What United States Companies Can Do

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. 

  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.

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).   

  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.

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 Ways and Means of the U.S. House of Representatives, the focus of which “is to examine: (1) U.S. economic and trade policy toward Cuba and the impact of the U.S. embargo on the Cuban people, (2) the prospects for future economic relations in light of the Pope’s recent visit, (3) the status of humanitarian assistance extended to the Cuban people, and (4) how U.S.-Cuba policy, particularly the Helms-Burton legislation, has affected relations with U.S. trading partners.”  included: Chamber of Commerce of the United States; USA Engage; Medical Device Manufacturers Association; European-American Business Committee; and U.S.-Cuba Trade and Economic Council.

United States Companies and the Republic of Cuba

Some of the United States-based companies and United States-based companies with non-United States-based subsidiaries engaging in commerce with entities within the Republic of Cuba under licenses issued by 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., from 1985 through 2001.
 

Alcoa  Am International  Aeroquip  Armco  AT&T  Beckton Dickinson  Baker Hughes  Central Soya  Continental Grain  Corning  Crane Cooper Industries  Cummins Engine  Combustion Engineering  Coleman  Champion Spark Plug  Del Monte  Dow Chemical  Door-Oliver  Drew Chemical  Drexel Burnham Lambert  Dresser Industries  E.D. & F Man  E.I. Dupont  Environtech  Emhart Industries  Eli Lilly and Company  Exxon  Fisher & Porter  Ford Motor  General Electric  Genlyte Group  Gerber Products  Gilbarco  Goodyear Tire and Rubber  GTE International  H.B. Fuller  H.H. Robertson

Buckman Laboratories  Borg-Warner  Bridgestone/Firestone  Beatrice Companies  Barry Wehmiller  BF Goodrich  Butler Manufacturing  Hercules  Hoechst Celanese  Honeywell  Hussman  IBM World Trade  ITT  Ingersoll-Rand  International Multifoods  International Securities Investments  Johnson & Johnson  Johnson Controls  John Fluke Manufacturing  Joyce International  LDDS/Metromedia  Lubrizol  Litton Industries  Manville  Mastercard International  MCI Communications  3M  Mennen  Monsanto  Morton International  McGraw Edison  N.L. Industries  NYNEX  Otis Elevator  Owens Corning Fiber  Pfizer  Philipp Brothers

Burndy Bonne Bell  Caterpillar  Carter Day Industries Campbell Investment  Cargill Carrier Picker Industries  Potters Industries  RCA Global  R.J. Reynolds Raychem Reichold Chemicals  Reliance Electric Richardson Electronics  Rohm & Haas Joseph E. Seagram & Sons S.C. Johnson & Son  Sigma Aldrich  Sybron Acquisition  Tenneco TFX Holdings Time Warner TRW Telefax Toledo Scale  Uarco Union Camp  Union Carbide  Upjohn USM  Vulcan Hart  VISA International Westinghouse Electric Worthington International Worthington Pump WilTel

Republic of Cuba Commercial Highlights

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.  With 11.217 million citizens, the population is approximately the same as the State of Illinois.  If Cuba were a sate within the United States, it would rank 7th in population. 

Cuba, like the United States, was a founding signatory of the General Agreement on Tariffs and Trade (GATT).  Cuba, like the United States, is a member of the World Trade Organization, unlike the People’s Republic of China and Russia.  The United States and Cuba share membership in many international organizations and are signatories to many of the same international treaties.

There are more than 600 representation offices of foreign businesses located within the Republic of Cuba.  The Republic of Cuba maintains commercial dealings with approximately 4,500 foreign businesses in more than 100 countries.

The Republic of Cuba maintains diplomatic relations with 164 countries.  Seventy-eight countries have embassies in the Republic of Cuba.

As of 1 December 2001, there were a reported 398 joint ventures and economic associations established with Republic of Cuba government-operated companies by companies located in 46 countries, compared with 392 in 2000.  The 398 joint ventures and economic associations are in thirty-two sectors, including tourism, oil, mining, product assembly, and agriculture.  There are approximately fifty joint ventures and economic associations located in other countries, including Vietnam, People’s Republic of China, and Brazil.  In 1992 there were 80, in 1993 there were 112, in 1994 there were 180, in 1995 there were 212, in 1996 there were 260, and in 1997 there were 317.  Total announced/committed/delivered direct foreign investment within the Republic of Cuba is approximately US$5 billion by more than 100 companies from 30 countries as of December 2000.

The government of the Republic of Cuba has Investment Protection and Promotion Agreements with the following countries:

Tourism

Before 1959, 85% of tourists visiting the Republic of Cuba were United States citizens.  There are differences between tourist arrivals reported by the Madrid, Spain-based World Tourism Organization (WTO), of which the government of the Republic of Cuba is a member, and by the Ministry of Tourism of the Republic of Cuba:  

  Airlines

61 international air carriers have regular and/or charter services to and from the Republic of Cuba.  31 international air carriers have offices within the Republic of Cuba.

