commodities (Trade Sanctions Reform and Export Enhancement Act of 2000) and healthcare products (Cuban Democracy Act of 1992).  

There is no Direct Foreign Investment (DFI) in the Republic of Cuba by United States-based companies.  Since 17 December 2014, there have been two (2) proposals in the public domain that could qualify as DFI and each was rejected by the government of the Republic of Cuba: Alabama-based Cleber LLC (a facility in the Republic of Cuba that would use parts manufactured in the United States and delivered to the Republic of Cuba to assemble tractors for the domestic market and for export) and Florida-based Florida Produce of Hillsborough County (distribution center in the Republic of Cuba featuring food and other products imported from the United States).   

There are a reported twenty (20) to more than seventy (70) licenses issued in 2016 (before and after the 8 November 2016 presidential election through 20 January 2017) by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and/or Bureau of Industry and Security (BIS) of the United States Department of Commerce, that have not been disclosed by the licensee, have not been implemented by the licensee, have been implemented by the licensee but not disclosed, and/or in some instances confirmed by the government of the Republic of Cuba but not by the licensee. 

1.    Alabama- Gulfwise LLC (2016 contract export of one piece of equipment; not delivered)
2.    California- Airbnb (residential reservations)
3.    California- Cisco Systems (donated no-cost networking academy)
4.    California- Google (donated products for interactive display; donated servers)
5.    Colorado- Frontier Airlines (flights)
6.    Colorado- Western Union (funds transfers- commenced before 2014)
7.    Connecticut- Booking.com [owned by Priceline] (hotel reservations)
8.    Connecticut- Pearl Seas Cruises (cruise ships)
9.    Connecticut- Starwood Hotels & Resorts Worldwide (hotel management)
10.    Connecticut- General Electric (parts & equipment for a power plant)
11.    District of Columbia- United States Postal Service (delivery services)
12.    Florida- Crowley Liner Services (container shipping)
13.    Florida- Eastern Airlines (flights)
14.    Florida- Fogo Premium Hardwood Lump Charcoal (import of charcoal)
15.    Florida- Natbank (Mastercard)
16.    Florida- Norwegian Cruise Line Holdings (cruise ships)
17.    Florida- Premier Automotive Export (export of electric vehicles/chargers)
18.    Florida- Royal Caribbean Cruises, Ltd. (cruise ships)
19.    Florida- Silver Airlines (flights)
20.    Florida- Spirit Airlines (flights)
21.    Florida- Stonegate Bank (Mastercard & correspondent banking)
22.    Florida-Carnival Corporation & PLC (cruise ships)
23.    Georgia- Delta Airlines (flights & ticket office)
24.    Illinois- Caterpillar (Puerto Rico-based authorized distributorship; donated product)
25.    Illinois- United Airlines (flights)
26.    Kansas- Sprint (roaming agreement)
27.    Massachusetts- TripAdvisor (hotel reservations)
28.    Minnesota- Sun Country Airlines (flights)
29.    New Jersey- Advanced Solar Products (export of electric vehicle chargers)
30.    New Jersey- Wyndham Worldwide (hotel management)
31.    New Jersey- IDT Corporation (direct long distance)
32.    New York- Colgate-Palmolive (oral education program- early 2014)
33.    New York- JetBlue Airlines (flights)
34.    New York- Mastercard International (credit/debit branded cards)
35.    New York- Nestle Nespresso USA (coffee imports)
36.    New York- Roswell Park Cancer Institute (vaccine clinical trial)
37.    New York- Starr Companies (letter of intent- insurance)
38.    New York- Verizon (roaming agreement)
39.    Puerto Rico- Banco Popular de Puerto Rico (Mastercard)
40.    Tennessee- FedEx (cargo)
41.    Texas- American Airlines (flights & ticket office)
42.    Texas- AT&T (roaming agreement)
43.    Texas- Southwest Airlines (flights)
44.    Washington- Alaska Airlines (flights)
45.    Washington- T-Mobile (roaming agreement)

LINK FOR DOCUMENT IN PDF FORMAT

January 2017 Food/Ag Exports From US To Cuba Decrease 38%

ECONOMIC EYE ON CUBA©
March 2017

January 2017 Exports To Cuba Decrease 38%- 1
Healthcare Product Exports- 2
Humanitarian Donations- 3
Obama Administration Initiatives Product Exports- 3
U.S. Port Export Data- 14
2017 Speaking Schedule- 15

JANUARY FOOD/AG EXPORTS DECREASE 38%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in January 2017 were US$14,149,848.00 compared to US$22,819,258.00 in January 2016 and US$24,850,904.00 in January 2014. 

The following contains information on exports from the United States to the Republic of Cuba- products within the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, Cuban Democracy Act (CDA) of 1992, and regulations implemented (1992 to present) for other products by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry and Security (BIS) of the United States Department of Commerce.  The TSREEA re-authorized the direct commercial (on a cash basis) export of food products (including branded food products) and agricultural products (commodities) from the United States to the Republic of Cuba, irrespective of purpose.  The TSREEA does not include healthcare products, which remain authorized and regulated by the CDA.

LINK TO COMPLETE REPORT IN PDF FORMAT

Five Members Of Congress Secret (From Their Constituents) Visit To Cuba

Five (5) members of the United States House of Representatives visited the Republic of Cuba this week. 

While the Ministry of Foreign Affairs of the Republic of Cuba published images (6 March 2017 and 7 March 2017) and narrative of the visit by the delegation, no member of the delegation mentioned the visit on their www.house.gov Internet site as of 8:19 am on 8 March 2017.

Tom Emmer (D- Minnesota)
Jack Bergman (R- Michigan)
Jason Lewis (R- Minnesota)
Roger Marshall (R- Kansas)
James Comer (R- Kentucky)

Why would Members of Congress, especially Representative Emmer who has visited the Republic of Cuba on three (3) occasions, maintain secrecy about the visit- before it happened, during it, and subsequent to it... when the government of the Republic of Cuba is publicizing it?

FedEx Requests Extension From April To October To Begin Cuba Operations; USPS Began Operations In 2016

During the last several months, United States-based air carriers have sought to delay implementation of certain United States-Republic of Cuba routes, have sought to lessen frequencies of scheduled services, and have sought to reduce the size of aircraft used for scheduled services as they bring into balance the competitive efforts to obtain routes with the reality of profitable operations of those routes.

