U.S. DOLLAR UNCHANGED IN VALUE AGAINST THE PESO- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 20 Pesos since 27 January 2000.  The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged.  The government of the Republic of Cuba maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use.  The government of the Republic of Cuba does not fluctuate the value of the Peso for commercial transactions regardless of any fluctuation with the value of the U.S. Dollar or other currencies on the international market.  The Peso and the U.S. Dollar circulate freely in the Republic of Cuba.
 

CADECA Buy	CADECA Sell	From / To
20	21	27 January 2000 to 27 February 2000
21	21	24 December 1999 to 23 January 2000
21	22	2 October 1999 through 23 December 1999
20	22	13 September 1999 to 1 October 1999
20	20	1 September 1999 to 12 September 1999
20	21	13 August 1999 through 31 August 1999
22	22	16 June 1999 to 12 August 1999
22	21	13 April 1999 through 15 June 1999
21	21	15 March 1999 to 12 April 1999
20	21	4 March 1999 to 14 March 1999
21	21	19 February 1999 to 3 March 1999

NEW U.S. EXHIBITIONS PROPOSED, INCLUDING “U.S. FOOD AND AGRIBUSINESS EXHIBITION”- As a result of the success of the U.S. Healthcare Exhibition held from 25 January 2000 to 29 January 2000 at Pabexpo in the city of Havana, Republic of Cuba, Westport, Connecticut-based PWN Exhibicon International L.L.C. (organizer of the U.S. Healthcare Exhibition) has applied to the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., for a license to hold 1) a U.S. Food and Agri-Business Exhibition in December 2000 2) a U.S. Healthcare Pavilion at the February 2001 “Health For All” bi-annual international healthcare products trade show  3) a U.S. Healthcare Exhibition focused upon dental products and 4) a U.S. Healthcare Exhibition in 2002.  The U.S. Healthcare Exhibition had 97 companies as exhibitors (including members of the U.S.-Cuba Trade and Economic Council) with a combined participating representation of the exhibitors exceeding 280 individuals.  Approximately 8,000 Republic of Cuba nationals visited the U.S. Healthcare Exhibition. The U.S. Healthcare Exhibition was the single largest grouping of United States-based companies to visit the Republic of Cuba for a commercial exhibition in more than forty years and the single largest grouping of representatives of United States companies to visit the Republic of Cuba at one time under license from the OFAC.  PWN Exhibicon International L.L.C. is a member of the U.S.-Cuba Trade and Economic Council.

MEMBERS OF CONGRESS VISIT CUBA- The Honorable Peter Deutsch (R-Florida) visited the Republic of Cuba from 22 February 2000 to 25 February 2000.  The Honorable Maurice D. Hinchey (D-New York) visited the Republic of Cuba visited the Republic of Cuba during the week of 21 February 2000.

VACCINE JOINT VENTURE ESTABLISHED IN INDIA- New Delhi, India-based Panacea Biotech Limited (1999 revenues US$30 million with 1,200 employees) and Republic of Cuba government-operated Heber Biotec S.A. (the commercial subsidiary of the Centro de Ingenieria Genetica Y Biotecnolotgia) have established Pan Heber Biotec Ltd., a 50%-50% joint venture in India to manufacture Hepatitis-B vaccine in bulk form for sale in India and in neighboring countries. Pan Heber Biotec Ltd., which expects to commence production by January 2001, is constructing a manufacturing facility in Lalru (Punjab) India.  Products produced by Panacea Biotech Limited (established in 1927) include: Nimulid Mouth Dispersible Tablet, Nimulid Tablet, Nimulud Transgel, Nimulid Suspension, Glizid, Panimun Bioral, Myticef, Enivac HB, Alphadol, and Livoluk.

