PESO UNCHANGED AGAINST THE U.S. DOLLAR- 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. CADECA sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 21 Pesos from 19 February 1999 through 3 March 1999. CADECA had sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 20 Pesos from 13 January 1999 to 18 February 1999. CADECA purchased the U.S. Dollar for 21 Pesos and sold the Convertible Peso for 22 Pesos from 26 November 1998 to 12 January 1999. CADECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 21 Pesos from 15 July 1998 through 25 November 1998. CADECA purchased the U.S. Dollar for 19 Pesos and sold the U.S. Dollar for 21 Pesos from 1 April 1998 to 14 July 1998. CADECA purchased the U.S. Dollar for 20 Pesos and sold the U.S. Dollar for 22 Pesos from 12 March 1998 to 31 March 1998. CADECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 23 Pesos from 11 February 1998 to 11 March 1998. CADECA purchased and sold the U.S. Dollar for 23 Pesos from August 1997 through 10 February 1998. The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged. The government maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use. The government 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.
OFAC TO INCREASE DAILY PER DIEM FROM US$100.00 TO US$183.00-
The Office of Foreign Assets Control (OFAC) of the United States Department
of the Treasury in Washington, D.C, will increase the Per Diem allowance
for individuals subject to United States law visiting the Republic of Cuba.
There has been continuing criticism and increasing criticism as to why
employees of the United States government traveling to the Republic of
Cuba, with funds provided by the United States taxpayer, have had a regular
increase in their Per Diem, while individuals subject to United States
law who are not employees of the United States government traveling to
the Republic of Cuba have incurred a substantial decrease in their purchasing
power- at least 16% from November 1995 to December 1996 alone. For
at least fourteen years, the Per Diem for individuals subject to United
States law traveling to the Republic of Cuba who are not employees of the
United States government has been US$100.00 (no separation for lodging
and meals), during which period of time costs for hotels, costs for meals,
and costs for ground transportation within the Republic of Cuba have increased
threefold- or more, in many instances. The new Per Diem rate, US$183.00
(US$102.00 for lodging and US$82.00 for meals), is equal to the Per Diem
Rate For Foreign Areas issued by the Office of Allowances within the Office
of Operations of the Bureau of Administration of the Under Secretary of
Management of the United States Department of State in Washington, D.C.
The US$183.00 Per Diem rate has been in effect since December 1996.
From November 1995 to November 1996, the Per Diem Rate For Foreign Areas-
Republic of Cuba, was US$155.00 (US$90.00 for lodging and US$64.00 for
meals).
OFAC TO ISSUE REGULATIONS FOR 5 JANUARY 1999 INITIATIVES- The
Office of Cuban Affairs within the United States Department of State in
Washington, D.C., will be issuing the regulations to accompany the 5 January
1999 initiatives announced by The Honorable William J. Clinton, President
of the United States. The regulations will be administered by the
Office of Foreign Assets Control (OFAC) of the United States Department
of the Treasury in Washington, D.C., and the Bureau of Export Administration
(BXA) of the United States Department of Commerce. The regulations
are expected to be worded so as to provide the OFAC and the BXA with an
ability to interpret creatively submitted license applications with a goal
of authorization as opposed to denial. The regulations are expected
to: 1) restrict, at this time, exports of food products (bulk commodities,
food service, etc.), farm equipment (tractors, plows, silos, etc.), agricultural
products (fertilizer, pesticides, seeds, etc.), and farm supplies (fencing,
clothing, etc.) to owners of home-based restaurants (known as “paladares”),
non-governmental organizations (NGO’s), private farmers, etc. Direct
sales to Republic of Cuba government-operated entities which import bulk
food commodities for distribution (through ration coupon books, and for
use in schools and in healthcare facilities) to the 11 million citizens
of the Republic of Cuba, such as Alimport, which is under the auspice of
the Ministry of Foreign Trade of the Republic of Cuba, are not expected
to be authorized at this time. 2) there may be as yet undefined
food sales opportunities through third countries 3) encourage
representatives of United States-based companies to visit (under individual
licenses issued by the OFAC) the Republic of Cuba to discuss commercial
opportunities in the areas of food sales, farm equipment, agricultural
products, and farm supplies 4) authorize commercial financing
for food sales, farm equipment, agricultural products, and farm supplies
5) authorize an increase in the use of general aviation aircraft
for the transportation of individuals subject to United States law traveling
to the Republic of Cuba 6) authorize at least two new cities,
initially, to provide direct aircraft charter services between the United
States and the Republic of Cuba. The initial cities may include New
Orleans, Louisiana; Los Angeles, California; San Francisco, California;
and Newark, New Jersey. Currently, regularly-scheduled airline charters
may only depart the United States for the Republic of Cuba from Miami,
Florida’s Miami International Airport 7) electronic remittances,
for which a subsidiary of Paramus, New Jersey-based Western Union Financial
Services International, itself a subsidiary of Hackensack, New Jersey-based
First Data Corporation (1998 revenues exceeding US$5 billion), already
has an OFAC license, have yet to be implemented 8) the
United States Department of State has commenced discussions with the Ministry
of Foreign Affairs of the Republic of Cuba for the resumption of direct
mail service between the United States and the Republic of Cuba.