Now, with Memphis, Tennessee-based FedEx Corporation seeking to delay implementation of its regularly-scheduled cargo services after previously seeking a change to its routing and aircraft type, the bilateral commercial narrative is increasingly problematic for United States companies as it reflects less movement of passengers and packages. 

http://www.cubatrade.org/blog/2016/3/6/fedex-seeks-cargo-flights-to-cuba-ups-not-yet?rq=FedEx

However, this diminishing commercial landscape may be beneficial within the context of the review of United States policies and regulations toward the Republic of Cuba by the Trump Administration.  The less commercial activity that exists may result in fewer changes because there are fewer targets requiring impact.  

1 March 2017

MOTION OF FEDERAL EXPRESS CORPORATION [TO USDOT] FOR EXTENSION OF START-UP DATE

Federal Express Corporation ("FedEx") hereby moves for a six-month extension of time to inaugurate U.S.-Cuba scheduled, all-cargo air services utilizing the five weekly frequencies awarded to FedEx. In Notice of Action Taken, dated July 15, 2016, the Department of Transportation ("the Department") granted FedEx allocation of five weekly frequencies to provide once-daily (i.e., Monday-Friday) all-cargo air services between Miami, Florida (MIA) and Matanzas/Varadero, Cuba (VRA).  Pursuant to the conditions of the Department's award, FedEx must inaugurate its U.S.-Cuba air services with the allocated frequencies within 90 days of its requested January 15, 2017 start-up date, or by April 15, 2017. However, FedEx requests that its U.S.-Cuba air services start-up date be extended until October 15, 2017. This extension is needed to provide FedEx with additional time to work through the doing-business challenges and operational constraints that persist in the Cuba market, given that market's emergent nature and the Cuban regulatory complexities overlaying such matters.

In support of this Motion, FedEx respectfully submits the following:

1. As the only all-cargo participant in the Department's 2016 U.S.-Cuba Frequency Allocation Proceeding, FedEx is pleased to have received authority from the Department to operate five weekly all-cargo flights between MIA and VRA.

2. As previously indicated in this docket, FedEx began the rigorous preparatory and planning work for its Cuba services some time ago. However, FedEx requires a six-month extension of time for inaugurating its MIA-VRA service because of several inextricable dynamics, such as securing and establishing business relationships with Cuban service providers- in relation to air operations support services, customs clearance, andground/deliveryoperations - who would appropriately complement the express delivery services forwhich FedEx is world-renowned while remaining within the limits of the existing, relevant Cuban laws and regulations.

3. The Department's grant of FedEx's extension request would be consistent with the public interest and Department precedent. FedEx remains committed to using its Cuba authority to provide the highest quality of reliable and efficient U.S.-Cuba air express/cargo service, which would maximize the public benefit of the U.S.-Cuba Memorandum of Understanding, for U.S. shippers and commerce alike. The six-month extension requested herein would not impact such longer-term benefits. Moreover, all other U.S. carriers who received U.S.-Cuba authority from the Department have requested, and ultimately received, start-up extensions relating to certain U.S.-Cuba flights.

WHEREFORE, FedEx respectfully requests that the Department grant this Motion for a six-month extension of time, to October 15, 2017, for the start-up of FedEx's scheduled all-cargo air services between Miami, Florida and Matanzas/Varadero, Cuba.

On 7 March 2017, USDOT wrote: “The Department grants the request of Federal Express Corporation (FedEx) for relief, until October 15, 2017, from the 90-day start-up condition applicable to the Monday-Friday Miami-Matanzas frequencies allocated to FedEx by Notice of Action Taken dated July 15, 2016, in this docket. The Department will require that FedEx inaugurate its Monday-Friday Miami-Matanzas service no later than October 15, 2017. We acted on this motion without awaiting expiration of the answer period with the consent of all parties served.”

United States Postal Service Resumes Mail Service to Cuba
First Direct Transportation of Mail Service to Cuba in More Than 50 Years

16 March 2016: WASHINGTON — Today the United States Postal Service announced it resumed direct transportation of mail service with Cuba for the first time in more than 50 years.

"The U.S. Postal Service is pleased to participate in the historic direct transportation of mail service with Cuba," said Postmaster General and CEO Megan J. Brennan. "Moving letter mail and package volume directly between our countries will improve service for businesses and consumers."

The types of mail customers in the U.S. can send to Cuba include First-Class Mail International items, such as postcards and letter size envelopes, First-Class Package International Service items, Priority Mail International Flat Rate Envelopes and Priority Mail International Small Flat Rate Priced Boxes. A comprehensive list of mailing conditions to Cuba can be found in the International Mail Manual at: http://pe.usps.gov/text/imm/ce_017.htm#ep1416554.

USPS To Commence Operations
December 11, 2015

Press Release issued by the Cuban Delegation participating in the Negotiations to Re-establish Direct Postal Service between Cuba and US
 
MIAMI, December 11, 2015. On Thursday, December 10, the representatives of Cuba and the United States held a new round of talks on the re-establishment of direct postal service between both countries. The Cuban delegation was headed by José Ramón Cabañas Rodríguez, Ambassador of Cuba to the United States; and the US delegation was headed by Lea Emerson, Executive Director for International Postal Affairs at the United States Postal Service.

Both delegations agreed to re-establish direct postal service between the two countries through the implementation of a Pilot Plan for the transportation of mail which will become effective within the next few weeks, with the hope of eventually institutionalizing it on a permanent basis in the future.

After more than five decades without this important service, the direct transportation of mail and postal packages between Cuba and the United States will be available to the citizens of both countries on a date to be announced further on, once the discussion of the technical, operational and safety aspects required for its implementation is completed.

During the meeting, the Cuban delegation set out examples evidencing the impact that the implementation of the US blockade has had on the transactions carried out by Grupo Empresarial Correos de Cuba.

The talks were held in a respectful, professional and constructive ambiance (Cubaminrex).

Cuba Mentioned 14 Times In New USTR Report; What Became Of “Trade and Investment Working Group” Established in September 2016?

On 1 March 2017, the Office of the United States Trade Representative (USTR) within the Executive Office of the President, published a 336-page “2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on the Trade Agreements Program Office of the United States Trade Representative.” Link to Report.  The media release:

The Office of the United States Trade Representative releases President Trump’s 2017 Trade Policy Agenda

The new Trade Agenda reinforces the Administration’s commitment to defend American interests through the promotion of truly free and fair trade.