LG ELECTRONICS GROUP REPORTS 1999 SALES OF US$23.5 MILLION IN CUBA- Seoul, South Korea-based LG Electronics Group reported that sales of refrigerators, washing machines, air conditioners, televisions, and other products within the Republic of Cuba were US$23.5 million in 1999.  Total 2000 sales are expected to be US$32 million.  LG Electronics Group reported that the company would continue introducing its most advanced products into the Republic of Cuba market, such as door-cooled refrigerators and Turbo Drum washing machines.  In 1999, LG Electronics Group introduced Champ brand products within the Republic of Cuba, including the first High Definition Television (HDTV) to be sold within the Republic of Cuba.  Various brands of LG Electronics Group refrigerators, washing machines, and air conditioners are assembled within the Republic of Cuba in association with Republic of Cuba government-operated Copextel S.A., a company affiliated with the Ministry of Steel, Mechanical, and Electronics Industry of the Republic of Cuba (SIME) and Republic of Cuba government-operated Empresa Industria Electronica (EIE).

FIRST VEHICLES WITH MERCEDES-BENZ ENGINES ASSEMBLED- MCV Comercial S.A. has displayed the first of a planned 1,400 urban buses and unspecified number of light trucks assembled within the Republic of Cuba for use within the Republic of Cuba and for export to Caribbean Sea-area countries.  The engines are being supplied by Stuttgart, Germany-based Mercedes-Benz AG (a subsidiary of Stuttgart, Germany-based DaimlerChrysler AG), the chassis are being supplied by Mercedes-Benz of Brazil, and the bodies for the buses are being supplied by Sao Paulo, Brazil-based Busscar.  MCV Comercial S.A. is a Republic of Cuba-based joint venture established in 1995 between Unecamoto, a division of the Ministry of Steel, Mechanical, and Electronics Industry (SIME) of the Republic of Cuba, and Cuba and Cairo, Egypt-based Mr. Karim Ghabbour, whose family-owned companies have dealings with Mercedes-Benz AG.  MCV Comercial S.A. has a US$200 million multi-year contract for parts needed to assemble 1,400 urban buses, at a rate of 200 to 240 or more per year. MCV Comercial S.A. has been re-motorizing heavy agricultural and other transportation equipment for five years, and has six service centers across the country to maintain Mercedes Benz engines, supply spare-parts, etc.  In September 1999, MCV Comercial S.A. reported that the company expected gross revenues (vehicle sales, bus sales, service, etc.) in 1999 of approximately US$45 million, compared with gross revenues of approximately US$35 million in 1998.  Recently, MCV Comercial S.A. reported that gross revenues from 1995 through mid-1999 were approximately US$100 million.