Initially, mail delivery is expected to be limited to letters, rather than
packages. Commercial correspondence, including product samples, may be
also included 9) authorize some individuals subject to United
States law to visit the Republic of Cuba under a general license from the
OFAC if such visits are specifically related to culture, religious, humanitarian,
and perhaps, academic, purposes. A general license from the OFAC
authorizes an individual subject to United States law to travel to the
Republic of Cuba without applying for a printed license from the OFAC.
Individuals subject to United States law traveling to the Republic of Cuba
under a general license from the OFAC (currently full-time journalists,
diplomats, United States government employees on official business, and
representatives of international organizations of which the United States
government is a member) do so on the “honor system.”
VERDICT IN COURT CASE COULD NULLIFY 400 UNITED STATES COMPANY TRADEMARKS
IN CUBA- A verdict in a case currently before a Federal Court in New
York City may cause the government of the Republic of Cuba to nullify the
protection of an estimated 400 trademarks registered within the Republic
of Cuba by United States-based companies. The case involves Section
211, which was contained in the 4,000-page Omnibus Budget Act of 1998.
Section 211 provides, under certain conditions, to negate Republic of Cuba-origin
trademarks of the protections of United States law. Until Section
211 was enacted, the United States and the Republic of Cuba granted reciprocal
protection to each other’s trademarks under the 1931 Convention on the
Protection of Trademarks. An internal memorandum obtained from the Office
of the United States Trade Representative (USTR) memorandum addressed to
The Honorable Charlene Barshefsky, United States Trade Representative,
refers to Section 211 as follows: “Trademarks/TRIPS - Senator
[Connie] Mack [R-Florida] inserted language into the omnibus appropriations
bill that prohibits U.S. courts from enforcing trademarks held by a designated
national or successor-in-interest that was used with a business that was
confiscated. This provision addresses a long-standing dispute between
the Cuban government and [Hamilton, Bermuda-based] Bacardi rum. The
language is problematic because it violates our obligations under the TRIPs
agreement.” [The complete text of the USTR memorandum is reproduced
in the 27 November 1998 issue of the Washington, D.C.-based publication,
Inside U.S. Trade]. The Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS) sets out obligations relating to
intellectual property rights that are applicable to all members of the
World Trade Organization (WTO). These obligations include the protection
of trademark rights and impose obligations on members of the WTO to provide
administrative and judicial mechanisms to enforce intellectual property
rights. Ms. Lynne Beresford, an attorney in the Office of Legislative
and International Affairs of the United States Patent and Trademark Office
(USPTO) in Arlington, Virginia, was quoted in the November 1998 issue of
the monthly newsletter, CubaNews, which was, at the time,
owned by the Miami, Florida-based newspaper, The Miami Herald: “We’re
certainly out there pushing people to protect international property.”
The article continued: “Beresford said international reaction to the Bacardi
amendment could take several forms. Cuba may interpret the provision
as an abrogation of their right under the 1931 Interamerican Convention
on Trademarks to file and maintain a trademark in the United States. In
retaliation, Cuba could argue that it is relieved of its treaty obligation
to recognize some 400 U.S. trademarks registered in Cuba, including Hilton,
Coca-Cola and Palmolive.” On 8 January 1999, H.E. Ricardo de Alarcon
de Quesada, President of the National Assembly of People’s Power of the
Republic, made the following remarks (unofficial translation): “Section
211 of that law on the budget, simply violates the most basic principles
of intellectual property, the trademarks and patents that are universally
accepted, establishing that US courts cannot recognize any right to any
trademark or patent of any foreign company, a foreign company, not a US
company, that is allegedly linked to properties that were allegedly owned
by a North American now… Of course, trademarks and patents do not exist
for one side only and the right and responsibilities and the respect for
international norms must work in all directions. There are trademarks
and patents here that belong to US firms. It is not only one trademark
in the US market… You can get US trademarks here and they know it.
Trademarks and patents owners should be worried about the irresponsibility
of a government that can incur in actions that will not fail to provoke
a reaction…” The text of Section 211 of the Omnibus Budget Act
of 1998 is available from the U.S.-Cuba Trade and Economic Council.
