Mr. Chairman, Mr. Rangel, and members of the Subcommittee, thank you for the opportunity to appear before this hearing on "U.S. Economic and Trade Policy Toward Cuba."

In 1994, an estimated 500 United States business executives and representatives visited the Republic of Cuba. In 1995, an estimated 1,300 United States business executives and representatives visited the Republic of Cuba. In 1996, an estimated 1,500 United States business executives and representatives visited the Republic of Cuba. In 1997, an estimated 2,000 United States business executives and representatives visited the Republic of Cuba. In 1998, an estimated 2,500 United States business executives and representatives will visit the Republic of Cuba.

In total, perhaps 100,000 individuals subject to United States law will visit the Republic of Cuba in 1998- both with authorization and without authorization from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury. Most of these individuals will be of Cuban descent who reside within the United States and who are visiting relatives within the Republic of Cuba. An estimated 20,000 individuals subject to United States law are expected to visit the Republic of Cuba in 1998 without authorization.

Prior to "Helms-Burton" becoming law, interest toward the Republic of Cuba was primarily the domain of small and medium-sized United States companies who sent executives and representatives to the Republic of Cuba to obtain information and to learn what authorized commercial activities could be conducted immediately. Large United States companies gathered information about the Republic of Cuba, but generally did not seek to conduct commercial activities- even those authorized by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and by the Bureau of Export Administration (BXA) of the United States Department of Commerce.

Since March 1996, when President Clinton signed the "Helms-Burton" legislation into law, there have been two substantive changes with respect to the manner by which the interest of the United States business community toward the Republic of Cuba has been manifested.

Within weeks of "Helms-Burton" becoming law, small and medium-sized United States companies changed from seeking to conduct commercial activities to gathering information and large United States companies changed from gathering information to seeking to conduct commercial activities. Small and medium-sized companies believed that they would not be able to access the Republic of Cuba marketplace, without restriction, in the immediate future, so they refocused their limited resources. "Helms-Burton" caused large companies to believe that they would be able to access the Republic of Cuba marketplace, without restriction, in the immediate future. "Helms-Burton" created for large companies a justification to discuss publicly their interest toward the Republic of Cuba while simultaneously discussing their concerns about the use and effect of unilateral trade sanctions.

The basis of the justification was primarily due to provisions within the "Helms-Burton" law that were perceived by United States companies to be potentially harmful to their ability to operate in other countries and 1) no United States company with a claim certified by the Foreign Claims Settlement Commission in Washington, D.C., publicly lobbied on behalf of the "Helms-Burton" legislation 2) no United States company with a certified claim announced that it would seek to use remedies provided by the "Helms-Burton" law 3) United States company executives, including Mr. Dwayne Andreas of Archer Daniels Midland Company, Mr. Oscar Wyatt of The Coastal Corporation, Mr. Curtis Carlson of Carlson Companies, Mr. Ted Turner of Time Warmer, Mr. Donald Fites of Caterpillar, and Mr. James Perrella of Ingersoll-Rand among many others, permitted themselves to be quoted about their interest toward the Republic of Cuba; visited or had executives of their companies visit the Republic of Cuba; met with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba; and provided funds to partisan and nonpartisan organizations focusing upon the Republic of Cuba 4) national business organizations opposed to the "Helms-Burton" law 5) the media opposed the "Helms-Burton" law and 6) President Clinton, although he signed the "Helms-Burton" legislation into law, was widely viewed, correctly as time would confirm, that he would implement provisions of the law with constraint instead of expansively.

Since the visit of the Pope to the Republic of Cuba in January 1998, there has been an exponential increase in the number of United States companies requesting information about the Republic of Cuba. The U.S.-Cuba Trade and Economic Council has not witnessed such a sustained increase in interest since the period June 1995 to February 1996. The U.S.-Cuba Trade and Economic Council has sustained a higher percentage increase in annual membership since "Helms-Burton" became law than during each of the previous two years.

The government of the United States and the government of the Republic of Cuba continue to triangulate with the United States business community. Each government is taking unilateral actions toward the United States business community, then creating value from the resultant bilateral effects of their unilateral actions. A recent example was the participation of the United States business community with the visit of the Pope to the Republic of Cuba in January 1998. Members of the U.S.-Cuba Trade and Economic Council provided approximately US$100,000.00 in products and services- from aircraft to communications equipment to carpeting. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury issued licences quickly and the Ministry of Foreign Affairs of the Republic of Cuba was efficient with their logistical support. The result was reported as positive in Washington, D.C., and in Havana.