FRANCE EXTENDS US$180 MILLION IN TRADE CREDITS TO CUBA- The government of France reported that it would extend trade credits (primarily for wheat and flour) valued at up to US$180 million to the government of the Republic of Cuba in 2000.  The value of the 1999 trade credits was US$200 million; the value of 1998 trade credits was US$185 million; and the value of 1997 trade credits was US$160 million.  In 1999, the Republic of Cuba imported 714,000 tons of grains (primarily wheat and flour) from France, representing approximately 70% of the grains imported by the government of the Republic of Cuba.  Grains exported from France to the Republic of Cuba in 1999 was valued at US$133 million, a decrease reflected, in part, in a 5.7% decline in the value of bilateral trade (US$300 million to US$350 million) between the Republic of Cuba and France in 1999.  The Ministry of Tourism of the Republic of Cuba reported that the number of France nationals visiting the Republic of Cuba in 1999 was 123,607, an increase of approximately 18% from the 101,604 visiting the Republic of Cuba in 1998.  In 1999, there were increased airline flights from France to the Republic of Cuba by Paris, France-based Air France; Paris, France-based AOM; and Paris, France-based CORSAIR.  Paris, France-based Pansea Hotels and Resorts S.A., operating through Hospitality Service in the Caribbean Co. Ltd., has a US$55 million joint venture, Hotelera de Cuba S.A., with Republic of Cuba government-operated Cubanacan S.A., to construct eight 50-room to 100-room properties within the Republic of Cuba.  Evry Cedex, France-based Accor S.A., now manages seven hotels within the Republic of Cuba, plans to manage fifteen hotels within the Republic of Cuba by 2003, and eventually manage thirty hotels within the Republic of Cuba.  Paris, France-based Club Mediterranee S.A. manages three hotels within the Republic of Cuba.  Paris, France-based Pernod Ricard S.A. is a partner with Republic of Cuba government-operated Cuba Ron S.A. (a subsidiary of the Ministry of Food Industry of the Republic of Cuba’s Corporacion Alimentaria S.A., known as Coralsa S.A.), in Havana Club International S.A., which holds the exclusive worldwide distribution rights to the Havana Club brand.  Madrid, Spain-based Altadis (formed by the 1999 merger between Madrid, Spain-based Tabacalera and Paris, France-based  Seita) recently purchased 50% of Republic of Cuba government-operated Habanos S.A., the exclusive marketing representative for Republic of Cuba-produced cigars.  Paris, France-based Paris National Bank is establishing a “representative” office within the Republic of Cuba Paris, France-based Societe General (a retail, commercial, and investment bank) also has a “representative” office in the city of Havana, Republic of Cuba.  Paris, France-based government-operated France National Railways reported that the company had signed a contract valued at US$6 million with Republic of Cuba government-operated Railway Union.  Courbevoie, France-based Elf Aquataine, is a partner in a joint venture to replace kerosene, which is imported, with liquid gas produced within the Republic of Cuba.  Paris, France-based Babcock Enterprise S.A. and the Republic of Cuba government-operated Empresa Fabrica de Calderas, a subsidiary of the Ministry of Sugar of the Republic of Cuba, established the first joint venture within the sugar industry, Babcock Caribe S.A., to produce boilers and other industrial machinery for use within the sugar industry, the tourism industry, and for export.  Babcock Caribe S.A. expects sales of US$20 million during the first year of operation.  Babcock Enterprise is already involved with a multimillion U.S. Dollar contract to provide equipment for the modernization of thermo-electric plants throughout the Republic of Cuba, and has installed boilers in Republic of Cuba government-operated sugar byproduct facilities.  Oil exports from the Russian Federation to the Republic of Cuba are coordinated by Moscow, Russian Federation-based Alfa-Eco, a subsidiary of the Alpha Group, which is a division of Moscow, Russian Federation-based OAO Tyumen Oil Company. All of the oil was sold in Europe, some of which reportedly through Paris, France-based TOTALFINA S.A.  France-based investors and Republic of Cuba government-operated Cubanacan S.A. have a joint venture, FranCuba, which produces baked goods (bread, rolls, pastries, cookies, etc.), and sells baked goods at retail (for U.S. Dollars), to hotels and to restaurants.

WHEAT IMPORT UPDATE- The Republic of Cuba imported 100,000 tons of wheat during the month of January 2000 from the port of Rouen, France.
 

Total Imports of Wheat (in tons)	Reporting Period
126,800	1 January 2000 through 16 February 2000
474,925	1 March 1999 through 30 November 1999
447,000	July 1998 through March 1999
256,000	July 1997 through March 1998

FLOUR IMPORT UPDATE- The Republic of Cuba imported 10,817 tons of flour from 1 February 2000 to 16 February 2000 from the port of Rouen, France.
 

Total Imports of Flour (in tons)	Reporting Period
10,817	1 February 2000 to 16 February 2000

RICE IMPORT FROM CHINA UPDATE- The People’s Republic of China government-operated General Administration Of Customs (GAC) reported that 15,100 tons of rice was exported to the Republic of Cuba for the period January 2000.
 

January 2000 Exports (In Tons)	% Of Total Exports During Month (In Tons)	January 1999 Through December 1999 (In Tons)	% Of Total Exports For January 1999 Through December 1999
15,100	8.2	226,933	8.4

150,000 TONS OF RICE TO BE IMPORTED FROM THAILAND- The government of Thailand reported that 150,000 tons (at a price of approximately US$225.00 per ton) of 25% broken rice will be sold to the government of the Republic of Cuba with payment terms of 365 days, although all of the rice is expected to be delivered to the Republic of Cuba by the end of 2000.  The government of the Republic of Cuba will receive 15,000 tons of rice to 20,000 tons of rice each month under the terms of the agreement, expected to be concluded in March 2000.  The government of the Republic of Cuba imported approximately 150,000 tons of rice from Vietnam in 1999, which sells 25% broken rice for approximately US$235.00 per ton.  In 1999, the government of the Republic of Cuba imported 226,933 tons of rice from the People’s Republic of China.