A listing of some of the United States-based companies with trademarks
registered within the Republic of Cuba is attached to this issue of the
ECONOMIC EYE ON CUBA©.
QUEST NET CORPORATION PROPOSES US$13 MILLION UNDERSEA FIBER OPTIC
CABLE TO CUBA- Aventura, Florida-based Quest Net Corporation (OTC BB:QNET;
first quarter revenues for 1998, ending 30 September 1998, were US$957,000.00)
has announced that the company has filed with the Federal Communications
Commission (FCC) in Washington, D.C., for authorization to construct a
40 Gbps undersea (buried to 4,900 feet) fiber optic cable with capacity
of more than 530,000 simultaneous connections between the United States
and the Republic of Cuba. The project consists of approximately 180 kilometers
of undersea cable and two landing points. Quest Net Corporation reports
that the company has not initiated discussions with the Ministry of Communications
of the Republic of Cuba, choosing to await a decision by the FCC. “Projecto
Unidad,” as the initiative is being referred, seeks to “open broadband
applications with security for educational, scientific and commercial users
and greatly enhance the availability and use by residents of the Republic
of Cuba. The Internet will be more readily available to residential users
facilitating communication between the average citizen and the world with
a primary link with the United States. With the change in the political
atmosphere and the emergence of a more open relationship between Cuba and
major world powers, the demand for bandwidth and voice capacity is expected
to grow sharply as the Cuban economy continues to develop and diversify.”
The overall cost of the project is estimated to be approximately US$13,000,000.00
and would require twelve months to implement. Currently, fiber optic
connectivity does not exist between the Republic of Cuba and other countries.
Within the last five years, several United States-based telecommunications
companies have made similar proposals to the FCC, all of which were eventually
rejected by the Bureau of Export Administration (BXA) of the United States
Department of Commerce on the basis of concerns about technology transfers
to the Republic of Cuba. New York City-based AT&T Corporation
has one copper cable that was installed more than 40 years ago, which is
being used to transmit telephone service between the United States and
the Republic of Cuba. Direct telephone services between the United
States and the Republic of Cuba were re-established in 1993. The
“Projecto Unidad” system is being designed primarily for data and will
only carry Internet and data traffic. Quest Net Corporation will
not be involved in the settlement of telephone tariffs. A feasibility
study has been completed by Spring Lake, New Jersey-based SetWave Communications,
which specializes in management and design of Fiber Optics undersea cables.
SetWave Communications has been awarded the management contract for the
construction and installation of the cable. Quest Net Corporation
is negotiating with Morris Town, New Jersey-based Tyco Submarine Systems
(TSS), a subsidiary of Exeter, New Hampshire-based Tyco International (1998
revenues US$13.5 billion) to construct and to install the cable.
Tyco Submarine Systems, formerly known as AT&T Submarine Systems, was
sold by AT&T Corporation to Tyco International in 1998. TSS is
the largest supplier of submarine cable systems in the world, having installed
more than 155,000 miles of undersea cable. Quest Net Corporation operates
its own OC-12 (622Mbps) Fiber optic self-healing SMARTRing backbone running
from Key West, Florida, to Sebastian, Florida. The company is a provider
of secure, full-service global Internet and Intranet broadband digital
networking solutions for businesses and individuals. Quest Net Corporation
is one of the largest regional Internet Service Providers with Dial-up
POP’s (point-of-presence) in 228 cities and with more than 2,000 clients,
mostly small businesses. The company also offers dedicated high-speed
Internet access, metropolitan and wide area network data transport services,
including virtual private networks, to several commercial clients and other
ISP's, and Wireless Internet Connection at a speed of up to three Mbps
to a distance of eight miles on a license free spectrum. Quest Net Corporation
offers one of the fastest and cleanest routing system for the transfer
and delivery of voice, video and data streams at speeds ranging from 64
Kbps to 155 Mbps (OC-3), as well as frame relay connections at speeds up
to 45 Mbps. For information, contact Mr. Shepp Parr, Manager- Sales
and Marketing of Quest Net Corporation at telephone: (305) 935-1080; facsimile:
(305) 935-1031; E-mail: shepp@jpquest.com;
Internet: http://www.jpquest.com
CANADA TRADE AND CANADA INVESTMENT UPDATE- The Honorable Keith Christie, Ambassador of Canada to the Republic of Cuba, reported that bilateral trade with the Republic of Cuba was US$550 million in 1998, US$300 million in exports and US$250 million in imports. Bilateral trade was US$500 million in 1997. Canada is the Republic of Cuba’s second-largest trading partner after Spain (more than US$600 million in 1998). Ambassador Christie said that Canada-based companies had delivered more direct investment within the Republic of Cuba than any other country, approximately US$700 million since 1990, primarily in mining, energy development, and tourism. Since 1990, Canada-based companies have announced a combined US$1,807,000,000.00 in direct investment within the Republic of Cuba. In June 1998, Ambassador Christie reported that Canada-based companies had delivered direct investment of US$200 million within the Republic of Cuba. In 1998, approximately 225,000 Canadian citizens (primarily from Quebec Province) visited the Republic of Cuba, placing Canada as the largest source of tourists visiting the Republic of Cuba in 1998.