Washington, D.C. – Today, the Office of the U.S. Trade Representative ("USTR") released President Trump's 2017 Trade Policy Agenda, as required by Congress.  The 2017 Agenda outlines the new Administration’s four trade priorities: promoting U.S. sovereignty, enforcing U.S. trade laws, leveraging American economic strength to expand our goods and services exports, and protecting U.S. intellectual property rights.  USTR leads development and implementation of the President’s Trade Policy Agenda, which it provides with the Annual Report on trade developments.

Page 135 of the report, under the category of “Other Priority Work,” contained the following reference to the Republic of Cuba.

The United States continued its engagement with other countries in the region, aimed at fostering bilateral trade relations and resolving trade problems during 2016. Highlights of USTR’s other priority activities in the region include:

Cuba

In addition to the United States-Cuba Regulatory Dialogue established in 2015, the U.S. Department of State held a meeting of the United States-Cuba Economic Dialogue in September 2016, during which the United States and Cuba agreed to create the Trade and Investment Working Group, which would be chaired by USTR on the U.S. side and Ministry of Foreign Trade and Investment on the Cuban side.” 

In October 2016, then-USTR Ambassador Michael Froman visited the Republic of Cuba in what was a non-publicized visit- with little information provided before, during or after the visit.  A 10 October 2016 blog post:

USTR Ambassador & Deputy Visit Cuba... MINREX Provides More Information Than US Government... Why?

Why is the government of the Republic of Cuba more transparent about it discussions with officials of the government of the United States?  They reported who the meetings were with, what was discussed, and issued an image (see below). 

On 4 October 2016, the Office of the U.S. Trade Representative (USTR) announced that USTR Ambassador Michael Froman will visit Havana, Republic of Cuba, from 5 October 2016 to 8 October 2016 for “bilateral meetings.”  The Honorable Matthew Vogel, Acting Deputy U.S. Trade Representative will also participate. 

Not identified as participating were support staff and John Melle, Assistant U.S. Trade Representative for the Western Hemisphere; Matthew McAlvanah, Assistant U.S. Trade Representative for Public and Media Affairs.

The delegation traveled using regularly-scheduled commercial airlines.

The visit was not announced in USTR's regularly-scheduled calendar issued on Friday, 30 September 2016.

Ambassador Froman was the seventh (7th) member of President Barack Obama's Cabinet to visit the Republic of Cuba since 17 December 2014.

From the Ministry of Foreign Affairs of the Republic of Cuba

"CUBA, October 7, 2016.- On 6 and 7 October, made an official visit to Cuba Ambassador Michael Froman, Office of the United States Trade Representative, during which he was received by ministers Bruno Rodriguez Parrilla, Foreign Affairs; and Rodrigo Malmierca, Foreign Trade and Foreign Investment.

He also met with Deputy Ministers of the Ministries of Communications, Agriculture and Science, Technology and Environment.

At the meetings they were discussed issues of interest to both related to the field of trade parties. Ambassador Froman and his delegation visited the Special Area Development Mariel, an agricultural cooperative and the Historic Center of Old Havana. (Cubaminrex)"

NOTE: Mrs. Josefina de la Caridad Vidal Ferreiro, the Director General (since 2013) of the Department of the United States at the Ministry of Foreign Affairs of the Republic of Cuba, reported that from October 2016 through December 2016 seven high-level visits by both officials of the government of the Republic of Cuba and delegations from the United States were scheduled to be held in Washington, DC, and in Havana.  The United States Department of State has not mentioned the number of visits.

NOTE: There remains a continuing issue with the Obama Administration relating to the transparency for visits to the Republic of Cuba by senior-level officials. 

NOTE: The United States business community would be better served by having advance notification of meetings that will impact the United States business community.

http://www.cubatrade.org/blog/2016/10/4/ustr-ambassador-michael-froman-deputy-to-visit-cuba-why-the-secrecy?rq=Froman

The “2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on the Trade Agreements Program Office of the United States Trade Representative” also mentioned the Republic of Cuba in the following pages of the publication:

Page 15: 1. Committee on Agriculture

Major Issues in 2016

The Agriculture Committee held four formal meetings, in March, June, September, and November 2016, to review progress on the implementation of commitments negotiated in the Uruguay Round. At the meetings, Members undertook reviews based on notifications by Members in the areas of market access, domestic support, export subsidies, export prohibitions and restrictions, and general matters relevant to the implementation of commitments.

In total, 206 notifications were subject to review during 2016. The United States participated actively in the review process and raised specific issues concerning the operation of Members’ agricultural policies. For example, the United States regularly raised points with respect to domestic support in many Members, including Afghanistan, China, Costa Rica, Cuba, Georgia, India, the Russian Federation, South Africa, Switzerland, Tunisia, and the United Arab Emirates. The United States used the review process to question Canada’s dairy and wine policies; India’s price support policies; Brazil’s Program for Product Flow (PEP – Prêmio para Escoamento do Produto) and Program for Producer-paid Equalization Subsidy

(PEPRO – Prêmio de Equalização pago ao Produtor) for rice, wheat, and corn; Costa Rica’s rice support program; India’s Export Assistance programs; Moldova’s poultry tariffs; Thailand’s rice policies; and Turkey’s wheat flour export policies under the Turkish Grain Board. The United States raised questions with respect to tariff-rate-quota fill issues with China, Guatemala, and Switzerland. The United States also raised questions regarding Canada’s export subsidy notifications for butter, and questioned missing information in Afghanistan’s export subsidy notification tables. Finally, the United States raised questions with the Russian Federation’s food aid notification to ensure it was consistent with WTO practices, and encouraged countries including China and Turkey to bring their notifications up to date.

During 2016, the Agriculture Committee addressed a number of other issues related to the implementation of the Agriculture Agreement, such as: (1) convening the third annual dedicated discussion on export competition, as follow-up to the Bali and Nairobi Ministerial outcomes; and (2) exchanging views on approaches to strengthening Committee work relating to transparency.

Disputes Brought Against the United States

Section 124 of the URAA requires, inter alia, that the Annual Report on the WTO describe, for the preceding fiscal year of the WTO: each proceeding before a panel or the Appellate Body that was initiated during that fiscal year regarding Federal or State law, the status of the proceeding, and the matter at issue; and each report issued by a panel or the Appellate Body in a dispute settlement proceeding regarding Federal or State law. This section includes summaries of dispute settlement activity in 2016 for disputes in which the United States was a responding party (listed by DS number).

