With the United States Government now permitting the importation of coffee from the Republic of Cuba, Seattle, Washington-based Starbucks Corporation (2015 revenues exceeding US$14 billion) may now have the option to import coffee from the Republic of Cuba for inclusion in beverages and for bulk retail sale, if the company has an interest. Importing coffee to the United States would place Starbucks in a first-tier position to operate locations within the Republic of Cuba.
Regardless of whether Starbucks Corporation decides to import bulk or packaged coffee (preferred by the government of the Republic of Cuba so as brand names become recognized), a United States-based company will almost certainly secure an agreement to import coffee from the Republic of Cuba within the next three months. France and Japan are two of the primary export markets for coffee grown in the Republic of Cuba.
A question to be answered is whether the government of the Republic of Cuba will find greater economic value and political value from authorizing the production and export of coffee (roasted or non-roasted or processed) through what the United States defines as entrepreneurs or retain the majority of production and export through Republic of Cuba government-operated entities.
And in the future......
There is little doubt that Starbucks Corporation will eventually have a presence within the Republic of Cuba, perhaps at properties to be managed in the Republic of Cuba by Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (2015 revenues exceeded US$5.7 billion) and Bethesda, Maryland-based Marriott International (2015 revenues exceeded US$14 billion). Starwood Hotels & Resorts Worldwide is being acquired by Marriott International.
Starbucks has a presence within many branded properties managed by Starwood Hotels & Resorts Worldwide and Marriott International. While Starbucks would be expected to seek stand-alone location(s) within the Republic of Cuba, with a focus upon resort properties, there would likely be operations within non-resort properties- both for retail and foodservice (restaurants, room service, in-room coffee makers, etc.).
Starwood Hotels & Resorts Worldwide will be managing three properties in the Republic of Cuba (Gran Caribe-owned Hotel Inglaterra; Habaguanex-owned Hotel Santa Isabel and Gaviota-owned Hotel Quinta Avenida, which will be re-branded as a Four Points by Sheraton). Gaviota is controlled by the Revolutionary Armed Forces of the Republic of Cuba.
Marriott International is in discussions with Republic of Cuba government-operated companies to identify properties to manage within the Republic of Cuba.
Today, the U.S. Department of State updated its “Section 515.582 List,” which sets forth the goods and services produced by independent Cuban entrepreneurs that are authorized to be imported into the United States pursuant to Section 515.582 of the Cuban Assets Control Regulations (CACR).
As of April 22, persons subject to U.S. jurisdiction may also import coffee and additional textiles and textile articles produced by independent Cuban entrepreneurs, in addition to the items previously authorized. Also, imports of these items no longer need to be made directly from Cuba. These changes allow for more engagement with Cuba’s private sector through new business opportunities. The State Department will continue to update this list periodically.
Empowering the Cuban people and Cuban civil society is central to our approach to Cuba. Expanding commercial ties between independent Cuban entrepreneurs and the United States creates new opportunities for such empowerment. As President Obama stated during the March 21 entrepreneurship summit in Havana, Cuba’s economic future partly depends on growth in the private sector, and the United States wants to be a partner as Cuba moves forward.
The State Department's Section 515.582 List
Bureau of Economic and Business Affairs
April 22, 2016
Goods and Services Eligible for Importation
In accordance with the policy changes announced by the President on December 17, 2014, to further engage and empower the Cuban people, Section 515.582 of the Cuban Assets Control Regulations (31 CFR Part 515 – the CACR) authorizes the importation into the United States of certain goods and services produced by independent Cuban entrepreneurs as determined by the State Department as set forth on the Section 515.582 List, below.
The goods whose import is authorized by Section 515.582 are goods produced by independent Cuban entrepreneurs, as demonstrated by documentary evidence, that are imported into the United States, except for goods specified in the following sections/chapters of the Harmonized Tariff Schedule of the United States (HTS):
Section I: Live Animals; Animal Products
Section II: Vegetable Products
All chapters, except Chapter 9 heading 0901 (coffee)
**Please note that exporters will be required to prove that they have met all sanitary and phytosanitary standards, including food safety.
Section III: Animal or Vegetable Fats and Oils and their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes
Section IV: Prepared Foodstuffs; Beverages, Spirits, and Vinegar; Tobacco and Manufactured Tobacco Substitutes
Section V: Mineral Products
Section VI: Products of the Chemical or Allied Industries
Chapters 28-32; 35-36, 38
Section XV: Base Metals and Articles of Base Metal
Section XVI: Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles
Section XVII: Vehicles, Aircraft, Vessels, and Associated Transportation Equipment
Section XIX: Arms and Ammunition; Parts and Accessories Thereof
Persons subject to U.S. jurisdiction engaging in import transactions involving goods produced by an independent Cuban entrepreneur pursuant to § 515.582 must obtain documentary evidence that demonstrates the entrepreneur’s independent status, such as a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled by the Cuban government.
This list does not supersede or excuse compliance with any additional requirements in U.S. law or regulation, including the relevant duties as set forth on the HTS.
For travelers importing authorized goods into the United States pursuant to § 515.582 as accompanied baggage, the $400 monetary limit set forth in § 515.560(c)(3) does not apply to such goods, but goods may be subject to applicable duties, fees, and taxes.
The authorized services pursuant to 31 CFR 515.582 are services supplied by an independent Cuban entrepreneur in Cuba, as demonstrated by documentary evidence. Persons subject to U.S. jurisdiction engaging in import transactions involving services supplied by an independent Cuban entrepreneur pursuant to § 515.582 are required to obtain documentary evidence that demonstrates the entrepreneur’s independent status, such as a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled by the Cuban government. Supply of services must comply with other applicable state and federal laws.
Note 1: All payments in settlement of transactions authorized by § 515.582 should reference this section in order to avoid having them rejected.
Note 2: The authorization in §515.582 of the CACR does not supersede or excuse compliance with U.S. laws or regulations or any other additional requirements.
Note 3: The Department of State, in consultation with other federal agencies, reserves the right to update this document periodically. Any subsequent updates will take effect when published on the webpage of the Bureau of Economic and Business Affairs’ Office of Sanctions Policy and Implementation (http://www.state.gov/e/eb/tfs/spi). Updates will also be published in the Federal Register. For further information, please contact the State Department at 202-647-7489.
Note 4: For provisions relating to recordkeeping and reports, see 31 CFR §§ 501.601 and 501.602 and 19 CFR Part 163.