GERMAN COMPANY RECEIVES US$4 MILLION ORDER FOR POULTRY INPUTS- Organizers of the February 1998 annual Livestock Fair reported that during the event contracts with a total value of more than US$8 million were signed with non-Republic of Cuba-based companies. The largest contract, valued at more than US$4 million, was signed with Germany-based Bremer Pharma for various inputs (veterinary medicines, insecticides, etc.) to be used in poultry production. Thirty-seven companies participated in the annual Livestock Fair including companies from Germany, Colombia, Ecuador, Spain, Israel, Mexico, the United Kingdom, and Sweden.
SPANISH COMPANY ESTABLISHES PACKAGE PRINTING JOINT VENTURE- Republic of Cuba government-operated Poligrafica S.A., affiliated with the Ministry of Light Industry of the Republic of Cuba, and Valladolid, Spain-based Industrias San Cayetano S.A., have established a 50%-50% joint venture to produce all types of graphics for packaging, advertising, etc. The joint venture, which is expected to be operational by the end of 1999, will market its products within the Republic of Cuba and in Caribbean Sea-area countries. Indistrias San Cayetano, whose president is Mr. Francisco Esgueva, manufactures cardboard packaging for shellfish products and cardboard packaging for fish products. The company is providing financing and technology. Poligrafica is providing an unused printing plant and labor. The joint venture expects to have annual gross revenues of US$10 million.
WHEAT IMPORT UPDATE- The Republic of Cuba imported wheat from
1 July 1998 to 1 March 1999 from various ports within France, including
Rouen, Dunkirk, La Pallice, and Bordeaux. Wheat imports to the Republic
of Cuba increased from the period 1 July 1998 to 1 March 1998.
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BARLEY IMPORT UPDATE- The Republic of Cuba imported barley from 1 February 1999 to 24 February 1999 from the port of Rouen, France.
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GRAPEFRUIT PRODUCTION UPDATE- The Isla de la Juventud citrus orchards, located 200 kilometers south of the city of Havana, reported that 1999 production was 38,800 tons, mainly grapefruit. The 1999 harvest was 100% above the 1998 harvest. Production is expected to be more than 40,000 tons in 2000. In 1998, Tel Aviv, Israeli-based Grupo BM established an economic association to manage the Isla de la Juventud citrus orchards, the most productive grapefruit orchards within the Republic of Cuba. 1999 fresh grapefruit exports were reported to have increased 500% from 1998 fresh grapefruit export levels, and, for the first time, the Isla de la Juventud citrus orchards produced orange juice for export.
15 March 1999- Mr. John S. Kavulich II, President of the U.S-Cuba Trade and Economic Council, will give a presentation at The Cuba Conference with Updates On The Reconstruction Of Central America, the Caribbean, and Colombia at the Center for Strategic and International Studies in Washington, D.C., on 15 March 1999. The conference is being sponsored by Washington, D.C.-based The Center For Reconstruction & Development, a division of Washington, D.C.-based Equity International, Inc. For additional information about the conference, contact telephone (202) 429-2024, facsimile telephone (202) 775-5921, and Internet: http://www.rec-dev.com
18 March 1999- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, will give a luncheon presentation at “Cuba Sommet ‘99” at the Chateau Frontenac Hotel in Quebec City, Quebec, Canada, on 18 March 1999 and 19 March 1999. The conference is being sponsored by the Chamber of Commerce and Industry of Metropolitan Quebec and the International Trade Center of Eastern Quebec. For additional information about the conference, contact telephone (418) 694-0226, facsimile telephone (418) 694-2286, and Internet: http://simnet.gmc.ulaval.ca/cuba99
13 July 1999- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, will be a moderator on a panel at the Cuba Business Roundtable sponsored by London, United Kingdom-based The Economist Conferences at the Four Seasons Hotel in Toronto, Ontario, Canada. For additional information about the conference, contact telephone: (212) 554-0659, facsimile telephone (212) 698-9732, E-mail: cateambrose@eiu.com, Internet: http://www.eiu.com
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