Page 70: United States – Section 211 Omnibus Appropriations Act (DS176)

Section 211 addresses the ability to register or enforce, without the consent of previous owners, trademarks or trade names associated with businesses confiscated without compensation by the Cuban government. The EU questioned the consistency of Section 211 with the TRIPS Agreement and requested consultations on July 7, 1999. Consultations were held September 13 and December 13, 1999. On June 30, 2000, the EU requested a panel. A panel was established on September 26, 2000, and at the request of the EU, the WTO Director General composed the panel on October 26, 2000. The Director General composed the panel as follows: Mr. Wade Armstrong, Chair; and Mr. François Dessemontet and Mr. Armand de Mestral, Members. The Panel report was circulated on August 6, 2001, rejecting 13 of the EU’s 14 claims and finding that, in most respects, section 211 is not inconsistent with the obligations of the United States under the TRIPS Agreement. The EU appealed the decision on October 4, 2001. The Appellate Body issued its report on January 2, 2002.

The Appellate Body reversed the Panel’s one finding against the United States and upheld the Panel’s favorable findings that WTO Members are entitled to determine trademark and trade name ownership criteria. The Appellate Body found certain instances, however, in which section 211 might breach the national treatment and most favored nation obligations of the TRIPS Agreement. The Panel and Appellate Body reports were adopted on February 1, 2002, and the United States informed the DSB of its intention to implement the recommendations and rulings. The RPT for implementation ended on June 30, 2005. On June 30, 2005, the United States and the EU agreed that the EU would not request authorization to suspend concessions at that time and that the United States would not object to a future request on grounds of lack of timeliness.

In January 2016, the United States notified the EU of positive developments that resolved a longstanding issue of concern to the EU and others, which helped moved this dispute into a more cooperative phase.

Page 96: Major Issues in 2016

Since its inception in 1989 to the end of 2016, the TPRB has conducted 452 reviews. The reviews have covered 153 of 164 Members. Those Members not yet reviewed by the end of 2016 are Afghanistan, Cuba, Kazakhstan, Lao PDR, Liberia, Montenegro, Samoa, Seychelles, Tajikistan, Vanuatu, and Yemen. Of the 36 LDC Members of the WTO, the TPRB had reviewed 31 by the end of 2016.

While each review highlights the specific issues and measures concerning the individual Member, certain common themes emerged during the course of the reviews conducted in 2016.  These included:

  • transparency in policy making and implementation;
  • economic environment and trade liberalization;
  • implementation of the WTO Agreements (including acceptance and implementation of the WTO TFA);
  • regional trade agreements and their relationship with the multilateral trading system;
  • tariff issues, including the differences between applied and bound rates;
  • customs valuation and customs clearance procedures;
  • the use of trade remedy measures such as antidumping and countervailing duties;
  • technical regulations and standards and their alignment with international standards;
  • sanitary and phytosanitary measures;
  • intellectual property rights legislation and enforcement;
  • government procurement policies and practices;
  • trade-related investment policy issues;
  • sectoral trade policy issues, particularly liberalization in agriculture and certain services sectors; and
  • technical assistance in implementing the WTO Agreements and experience with Aid for Trade, and the Enhanced Integrated Framework.

In December, WTO Members completed the sixth appraisal of the Trade Policy Review Mechanism and agreed on several reforms that aim to improve the TPRB’s review of Members’ trade policies and practices and its monitoring of the global trading environment. Most significantly, Members agreed to adjust the cycle of TPRs amid the rising number of WTO Members. Currently, Members undergo a TPR every two, four, or six years depending on the size of their economy. From 2019, the frequency will be changed to three, five, or seven years, respectively.  Members agreed to revise the timeline for the TPR question-and-answer process for those Members who opt to provide early written answers to other Members’ questions. For Members reviewed on a two-year cycle, such as the United States, it was agreed that the Secretariat Report may focus on the implementation of issues highlighted in the previous review and on actual changes due to legislation or related to new issues arising from recent WTO ministerial decisions. Further, Members agreed to create a regular item on the agenda of trade monitoring meetings to allow Members to provide brief reports on significant changes in their trade policies.

Strange: A House Ag Hearing And No Mention Of Cuba; Despite USDA Seeking US$1.5 Million For FAS Staffing In Cuba

On 28 February 2017, the Subcommittee on Livestock and Foreign Agriculture of the Committee on Agriculture of the United States House of Representatives held a hearing relating to International Market Development.” [See media release below.]

What is extraordinary about this hearing is none of the witnesses mentioned the Republic of Cuba in their written statements despite the perception of generally bipartisan interest by members of the House of Representatives and private sector commercial/educational interests towards expanding the commercial landscape for agricultural commodities and food products to be exported from the United States to the Republic of Cuba. 

Since December 2001, under provisions of the Trade Sanctions Reform and Enhancement Act (TSREEA) of 2000, more than US$5.3 billion in agricultural commodities and food products have been exported from the United States to the Republic of Cuba on a cash basis as required by the TSREEA.  There have been numerous efforts in the United States Congress to make expansive changes to the TSREEA.

http://www.cubatrade.org/blog/2017/2/13/economic-eye-on-cuba-2016-exports-increase-36-2016-healthcare-exports-increase-22

In 2016, the United States Department of Agriculture (USDA) requested an appropriation of US$1.5 million to provide payments for USDA Foreign Agricultural Service (FAS) staffing within the Embassy of the United States in Havana, Republic of Cuba.  The request was approved on 19 May 2016 by the United States Senate Committee on Appropriations; the request requires approval by the United States Senate and United States House of Representatives before becoming law.

http://www.cubatrade.org/blog/2016/11/5/usda-hubris-usda-illegality-for-the-inspector-general-why-is-this-an-issue?rq=FAS

USDA Media Notification

May 2016

With the normalization of relations between the United States and Cuba, USDA requires permanent in-country presence there to effectively carry out the USDA mission and advance U.S. agricultural and national security interests. On May 19, the Senate Appropriations Committee unanimously approved a fiscal 2017 appropriations bill that includes $1.5 million to support President Obama’s budget request for USDA staffing in Cuba.”

In 2017, FAS will conduct its activities and programs through offices in Washington, D.C. and at 94 overseas locations, including Cuba. The overseas offices represent and advocate for U.S. agricultural interests; provide reporting on agricultural policies, production, and trade for more than170 countries; assist U.S. exporters, trade groups, and State export marketing officials in their trade promotion efforts; and help to implement technical assistance and trade capacity building programs that contribute to increased food security. The Budget provides an appropriated funding level of $197 million for FAS activities in 2017, including increased funding for International Cooperative Administrative Support Services, opening an overseas post in Cuba, and pay costs, including for locally employed staff. Agriculture will play an important role as the U.S. and Cuba expand relations, acting as a bridge that can foster cooperation, understanding, and the exchange of ideas. USDA needs an in-country presence in Cuba to cultivate key relationships, gain firsthand knowledge of the country’s agricultural challenges and opportunities, and develop programs of mutual benefit to both countries.”

