U.S.-Cuba Trade and Economic Council, Inc.
30 Rockefeller Plaza New York, New York 10112-0002
Telephone (212) 246-1444 Facsimile (212) 246-2345
Internet: http://www.cubatrade.org


Realities of MarketCuba©

What United States Companies Can Do

United States businesses are permitted, either under a general license (no written authorization required) or specific license (written authorization required) from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., and/or Bureau of Export Administration (BXA) of the United States Department of Commerce in Washington, D.C., to:

(A) Execute and implement contracts within the fields of agricultural products, air charter services, artwork, communications, cultural events, entertainment, exhibitions, farm supplies, food sales, informational materials, medical equipment, medical instruments, medical supplies, medicated products, medicines, money transfer services, package delivery services, pharmaceuticals, telecommunications, and travel services

(B) Visit the Republic of Cuba to identify commercial opportunities within the fields of agricultural products, air charter services, artwork, communications, cultural events, entertainment, exhibitions, farm supplies, food sales, informational materials, medical equipment, medical instruments, medical supplies, medicated products, medicines, money transfer services, package delivery services, pharmaceuticals, telecommunications, travel services; and for intellectual property matters and for legal matters.

(C) Register trademarks and patents.

(D) Provide camera-ready artwork for advertising on television, in newspapers and magazines.

(E) Execute non-binding letters of intent.

(F) Provide funding to entrepreneurs.

(G) Make donations of products for humanitarian purposes.

(H) Organize and participate in trade shows.

(I) Have executives lecture at educational institutions.

(J) Authorize consumer credit cards to be valid for use.

(K) Have indirect non-controlling investments in the Republic of Cuba.  On 4 March 1994 the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., issued an opinion to Mr. John S. Kavulich II, which stated that a U.S. business or individual subject to U.S. law may make a secondary market investment in a third-country business which has commercial dealings within the Republic of Cuba provided that the investment does not result in control-in-fact of the third-country business by the U.S. investor and the third-country company does not derive a majority of its revenues from business activity within the Republic of Cuba.  Secondary market investment that falls short of a controlling interest in such a business is not prohibited.

 

United States-Republic of Cuba Commercial Relations -- 1980 to Present

 Between 1980 and the end of 1992, for example, the value of United States-owned foreign subsidiaries' trade, licensed 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, with enterprises within the Republic of Cuba was US$4.563 billion. 

 Of this total trade, US$2.637 billion was the value of subsidiaries' exports to the Republic of Cuba permitted by the licenses and US$1.926 billion was the value of subsidiaries' imports from the Republic of Cuba permitted by the licenses.  There were 2,938 licenses issued by the OFAC and by the BXA to more than one hundred United States-based companies businesses (see attached listing) between 1980 and the end of 1992.  There were few license applications rejected by the OFAC.

 The implementation of the Cuban Democracy Act in October of 1992 eliminated (bulk food commodities) the continuation of most United States-owned foreign subsidiaries' trade with enterprises within the Republic of Cuba, but at the same time provided additional licensed and non-licensed opportunities for the artwork, communications, entertainment, informational materials, medical equipment, medical instruments, medical supplies, medicated products, medical, pharmaceutical, publishing, and telecommunications industries. 

Year

Estimated Number Of United States Business Representatives Visiting The Republic Of Cuba

2001

3,700

2000

3,400

1999

2,800

1998

2,500

1997

2,000

1996

1,500

1995

1,300

1994

500

  The total value of permitted United States business activity within the Republic of Cuba from October 1994 through December 2001 is estimated to have exceeded US$900 million.

Executives of AOL Time Warner and other companies have traveled to the Republic of Cuba to discuss opportunities for the export and import of music, films, and publications.  Johnson & Johnson and other companies have received licenses from the BXA to export healthcare products to Republic of Cuba government-operated companies.  AT&T, LDDS/Metromedia, MCI, Sprint, AT&T de Puerto Rico, Wil-Tel, and WorldCom each currently provide long distance telephone and data services between the United States and the Republic of Cuba. 

The number of United States-based companies receiving Carrier Service Provider (CSP) licenses and Travel Service Provider (TSP) licenses from the OFAC increased during the period 7 September 2000 through 13 April 2001.  The number of United States-based companies receiving and Remittance Forwarder (RF) licenses from the OFAC has decreased during the period 7 September 2001 through 13 April 2001.  A total of 164 United States-based companies currently have a combined 273 licenses (TSP, CSP, and/or RF) issued by the OFAC.