During the last two years, the Clinton Administration has both taken initiatives and responded to external pressures, resulting in expanded opportunities for United States companies- in terms of what can be done within the Republic of Cuba and the means by which to conduct transactions within the Republic of Cuba. The two most substantive changes have been 1) to authorize representatives of United States health care product companies to visit the Republic of Cuba and to transport, if desired, samples of their products. Members of the U.S.-Cuba Trade and Economic Council received the first of these licenses. 2) The authorization for a Connecticut-based company, which is a member of the U.S.-Cuba Trade and Economic Council, to organize a trade exhibition to be held in the Republic of Cuba, the purpose of which is to promote the sale of medical equipment, medical instruments, medical supplies, medicated products, pharmaceuticals, and healthcare informational materials. The government of the Republic of Cuba has agreed to hold this exhibition from 26 January 1999 to 30 January 1999. No earlier dates were available at locations within the city of Havana with the required quantity of space.

Reportedly, an agreement between the government of the Republic of Cuba and the government of the United States is expected to be announced soon with respect to overflights of United States territory by Republic of Cuba air carriers. The Republic of Cuba permits overflights of its territory by United States air carriers.

Reportedly, the Clinton Administration is considering the reactivation of direct mail service between the United States and the Republic of Cuba. Direct mail service, including package delivery services such as those provided by United Parcel Service and Federal Express, could reduce costs associated with commercial transactions (export sales and import sales of products and donations of products) currently authorized by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and the Bureau of Export Administration (BXA) of the United States Department of Commerce between United States companies and Republic of Cuba entities.

On 29 April 1998, the Republic of Cuba government-operated Prensa Latina News Agency, published a story that began with the words "Thanks to the United States Interests Section in Havana . . . " The occasion was the screening of the motion picture Amistad. California-based DreamWorks SKG had provided the motion picture to United States diplomatic missions in many countries. This was the first time in more than thirty-five years that the Republic of Cuba government-operated Cuban Institute of Art and Cinematography (ICAIC) and the United States Interests Section held a jointly-sponsored cultural event. The screening for Republic of Cuba nationals was at the Charlie Chaplin Theater in the city of Havana.

Commercial information from the Republic of Cuba requested by United States companies is being provided on a more timely basis by an ever-increasing variety of sources. No longer is a United States company surprised to receive a facsimile or E-mail directly from a Republic of Cuba government-operated company, joint venture, economic association, or non-Republic of Cuba-headquarterd company with an office within the Republic of Cuba.

A member of the U.S.-Cuba Trade and Economic Council recently received an order worth more than US$100,000.00 for medical devices. In November 1997, the company delivered product brochures. Executives of the company have received a license from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury to visit the Republic of Cuba.

Washington, D.C.-based diplomats from the Cuban Interests Section are now traveling throughout the United States to meet with United States business executives with such frequency that they can benefit from membership in various United States airline frequent flyer programs.

The government of the Republic of Cuba's increased focus on commerce with English-speaking countries such as Canada and the United Kingdom, benefits United States companies. English-language publications include the ETECSA Telephone Directory, newspapers such as Negocios en Cuba and Opciones, magazines such as Business TIPS on Cuba and Acuarela de los Habanos, and the 302-page Directorio Turistico de Cuba.

When the government of the Republic of Cuba and the government of the United States have bi-annual meetings to discuss immigration issues, the Cuban delegation includes an attorney who, besides handling immigration, was the negotiator of the asset claim settlements between the Republic of Cuba and Canada, Spain, France, and other countries. Why does a dual-use attorney attend these meetings I asked an official of the Ministry of Foreign Affairs of the Republic of Cuba, "Just in case," I was told, "the United States wishes to discuss the issue of the certified claimants. We are ready." In a subsequent letter to me, the United States Department of State wrote that the United States government will negotiate the issue of the certified claims when the Cuban government makes a "serious" proposal. When asked to define "serious," the United States Department of State declined to provide such a definition because, I was informed, it might provide value to the Cuban government.

There remain, however, divisions amongst those who determine policy and those who implement policy- both in Washington, D.C., and in Havana.

Only during the last eight months has there been a visible effort by the United States Department of State, United States Department of the Treasury, and the United States Department of Commerce (which has made considerable progress) to make more accessible, more accurate, and more timely, the information and guidance provided to United States companies regarding authorized commercial transactions relating to the Republic of Cuba. The policy of the Clinton Administration continues to shift from seeking a reason to say "no" to seeking a reason to say "yes."