From The Hearing Media Release

Today, Rep. David Rouzer (NC-7), Chairman of the House Agriculture Committee’s Subcommittee on Livestock and Foreign Agriculture, held a hearing to examine the international market development programs administered by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service. Members heard from a variety of witnesses in the agricultural industry who discussed the critical nature of these programs in increasing and enhancing access to overseas markets. The hearing was a continuation of the committee’s hearing series on the next farm bill.

“It is important that we recognize the overarching benefits that market development funding brings the U.S. agricultural industry as a whole—benefits to American farmers and small businesses that would not be otherwise achieved. These USDA programs continue to facilitate our farmers’ and ranchers’ efforts to reach new markets and have proven invaluable in helping to level the playing field within those global markets. We must continue to invest in these programs so demand for U.S. food and fiber continues to grow and American agriculture remains strong,” said Subcommittee Chairman Rouzer.

“Our competitors are outspending us on export promotion programs by a huge margin. Couple that with a host of countries who continue to employ trade distorting domestic policies with no regard to their WTO commitments, and it is easy to see why it is becoming harder and harder for our producers to compete on the global stage. International market development programs like the Market Access Program and the Foreign Market Development program are essential tools in helping to overcome such obstacles. I am impressed by the work made possible through these programs, and I look forward to ensuring they are being used as efficiently as possible to promote superior quality American agricultural products around the world,” said Agriculture Committee Chairman K. Michael Conaway.

Witness List:
Dr. Gary Williams, Professor of Agricultural Economics & Co-Director of the Food, Agribusiness and Consumer Economics Research Center, Texas A&M University, College Station, TX
Mr. Joseph Steinkamp, Director, American Soybean Association, Evansville, IN; on behalf of the Coalition to Promote U.S. Agriculture Exports and the Agribusiness Coalition for Foreign Market Development
Mr. Tim Hamilton, Executive Director, Food Export-Midwest and Food Export-Northeast, Chicago, IL
Mr. Philip Seng, President & CEO, U.S. Meat Export Federation, Denver, CO
Mr. Dean Alanko, Vice President of Sales and Marketing, Allegheny Wood Products, Petersburg, WV; on behalf of the Hardwood Federation
Mr. Paul Wenger, almond grower and President, California Farm Bureau, Sacramento, CA

Seven (7) Memoranda: The Trump Administration (2016-2017)

Castro To Canel: 365 Days, 52 Weeks, 525,600 Minutes.... Another Transition, Succession & Opportunity

365 days
52 weeks
525,600 minutes

On 24 February 2018, H.E. General Raul Castro (DOB 3 June 1931), President of the Republic of Cuba, will be replaced by the First Vice President of the Council of State of the Republic of Cuba, H.E. Miguel Diaz-Canel Bermudez (DOB 20 April 1960).  

This will be the first time in fifty-nine (59) years that the Republic of Cuba will have a head of state and head of government whose family name is not Castro.

The date 24 February has significance to the Republic of Cuba and for the United States: 

  • 24 February 2013, H.E. General Raul Castro is elected to a 2nd term as President of the Republic of Cuba.  
  • 24 February 2008, H.E. Dr. Fidel Castro Ruz retires as President of the Republic of Cuba.  
  • 24 February 1996 was the date when two United States civilian aircraft were shot down by aircraft operated by the Revolutionary Armed Forces of the Republic of Cuba (FAR); four individuals die.  
  • 24 February 1976 was the date the Republic of Cuba adopted its constitution.  
  • 24 February 1895 was the beginning of Cuba’s War of Independence.
H.E. General Raul Castro

H.E. General Raul Castro

H.E. Miguel Diaz-Canel

H.E. Miguel Diaz-Canel

Ethics & Commerce With Cuba: A Day-Long Program

Politico
Arlington, Virginia
21 February 2017

CASHING IN ON CUBA — Via press release: “What are the ethical, legal and compliance land mines associated with the evolving business relationship between the U.S. & Cuba? Should you or your company get involved or stay away? The Miami-Dade Ethics Commission has put together a day-long program featuring veteran Cuba watchers, legal minds and academic experts to hash it out on Fri., Mar. 10 at Barry Univ. in Miami Shores. Lawyers earn 6.5 CLE. Details at ethics.miamidade.gov.”

LINK To Agenda

Image From 10 March 2017

Image From 10 March 2017

2/24/17 For Cuba Policy/Regulatory Announcements? 7 Sectors Receiving Focus

It could.  Might not.  That’s the point…. Create uncertainty.
24 February 2017-24 February 2018
Who Prevails? The Agnostics, The Pragmatics or Passionate Ideologues  
Air Carriers, Cruise Lines, Travel Agents/Tour Operators, OFAC, CBP, Title III, Military
Illogical to plan for nothing.  Irrational to plan for everything.  Informed to plan for something.

There are individuals within the Trump Administration who advocate for an announcement on 24 February 2017 relating to United States-Republic of Cuba policy and regulations.

This date would be one year before a new president is inaugurated in the Republic of Cuba- the first in fifty-nine (59) years not to have the “Castro” family name:  H.E. Miguel Diaz-Canel Bermudez (DOB 20 April 1960), the current First Vice President of the Council of State of the Republic of Cuba.

The Trump Administration may position changes in policy and regulations as fluid rather than momentary- an initial announcement and then, perhaps others.  Personnel issues, not having in place individuals who focus upon enforcement at departments and agencies have disrupted the timing of the initial announcement.

A point of contention is whether to make changes to policy and regulations retroactive or hence-forward.  There are potential legal challenges to removing what has already been relied upon by United States companies and citizens.  The decision is not about can or can’t, it’s about should or shouldn’t.

In 2016, the export of products and provision of services to Republic of Cuba meant approximately US$1.2 billion million in gross revenues to United States companies; and in 2017 is projected to mean US$1.4 billion in gross revenues to United States companies.  Export is defined as food products/agricultural commodities, healthcare products, air carriers, cruise lines, travel agent/tour operator revenues/fees/commissions, financial transaction fees, shipping fees, and private exports of products for use by independent businesses.  A substantial portion of travel agent/tour operator revenues (payments for hotels, ground transportation, tours, etc.) are transferred to the Republic of Cuba.