Period

TSP Licenses

CSP Licenses

        RF Licenses

Total Licenses

13 April 2001

149

28

96

273

7 September 2000

137

27

99

264

12 August 1999

103

19

92

214

 

Location Of OFAC Licensees As Of 13 April 2001

State

TSP Licenses

CSP Licenses

RF Licenses

California

21

1

12

Colorado

 

 

1

Florida

99

21

66

Georgia

 

1

 

Illinois

2

1

1

Louisiana

3

1

2

Massachusetts

1

 

 

Minnesota

 

 

1

Nevada

1

 

 

New Jersey

9

1

7

New York

3

 

2

Puerto Rico

3

 

3

Tennessee

1

 

 

Texas

1

1

 

Virginia

1

 

 

Washington

1

 

 

Washington, D.C.

3

1

1

 

Elk Grove Township, Illinois-based United Airlines, Inc. (2001 revenues exceeded US$17 billion), Dallas/Fort Worth Airport, Texas-based American Airlines, Inc. (2001 revenues exceeded US$19 billion); Atlanta, Georgia-based Delta Air Lines, Inc. (2001 revenues exceeded US$14 billion); and Dania Beach, Florida-based Gulfstream International Airlines (2001 revenues exceeded US$80 million), within which Houston, Texas-based-Continental Airlines, Inc. (2001 revenues exceeded US$7 billion) has a 28% interest, each have CSP licenses from the OFAC which authorize the transportation of passengers and cargo between the United States and the Republic of Cuba.  United Airlines also has a TSP license from the OFAC.  RF licenses are held by Englewood, Colorado-based Western Union Financial Services, Inc. (a subsidiary of Atlanta, Georgia-based First Data Corporation, 2001 revenues exceeded US$5 billion), and Minneapolis, Minnesota-based MoneyGram Payment Services, Inc. (a subsidiary of Phoenix, Arizona-based Viad Corp, 2001 revenues exceeded US$2 billion).   

Only Gulfstream International Airlines (which has a CSP license and a TSP license) has chosen to operate regularly scheduled charter flights between the United States and the Republic of Cuba using its own aircraft.  United Airlines and American Airlines have chartered their aircraft to CSP licensees for use on regularly scheduled charter flights between the United States and the Republic of Cuba; and Delta Air Lines has used its aircraft to transport a group from the United States to the Republic of Cuba.  Gulfstream International Airlines has a code-share agreement with St. Paul, Minnesota-based Northwest Airlines Corporation (2000 revenues exceeded US$10 billion).  Gulfstream International Airlines has a connection agreement and operates the TWA Connection from San Juan, Puerto Rico, with St. Louis, Missouri-based Trans World Airlines, Inc. (2000 revenues exceed US$3 billion), a subsidiary of American Airlines.  Gulfstream International Airlines has a code-share agreement with Panama City, Panama-based COPA airlines. 

Since 1962, Delta Air Lines, Continental Airlines, and United Airlines have had route authorities from the following cities: Delta- Havana to Houston, Los Angeles, New Orleans, San Francisco, and San Juan; Continental- Havana to Fort Lauderdale, West Palm Beach, United- Havana to Miami, Key West, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.; and Camaguay to Miami, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.

  US Airways permits the 17 million members of its US Airways Dividend Miles program to accrue mileage for travel to/from/through the Republic of Cuba.  While US Airways does not currently provide service to/from/through the Republic of Cuba, and no awards are available for travel to the Republic of Cuba, members of the US Airways Dividend Miles program can accrue mileage to/from/through the Republic of Cuba when traveling on airlines affiliated with LatinPass.  LatinPass is a worldwide partner of the US Airways Dividend Miles program (other airline partners include ANA, Qantas, Alitalia, Sabena, Swissair, and Northwest).  LatinPass, which has 125,000 members, includes ACES, Avianca, Aviateca, COPA, LACSA, Mexicana, Nica, Saeta, Taca, US Airways, KLM, Avis, American Express Membership Rewards, AT&T True Awards, InterAmerican Rent-a -Car, Diners Club Rewards, Holiday Inn Worldwide, and Radisson Hotels Worldwide.