Discussions with Republic of Cuba Communist Party officials, officers in the military, government officials, and with government-operated company managers present a preference for an incremental change in the commercial and economic relationship with the United States. Some of these individuals would view substantial and immediate change in the overall commercial and economic relationship between the United States and the Republic of Cuba to be an effort by the United States to undermine the commercial and economic structures that currently exist within the Republic of Cuba. Any sudden and substantial change in the commercial and economic policies of the United States toward the Republic of Cuba could result in the Republic of Cuba erecting immediate barriers.

If the United States could not defeat the revolution in the 1960's with military action, if the United States could not defeat the revolution in the 1970's and 1980's with international pressure, if the United States could not defeat the revolution in the 1990's with laws, now the United States would be using business and tourism as weapons.

Why are small, medium, and large United States companies interested in the Republic of Cuba market? Because the Republic of Cuba has 11 million citizens. If the Republic of Cuba were a state within the United States, it would rank 7th in population- after the State of Illinois.

The Republic of Cuba is the largest Caribbean Sea-area country, larger than nearly all of the islands within the Caribbean Sea-area combined, and with nearly one-third of the combined populations. Nearly as large as the State of Pennsylvania and approximately as long as the State of Florida.

As of May 1998, the estimated value of announced investments within the Republic of Cuba by private sector companies and government-controlled companies from twenty-five countries is US$5.636 billion, of which US$1.756 billion is estimated to have been committed and/or delivered.

The citizens of the Republic of Cuba have one of the highest levels of awareness of United States product and service brand names of any non-English speaking country. The citizens of the Republic of Cuba have one of the highest levels of preferences for United States product and service brand names of any non-English speaking country. For a company to develop a new market, or redevelop a previous market, the two greatest cost components are a) the creation of brand awareness and b) the creation of brand preference. In the Republic of Cuba, these two significant cost components are reduced, thus making the Republic of Cuba an immensely attractive export market.

The value of unrestricted annual United States-Republic of Cuba trade has been estimated to range from US$3 billion to US$7 billion- with, perhaps, 70%, or US$2.1 billion to US$4.9 billion being exports from the United States to the Republic of Cuba.

According to the United States Department of Commerce, for each US$1 billion in United States exports, 20,000 new employment opportunities can be created. United States-Republic of Cuba trade could be responsible for creating perhaps 100,000 or more new jobs for United States citizens.

Unrestricted access of United States companies to the Republic of Cuba market would result, in less than four years time, of, perhaps, 80% or more of the Republic of Cuba's Gross Domestic Product resulting from its bilateral trade, financial services flow, and tourism with the United States. The Republic of Cuba will most certainly be the recipient of a Puerto Rico-type of favorable production and tax/tariff relationship with the United States. The Republic of Cuba's already established Free Trade Zones will become more attractive as their infrastructure develops and operational restrictions lessen. United States companies, especially those who seek relatively skilled labor for assembly operations, may find the Republic of Cuba to be a cost-effective production base. United States companies will not, however, find that the Republic of Cuba will have a low-cost labor force in the future. Today, The Republic of Cuba has an under-employment problem and as this situation is resolved, Republic of Cuba nationals will demand to be paid at a rate in comparison with the value of the product or service that they are employed to produce or provide. Republic of Cuba nationals are seeking and receiving U.S. Dollar bonuses from Republic of Cuba government-operated companies as inducements to increase production.

United States companies in the bulk food commodity sectors would find substantive opportunities in the short term, medium term, and long term. The Republic of Cuba currently imports powered milk, soy, rice, wheat, cooking oil, and poultry among other products. In 1997, Republic of Cuba bulk food commodity imports totaled approximately US$800 million.

United States health care companies (medical equipment, medical instruments, medical supplies, medicated products, pharmaceuticals, and informational materials) would have marginal short term opportunities. This is due to 1) the Republic of Cuba's health care system has limited resources to import products on a cash-and-carry basis, if United States-based financing were available for such imported products, sales opportunities could be increased 2) the Republic of Cuba's health care system has current other country supply channels for products which, in a large number of instances, are less expensive than similar products from the United States 3) the Republic of Cuba's health care system has spent considerable resources during the last six years developing production capabilities, especially in pharmaceuticals and limited function medical equipment. In the long term, the Republic of Cuba's health care sector is a potential annual market of US$500 million to US$1 billion.

Thank you for this opportunity to appear before the Subcommittee on Trade of the Committee on Ways and Means of the United States House of Representatives.