In 2016, Republic of Cuba government-operated entities earned gross revenues of approximately US$1.0 billion from visitors subject to United States jurisdiction (those with and without passports issued by the government of the Republic of Cuba), in addition to approximately US$2 billion in remittances (a meaningful amount of which was delivered in the form of products purchased in the United States and provided to family and friends; and to customers of independent businesses).

In 2017, the value of visitors subject to United States jurisdiction to Republic of Cuba government-operated companies is projected to exceed US$1.5 billion and remittances are expected to remain similar to 2016.  These projections are based upon no changes to United States policies or regulations by the Trump Administration.

The Trump Administration review process has three (3) groups: The Agnostics, The Pragmatics and the Passionate Ideologues

The first group doesn’t care; the Republic of Cuba is of such insignificance they will neither advocate more nor advocate less; they will adjust to the outcome while appreciating what is enacted today will be sustained or massaged by events as-yet-unknown.

The second group receives input from varied sources (inside government and outside government) and tends to support the status quo unless the status quo is doing harm- to the United States.  They are averse to disruption for it can create uncertainty, which is generally to be avoided as it may negatively impact commerce.  They are influenced by media.

The third group has historically been victorious in legislative, policy and regulatory arenas of combat.  They (specifically Members of the United States Congress) are generally not influenced by whether their respective political party is in the majority or minority.  Their focus has been two-fold: First, “Castro-centric” meaning that until both are gone, commercial engagement perpetuates a multi-decade plague upon the 11.3 citizens of the Republic of Cuba.  Second, the communist/socialist platform embraced by the government of the Republic of Cuba must end.  Their victories are often a result of perpetual assault on legislative, policy and regulatory processes- and their personal stories, and stories of those they share, have often resulted in colleagues not wanting to challenge them.  With the November 2016 death of H.E. Dr. Fidel Castro, former president of the Republic of Cuba, and the year-off retirement of H.E. General Raul Castro, President of the Republic of Cuba, this group may now have a confluence of moments to argue for, at minimum, a dynamic narrative to be presented to the next president of the country. 

They have positioned some Obama Administration initiatives as violations of statute, particularly relating to how visitors travel to the Republic of Cuba; their view is adjustments need to be made to maintain the viability of United States law.  Their self-described principled argument is- the Obama Administration gave away everything and received nothing- voluntarily (nothing was proactive; it was all reactive) which conveys the truth.  The citizens of the Republic of Cuba only benefit when their government is forced to offer them a means to a better life; so, let’s lessen this government’s lifeline and ask of it to do what is in the interests of its citizenry.  When it does so because it believes that it should- not because it will receive a reward, only then should the United States fully engage with it.  

They want the Republic of Cuba to deconstruct the socialism that has only survived because others have provided funding for it and reconstitute it as a self-financing program; meaning providing less and requiring more of the citizenry.  A result being less control over that citizenry.

There has been a political narrative for linking United States policy toward Cuba with the performance of the respective economies. 

If the United States economy (including exports) is doing well, there is less pressure to embrace Cuba because the risk/reward may not be of value.  If the United States economy (including exports) is suffering, there is more pressure to embrace Cuba, as it represents another marketplace for products and services.  If the Cuba economy is doing well, then there is pressure to permit United States companies to compete before selective opportunities may no longer be available (or viable).  If the Cuba economy is suffering, there is less pressure to embrace because the worse the environment, the more changes the government of Cuba may be forced to make, which will in a micro and macro way benefit everyone, so advisable to wait rather than be a potential lifeline.

So, upon which group to wager?  The second combined with the third.  The second group will position the status quo as useful because there are more important items on the Trump Administration agenda; but, they will accept some changes.  The third group will position change in terms of muscular headlines- the Trump Administration will once again reverse misguided Obama Administration initiatives, observe the rule of law, be perceived as rugged.  And they will remind President Trump that he will be the first occupant of the Oval Office to preside as the Republic of Cuba receives a head of state/head of government whose family name is not “Castro.”  That may be an intoxicating political cocktail too tempting to refuse.

On 16 February 2017, Mr. Arne Sorenson, Chief Executive Officer of Bethesda, Maryland-based Marriott Corporation, shared on CNBC that he believed there would be no changes in United States policy or regulations towards the Republic of Cuba: “I don’t actively worry about this Administration turning back the progress on Cuba.  You don’t hear them saying much about Cuba.  You don’t hear a lot of debate in the political environment about Cuba.”

Members of the United States Senate Ted Cruz (R- Texas), Robert Menendez (D- New Jersey), Marco Rubio (R- Florida) and Mitch McConnell (R- Kentucky) and Members of the United States House of Representatives Carlos Curbelo (R- Florida), Mario Diaz-Balart (R- Florida), Ileana Roz-Lehtinen (R- Florida) and Paul Ryan (R- Wisconsin) would disagree.  But, do they have the collective political capital to influence the Trump Administration?  Do they have the collective political capital to prevent rank-and-file members, ranking members, sub-committee chairs and committee chairs from voting to authorize tourist travel to the Republic of Cuba and to authorize payment terms for food products and agricultural commodities, which is prohibited by statute?  They (and predecessors and colleagues) have for nearly 6,000 days- including the last eight (8) years when a president of the United States advocated for change; and two years when a president’s political party controlled the United States Congress.

On 18 February 2017, The New York Times reported that Mr. Jorge M. Perez, Chairman and Chief Executive Officer of Miami, Florida-based Related Group of Florida, recounted a conversation with President Trump: “We used to talk about Cuba as a place to do business — a Trump hotel, a Trump golf course.”  So during that last phone call, he asked Mr. Trump point-blank, did he intend to tighten the trade embargo against Cuba? “He gave me no real answer — not yes, not no. Just ‘We’re going to see what happens, I haven’t decided on that yet.’”

President Trump has shared that he would have made a “better deal” than the Obama Administration which announced its initiatives on 17 December 2014.  He has shared an interest in identifying commercial opportunities in the Republic of Cuba for The Trump Organization.  He has shared that changes should be made to the policies and regulations implemented from 2009 through 2017.

There is logic to conclude, or at minimum be comfortable with based upon the varietal statements from President Trump, President-Elect Trump, nominee of the Republican Party for President of the United States, candidate for the nomination of the Republican Party for President of the United States, and business executive that distance may exist between his words and his actions relating to the Republic of Cuba.