1999 UNITED KINGDOM COFFEE IMPORTS FROM CUBA- The government of the United Kingdom reported the following quantities of coffee imported from the Republic of Cuba during the period January 1999 through December 1999.
 

January 1999 to December 1999	January 1998 to December 1998
18 Tons	108 Tons

JAPAN RAW SUGAR IMPORT UPDATE- The Ministry of Finance of Japan reported that 121,093 tons of raw sugar was imported from the Republic of Cuba in 1999 and no raw sugar was imported from the Republic of Cuba in 1998.  The Ministry of Finance of Japan reported that total raw sugar imports in 1999 were 1.51 million tons and that total raw sugar imports in 2000 are expected to be approximately 1.51 million tons as companies continue to replace raw sugar with less expensive hi-fructose corn syrup and as Japan-based sugar production continues to increase.

1999 CIGAR EXPORT UPDATE- Mr. Manuel Garcia, Vice President of Republic of Cuba government-operated Habanos S.A., the exclusive marketing representative for Republic of Cuba-produced cigars, reported that 1999 cigar exports were 148 million units, an increase of approximately 14% from the 126.8 million cigars exported in 1998.  In mid-1999, Habanos S.A. had reported that 200 million cigars would be exported in 1999 and that 250 million cigars would be exported in 2000.  Habanos S.A. also had reported in 1999 that 150 million cigars to 160 million cigars would be exported in 1999 and that 160 million cigars would be exported in 2000.  Habanos now expects to export 158 million cigars in 2000 and export 10,000 tons of tobacco leaf in 2000; 9,000 tons of tobacco leaf were exported in 1999.  Spain remained the primary export market in 1999 for Republic of Cuba-produced cigars, 28.95% (43 million cigars) of total exports in 1999, followed by France with 12% (17.8 million) of total exports, sales at Republic of Cuba government-operated U.S. Dollar retail stores with 7.66% (11.6 million cigars) of total production, United Kingdom with 4% (6 million cigars), Switzerland with 4.7% (7 million cigars), and Canada 3% (4.7 million cigars).  Sixty percent of total exports were to customers on the European continent.  Mr. Garcia reported that the recent decision to establish a 50%-50% joint venture with the Madrid, Spain-based Altadis (formed by the 1999 merger between Madrid, Spain-based Tabacalera and Paris, France-based Seita) would improve cigar exports.  Three mini-cigar factories are being constructed and are expected to begin production by the end of 2000: 1) two as joint ventures- one with Altadis and one with Canary Islands-based CITA, which is 50% owned by Altadis and 2) one owned by the government of the Republic of Cuba which will produce min-cigars under the brand name “Jose L. Piedra.”  Mr. Garcia reported that total gross revenues (cigars, tobacco leaf, Casa de Habanos retail stores, royalties, distributor payments, etc.) of Habanos S.A. in 1999 were reported as US$250 million.  Habanos S.A. expects to export 20 million mini-cigars in 2000, 80 million mini-cigars in 2001, 105 million in 2002, 135 million in 2003, and 150 million in 2004.  In October 1999, Altadis reported that gross revenues of Habanos S.A. would increase 14%, to US$288 million in 1999, while gross profits would increase 21%, to US$64 million in 1999.  Habanos S.A. reported 1999 gross revenues of US$280 million to US$290 million and gross profits of US$50 million to US$60 million.

CIGAR EVENT UPDATE- Republic of Cuba government-operated Habanos S.A., the exclusive marketing representative for Republic of Cuba-produced cigars, reported that more than 800 participants were expected at the Second International Festival of Habanos, scheduled for 28 February 2000 to 3 March 2000.  The event includes a trade fair, seminars, visits to tobacco growing regions and factories, and dinner where cigars will be auctioned and the Habanos Man of the Year will be awarded.