 

Year

Travelers (not including individuals of Cuban descent visiting relatives) Visiting (charter flights and through third countries) Reported By The National Statistics Office (NTO) of the Republic of Cuba

Authorized Travelers Using Charter Flights Reported By The OFAC (including individuals of Cuban descent and individuals not of Cuban descent)

2001

 

89,164 (preliminary reported by TSP’s)

2000

76,898

“more than 150,000”*

1999

62,345

82,000**

1998

46,778

55,975

1997

34,956

50,812

1996

27,113

Not Reported

1995

20,672

Not Reported

1994

17,937

Not Reported

1993

14,715

Not Reported

1992

10,050

Not Reported

1991

11,233

Not Reported

1990

7,375

Not Reported

1989

12,908

Not Reported

1988

10,195

Not Reported

1987

10,201

Not Reported

1986

15,445

Not Reported

1985

5,936

Not Reported

*Travelers Using General OFAC Licences And Specific OFAC Licenses As Reported By TSP’s And CSP’s.

**The OFAC reported that 82,000 individuals subject to United States law traveled from the United States to the Republic of Cuba in 1999 using the regularly-scheduled direct charter flights operating from Miami International Airport and, during the month of December 1999, from John F. Kennedy International Airport in New York City, and general aviation charter flights from other cities.

 

In March 2000, Mr. Eduardo Bencomo, President of Republic of Cuba government-operated Corporacion Cimex S.A., the largest Republic of Cuba government-operated company earning revenues in U.S. Dollars, reported that 124,000 individuals of Cuban descent who are subject to United States law visited the Republic of Cuba in 1999, primarily using the travel services of Republic of Cuba government-operated Havanatur, a subsidiary of Corporacion Cimex S.A.  Since 1994, the number of individuals subject to United States law authorized by a general license (no specific documentation from the OFAC is required) or specific license from the OFAC to travel to the Republic of Cuba has increased on average 9% to 11%.  Since 1994, the number of individuals subject to United States law traveling to the Republic of Cuba, but not authorized by the OFAC to do so, has increased on average 19% to 21%.  Approximately 22,000 individuals subject to United States law traveled to the Republic of Cuba in 2000 without authorization from the OFAC.  Approximately 92% of individuals subject to United States law visiting the Republic of Cuba from 1994 through 2000 were of Cuban descent whose specific purpose was to visit immediate family members for a self-defined “humanitarian purpose” or under the auspice of a specific license issued by the OFAC.  Individuals subject to United States law of Cuban descent who have immediate family members residing within the Republic of Cuba are permitted one visit under a general license from the OFAC every twelve months for a self-defined “humanitarian purpose.”  Approximately 8% of individuals subject to United States law traveling to the Republic of Cuba since 1994 under a general license from the OFAC or specific license from the OFAC were business representatives, journalists, academicians, cultural groups, students, athletes, and humanitarian groups amongst an expanding number of categories. 

Since January 1999, with the expansion of the “people-to-people” program regulated by the OFAC, a) the annual rate of increase for authorized travelers has increased b) the annual rate of increase for unauthorized travelers has decreased as more unauthorized travelers determine that they are eligible for a license from the OFAC and c) the ratio of all travelers visiting the Republic of Cuba has shifted, with the percentage of authorized travelers visiting the Republic of Cuba who are not of Cuban descent increasing from approximately 8% to approximately 17%.

U.S. Congress Hearings

Representatives of the U.S. business community appearing and/or providing statements to the 17 March 1994 joint hearing before the Subcommittee on Select Revenue Measures and the Subcommittee on Trade of the Committee on Ways and Means of the U.S. House of Representatives: AT&T; Carlson Companies; LDDS/Metromedia; RKO Pictures; SH&E; and United Technologies Corporation.

 

Representatives of the U.S. business community appearing at and/or providing statements to the 19 May 1994 hearing before the Subcommittee on Foreign Agriculture and Hunger of the Committee on Agriculture of the U.S. House of Representatives: Archer Daniels Midland Company; National Oil Seed Processors Association; National Pork Producers Council; The Rice Miller's Association; and U.S. Rice Producer's Group.

Representatives of the U.S. business community appearing at and/or providing statements to the 30 June 1995 hearing before the Subcommittee on Trade of the Committee on Ways and Means of the U.S. House of Representatives: National Association of Sugar Mill Owners of Cuba; U.S.-Cuba Trade and Economic Council; and USA Rice.            

Representatives of the U.S. business community appearing at the 23 October 1997 hearing and/or providing statements regarding the “Use and Effect of Unilateral Trade Sanctions” before the Subcommittee on Trade of the Committee on Ways and Means of the U.S. House of Representatives: USA Engage; The Boeing Company; National Association of Manufacturers; National Foreign Trade Council; American Farm Bureau Federation; European-American Business Council; U.S.A. Rice Federation; and U.S.-Cuba Trade and Economic Council.

Representatives of the U.S. business community appearing at the 7 May 1998 hearing and/or providing statements for the hearing before the Subcommittee on Trade of the Committee on Wa