Individuals with his 2015-2016 campaign, those placed on the Transition Team, within the Landing Teams, on staff at The White House, within the Cabinet, and amongst departments and agencies have opinions ranging from supporting a reversal of all policy and regulatory decisions taken by the Obama Administration to reversing some to modifying some to leaving what exists and do nothing further until Saturday, 24 February 2018.    

United States companies do not want constrictive modifications to the Obama Administration initiatives.  What they needed in 2015 and in 2016 and did not receive was a government of the Republic of Cuba accepting far more of those initiatives and the Obama Administration making far more meaningful changes to policy and regulations.  A reason that the Obama Administration initiatives are in peril is directly conditioned upon the lack of presence by United States companies in the Republic of Cuba- that’s the fault of both governments, collectively and individually.  There was and remains no lack of trying by United States companies.  In this regard, United States companies are in concurrence with President Trump- the government of the Republic of Cuba could have, can and should do more. 

Due to a lack of anticipation of an election result neither government desired, commercially-focused licenses issued in 2015, 2016, and 2017 by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and/or Bureau of Industry and Security (BIS) of the United States Department of Commerce, especially those issued during the period 8 November 2016 to 20 January 2017, may never be implemented.

Any Republic of Cuba-focused legislation introduced during the 115th United States Congress has an immensely problematic pathway to becoming law.  The President of the United States, the Speaker of the United States House of Representatives, and the Majority Leader of the United States Senate oppose any legislation which would expand the commercial, economic and political relationship with the Republic of Cuba absent manifest and irreversible changes within the Republic of Cuba. 

Supporters in the United States Congress know what they need; they haven’t got it… yet: one necessity being United States companies and financial institutions in public and at congressional hearings stating what payment terms they would provide, today, to the government of the Republic of Cuba.  And, a member of the United States Senate refusing to release a hold on must-pass legislation or nomination unless a Republic of Cuba-focused provision is included; no one can remember when that last happened.

There could be an opening, for example, on 24 February 2018, when President Castro will retire as head of state and be succeeded by First Vice President of the Council of State of the Republic of Cuba, Miguel Diaz-Canel Bermudez.  The date 24 February has significance to the Republic of Cuba and for the United States:  

·        24 February 2013, H.E. General Raul Castro is elected to a 2nd term as President of the Republic of Cuba. 

·        24 February 2008, H.E. Dr. Fidel Castro Ruz retires as President of the Republic of Cuba. 

·        24 February 1996 was the date when two United States civilian aircraft were shot down by aircraft operated by the Revolutionary Armed Forces of the Republic of Cuba (FAR); four individuals die. 

·        24 February 1976 was the date the Republic of Cuba adopted its constitution. 

·        24 February 1895 was the beginning of Cuba’s War of Independence.

Section 202 of the Libertad Act of 1996 authorizes the United States to aid the Republic of Cuba provided the government does not, among other conditions, “include Fidel or Raul Castro.”  However, while President Castro will retire as head of state, he is likely to retain his position as First Secretary of the Communist Party of the Republic of Cuba, which could be argued is liken to head of government.  If that happens, an opportunity might be unavailable.  That, however, would be a determination for President Trump.

What’s on the list that the Trump Administration is considering?  The recommendations of Members of Congress, White House staff, Cabinet officers, Department and Agency officials range from nothing to everything.  The United States business community wants nothing to change.

Air Carriers

Helping to potentially mitigate policy and regulatory changes are the recently announced reductions in regularly-scheduled commercial flights and reductions in the size of the aircraft used for those flights as they lessen revenue to the Republic of Cuba. 

The reductions are, however, less about fewer individuals seeking to visit the Republic of Cuba than a consequence of aggressive market positioning by air carriers that was not commensurate with reality.  In their 2016 pleadings with the United States Department of Transportation (USDOT) air carriers requested approximately 2 million more seats than the authorized 1.2 million seats under the USDOT arrangement with the government of the Republic of Cuba. 

There is truth in interest to visit the Republic of Cuba has been negatively impacted since 2015 by dramatic increases (100% to 200% or more) in hotel room rates, prices at restaurants, and fares for transportation with no comparative increase in quality of experience; and in too many instances, a continued decrease in quality of experience relative to pricing structures.  For 2017, however, the number of individuals subject to Untied States jurisdiction visiting the Republic of Cuba is expected to increase 20% to 30%.

Potential changes could include requiring airlines to engage in a greater level of passenger certification/verification and require increased record-keeping, thus impacting the efficiency of the services.

Cruise Lines

Not helping to potentially mitigate policy and regulatory changes are the recent announcements from the three-largest United States cruise lines that they are adding capacity for sailings that include the Republic of Cuba; and will, if operating at capacity, which is likely, bring a combined 110,000 individuals subject to United States jurisdiction to the Republic of Cuba in 2017/2018.

Multiple-destination sailings that include the Republic of Cuba are being actively considered for prohibition.  These itineraries are perceived by some in the Trump Administration as tourism and, as such, is prohibited by United States statute.  These itineraries bring revenues (berthing fees, etc.) to the government of the Republic of Cuba, specifically to FAR through affiliated companies, regardless of whether an individual subject to United States jurisdiction disembarks the vessel at the Port of Havana or another location and pays for a guided tour or self-guided tour. 

The sailings that commenced in May 2016 by Miami, Florida-based Carnival Corporation & plc’s Fathom subsidiary which required all passengers to engage in defined people-to-people activities authorized by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury are generally more palpable as there is a direct connection between what a passenger does and the impact upon the Republic of Cuba.

Travel Agents/Tour Operators

The OFAC would increase scrutiny of marketing materials by those companies offering visits to the Republic of Cuba, perhaps requiring pre-approval and, thus, lengthen the distance between presentation and implementation.  The marketing materials of some companies have, in the opinion of some in the Trump Administration, crossed a statutory line.  There may be restrictions and/or prohibitions on self-defined and self-organized visits.

Tour operators and travel agents and charter boat operators marketing their services with statements such as “After breakfast on day five, the group will depart to Varadero, which is often described as the best beach in the world...” will be in peril. 

Where during the Obama Administration the OFAC permitted what were generally defined by the public as tourism-related promotional efforts, when tourism was and remains prohibited by United States law, the Trump Administration may be less supportive. 

Wealthy people cruising around the Republic of Cuba, coming ashore to smoke cigars and drink rum is not appealing to some in the Trump Administration.  The same feeling is directed towards those arriving by general aviation aircraft and departing with little more than selfies posted on Facebook and Instagram.