DIRECT FOREIGN INVESTMENT POLICY UPDATE- H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba and Secretary of the Executive Committee of the Council of Ministers of the Republic of Cuba, reported that direct foreign investment would continue to be pursued when it represented the most productive form to “capture capital, markets, and technology.”  He confirmed that the process by which the government of the Republic of Cuba accepts direct foreign investment was problematic, with an average of thirteen months for approval, but less than the fifteen months reported for approval in 1998.  He requested an analysis of the reasons for the delays of months, and in some instances, years, to conclude an agreement, thus earning no income and damaging the image of the Republic of Cuba.  “There are some measures and regulations that need a fresh review at this moment to see up to what point we can make certain investment procedures more flexible.”

DIRECT FOREIGN INVESTMENT UPDATE- The Ministry of Foreign Investment and Economic Cooperation of the Republic of Cuba (MINVEC) reported that as of 31 December 1999 there were a total of 374 joint ventures and economic associations involving non-Republic of Cuba-based capital, compared to a total of 345 joint ventures and economic associations as of 31 December 1999.  Fifty-eight new joint ventures and economic associations were established in 1999, meaning that 29 previously established joint ventures and economic associations were terminated in 1999.  The MINVEC reported that sixty “supervisions” of joint ventures and economic associations were conducted in 1999, compared to thirty-five “supervisions” of joint ventures and economic associations conducted in 1998, and eight “supervisions” of joint ventures and economic associations conducted in 1997.  The MINVEC reported it also carried out 273 “control visits” of joint ventures and economic associations in 1999.  MINVEC reported that, compared to 1998, the operations in 1999 of the 374 existing joint ventures and economic associations reported gross revenue increases of 26% in 1999, reported export (not defined as export revenues or quantity of exported products and/or services) increases of 25%, and reported that their “contribution to the economy” increased 27%.  MINVEC reported that direct investment capital originated from 46 countries, although 52% of direct investment capital originated from European Union-member countries, 19% from Canada, and 18% the Americas; but that direct investment capital was primarily from Spain, Canada, and Italy.  The government of the Republic of Cuba has previously defined sources of financing as direct foreign investment.  The MINVEC did not report on the approximately 150 production cooperation agreements whereby non-Republic of Cuba-based companies jointly produce and sell goods with Republic of Cuba government-operated companies, with the non-Republic of Cuba-based company generally provides one or more of the following: capital, technology, management expertise, or markets, with the complexities of establishing and joint venture or economic association.  The MINVEC reported that eleven Investment Protection and Promotion Agreements were signed in 1999, bringing the total number of agreements to forty-five.  Approximately 20% of joint ventures established to date have been dissolved for various reasons. The MINVEC reported the number of joint ventures was has follows:
 

Year	Joint Ventures
1988	1
1993	129
1994	180
1995	212
1996	280
1997	317
1998	345
1999	374

FREE TRADE ZONES CRITICIZED- H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba and Secretary of the Executive Committee of the Council of Ministers of the Republic of Cuba, criticized Free Trade Zones, in general, as mainly benefiting western corporations through cheap labor and other benefits.  He said before additional Free Trade Zones were established within the Republic of Cuba, those already functioning would be studied, “to see what role they can play within our conception of development,” and would be strictly supervised.

In July 1999, the Central Bank of the Republic of Cuba reported that the 200 primarily product import companies located in the three Free Trade Zones exported a reported US$153.2 million worth of products and services to the Republic of Cuba in 1998.  Companies operating in the Free Trade Zones are authorized to export 25% of their production to the Republic of Cuba without losing their tax-free status.  The Ministry for Foreign Investment and Economic Cooperation (MINVEC) of the Republic of Cuba reported that there were 294 companies currently operating in three Free Trade Zones, compared to 260 companies reported operating in three Free Trade Zones in 1998.  Almost all of the companies, both Republic of Cuba government-operated and non-Republic of Cuba government-operated, provide import services, not manufacturing or assembly.  The three Free Trade Zones currently employ a combined 800 workers (almost all Republic of Cuba nationals), compared to the thousands originally expected by the government of the Republic of Cuba.  Non-Republic of Cuba-based companies have reported that over-regulation and inability to freely hire Republic of Cuba nationals has been a primary factor in the failure of Free Trade Zones to provide greater value to the government of the Republic of Cuba.  In the summer of 1999, the government of the Republic of Cuba uncovered violations of regulations and corruption at some companies operating within the three Free Trade Zones.