OFAC

There is support for the re-establishment of aggressive oversight of the Republic of Cuba by the OFAC.  During the Obama Administration, there were meaningful changes, which the United States business community advocated for and made use of primarily relating to the shift from requiring specific licenses to authorizing activities under general licenses.

There was also immense frustration by the United States business community with the OFAC, and by extension the Obama Administration, specifically the National Security Council (NSC), that adhered to imaginary statutory limitations on executive branch authority despite repeated evidence to the contrary.  Two examples: 1) Not permitting under a general license Republic of Cuba government-operated financial institutions to establish accounts with United States financial institutions; the result would have lessened the cost and the time for authorized transactions, for example those under provisions of the Cuban Democracy Act (CDA) of 1992 and Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, healthcare products and food products/agricultural commodities, respectively.  And 2) only permitting coffee and charcoal to be imported from the Republic of Cuba to the United States for commercial purposes.  There is no statutory limitation upon the number of products.

CBP

U.S. Customs and Border Protection (CBP) within the United States Department of Homeland Security (DHS) may be directed to increase inspection of travelers returning to the United States from the Republic of Cuba.

The changes could be subjecting all passengers to secondary inspection- additional questions, requesting to view materials that would verify the authorization of a traveler to have visited the Republic of Cuba; and subjecting luggage to additional screening.  The goal would be to increase the inefficiency of travelers, perhaps missing a connecting flight resulting in additional payments to an air carrier, to a hotel, for ground transportation or for a meal.  While the traveler may be inconvenienced, a result could be a revenue transfer from the traveler to a business- located within or near airports, for example, located in Florida, New Jersey, New York, Texas, and California.

Title III

Title III of the Libertad Act of 1996 may be weaponized to encourage the government of the Republic of Cuba to enter formal negotiations to compensate certified claimants.

There were 8,821 claims of which 5,913 awards have been certified by the United States Foreign Claims Settlement Commission (USFCSC- https://www.justice.gov/fcsc) at the United States Department of Justice which are valued at US$1,902,202,284.95.  Of these claims, thirty (30) United States-based companies hold 56.85% of the total value.  The USFCSC permitted interest to be accrued in the amount of 6% per annum; with the current value ranging from US$6 billion to US$9 billion.

During the next six months, or sooner, the Trump Administration will decide whether to implement this provision which enables individuals with assets expropriated by the government of the Republic of Cuba to bring lawsuits in United States Federal Courts. 

The Libertad Act requires the president to enable or suspend the provision every six months; and Presidents Clinton, Bush and Obama did so.  If not, lawsuits relating to expropriated property in the Republic of Cuba may commence.  The president may rescind the suspension at any time.

The Trump Administration may view creating uncertainty about Title III as an effective means of destabilizing the interests of companies in the United States and other countries toward the Republic of Cuba; and it would be successful.

For example, there are individuals who maintain they have Title III-actionable claims relating to Jose Marti International Airport (HAV) and port at Santiago de Cuba.  In the case of HAV, United States-based air carriers and those from other countries could find their assets attached if they do not avoid the Republic of Cuba.  In the case of the port at Santiago de Cuba, passenger cruise ships and cargo ships might avoid docking and unloading for fear of expensive and enduring legal proceedings.

The United States Department of State reported that the Obama Administration issued a suspension on 5 January 2017; this was not publicized.  The next six-month interval will be July/August 2017.

Military (Airports, Hotels & Ports)

The following are excerpts from the 9 June 2016 statement by The Honorable Paul Ryan (R- WI) Speaker of the United States House of Representatives:  

“The Obama administration took office with the misguided goal of conducting closer engagement with America’s adversaries.  They extended an open hand to governments in Cuba, Iran, North Korea, Russia, Syria, and Venezuela, and made damaging concessions often from a position of weakness. In the process, they have emboldened those regimes, alienated our allies, and left America in a more vulnerable strategic position. Now we must take immediate action to repair alliances and partnerships around the globe and to be clear about how the United States treats friends and foes.” 

“Finally, in our own backyard we will continue to work with our friends and stem the influence of foes. Our relations with Canada and Mexico are crucial, especially in managing trans-border trade and countering trans-border threats. But we cannot blindly follow the administration’s normalization plan with communist Cuba, a regime that is fundamentally opposed to U.S. policy and that represses an entire population only 90 miles from our coastline. Instead, we will work to restore U.S. leverage, hold the Castro regime accountable, and make sure any further accommodations are met first with real concessions from the Cuban government. A first step should be to ban financial transactions with the Cuban military.” 

“Our leverage to promote democracy and human rights should never be squandered. The Obama administration sought to normalize relations with the Castro regime in exchange for the promise of democratic and human rights progress in Cuba.  One year into the agreement, which included reopening the American embassy in Havana, the Castro regime is as repressive as ever. In the first two months of 2016 alone, the Cuban Commission for Human Rights registered 2,588 political arrests.  Nevertheless, President Obama reneged on his vow to refuse to travel to Cuba until human rights had improved.”

On 16 March 2016, Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (a subsidiary of Marriott International) reported the company had received a license from the OFAC to manage properties in the Republic of Cuba: The Hotel Quinta Avenida (re-branded as Four Points Sheraton Havana on 27 June 2016) and Hotel Inglaterra (delayed from 2016 until 1 December 2017); and a Letter of Intent to manage a third property, Hotel Santa Isabel (no further information provided since 2016).

Two of the properties are owned by Republic of Cuba government-operated Gaviota SA. and one of the properties is owned by Republic of Cuba government-operated Habaguanex; all are controlled by Republic of Cuba government-operated Grupo de Administracion Empresarial S.A. (Enterprise Management Group), or GAESA, which is, in turn, controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR).

That Starwood Hotels & Resorts Worldwide has only one property in operation may make easier for restrictions/prohibitions to be implemented.  A more dramatic footprint would have created less opportunity for disruption.

Airports and ports in the Republic of Cuba operate under the auspice of the entities affiliated with GAESA and the FAR.

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Ports In Mississippi Sign MOU's With Cuba Ports Authority

Mr. Manuel Pérez Guerra, General Director of the Cuban Ports Authority and Messrs. Mark McAndrews and Jonathan Daniels, representing the Port of Pascagoula, Mississippi, and Port of Gulfport signed Memorandums of Understanding.  The Honorable William Thad Cochran (R-Miss), a Member of the United States Senate, attended the signing.