Cubana Airlines has regular and/or charter services to and from:  Spain, United Kingdom, Russia, Germany, France, Italy, Belgium, Chile, Argentina, Mexico, Jamaica, Canada, Panama, Brazil, Peru, Costa Rica, Dominican Republic, Venezuela, Austria, Angola, Netherlands-Antilles, and Ecuador among other countries.

SH&E, the largest civil aviation consultants in the world, estimates that United States-Republic of Cuba air travel might reach 5.2 million passengers per year; and that the economic impact upon U.S. airlines might approach US$1 billion.  SH&E also has projected that there may be a potential for up to US$2 billion in aircraft sales to Cubana Airlines. 

The U.S. Government authorizes charter airline passenger services between the Republic of Cuba and Miami, Florida; New York City, New York; and Los Angeles, California. 

Car Rentals

There are presently three vehicle rental agencies within the Republic of Cuba.  Available vehicle types include: Nissan, Suzuki, Daihatsu, Toyota, Mercedes Benz, and Renault.

Republic of Cuba government-operated companies have imported 1999 model Chrysler and Ford passenger vans, and Toyota passenger cars and vans.

Cubanacan S.A., the largest of the three Republic of Cuba public/private tourism businesses, has more than 400 imported passenger vehicles which are rented to foreign tourists. Transautos has 1,500 vehicles and reported US$13 million in profits in 1997. 

Hotels

In 1990, there were 13,664 hotel rooms of acceptable international quality within the Republic of Cuba.  By December 1993, there were 20,800, a 52% increase.  There are 181 hotels used exclusively for tourists, of which 13 of these are five-star and 45 are four-star.   As of June 1998, there were approximately 28,000 hotel rooms of varying quality.  As of January 2001, there were approximately 35,400 hotel rooms of varying quality.

Palma de Mallorca, Spain-based Sol Melia S.A. (2000 revenues US$800 million) manages twenty-three hotels within the Republic of Cuba.  [In August 2000, Sol Melia S.A. purchased Madrid, Spain-based Hoteles Tryp, which then managed four hotels within the Republic of Cuba].  By the end of 2001, Sol Melia is expected to manage approximately 12,568 hotel rooms, or approximately 33% of the approximately 38,000 hotel rooms within the Republic of Cuba as reported by the Ministry of Tourism of the Republic of Cuba.  Since many of the hotel rooms managed and marketed by Republic of Cuba government-operated companies (Gran Caribe S.A., Corporacion Cubanacan, Gaviota S.A., Horizontes S.A., Habaguanex S.A.) are of one-star quality and two-star quality based upon United States criteria, Sol Melia S.A. may manage more than 50% of all three-star quality to five-star quality hotel rooms, based upon United States criteria, within the Republic of Cuba by 2004. 

LTI, the German tourist agency, has several resorts under management and development.

Days Inn of the United States has requested United States Government approval to include the Republic of Cuba in its representation agreement with a Canadian company.

Cruise Ships

Cruise ship dockings are increasing, mainly those of the Club Med II, the Aida, the Princess

Danae, the Triton, and the Costa Prima.  At least US$12 million has been committed to renovate and construct new passenger cruise ship terminals in Havana (completed in December 1995), Mariel, and Santiago de Cuba.

Banking and Financial Services

MasterCard and Visa are permitted to be used in the Republic of Cuba by individuals not subject to U.S. law.  The cards must not be processed by United States-based financial institutions.  American Express cards are being used as well.  Visa charges exceeded US$180 million and Mastercard charges exceeded US$85 million in 1996.

Banamex, Mexico's largest financial conglomerate, has a joint venture with an enterprise within the Republic of Cuba to process receivables and issue consumer credit and charge cards.

The Banco Financiero Internacional, S.A., Banco Nacional de Cuba, Banco Internacional de Comercio and savings bank Banco Popular de Ahorro,  provide Republic of Cuba enterprises, non-

Mining

Canadian companies MacDonald Mines, Sherritt International, Minera Mantura, and several others have operations within the Republic of Cuba.  Most investment has been in the nickel industry.

Caribgold Resources of Canada has a joint venture to mine gold.  Joutel Resources of Canada has a joint venture to prospect for gold, lead, silver, and zinc.

The Republic of Cuba has 246 quarries for construction aggregates and 32 quarries specializing in marble production.  The country has 34 yards for prefabricated concrete.

Miramar Mining of Canada has a joint venture to exploit an open-pit copper mine.

Agriculture

The State of Arkansas was the largest supplier of rice to the Republic of Cuba before 1959.  The Republic of Cuba imports from the People’s Republic of China, Vietnam, and Thailand what amounts to approximately 12% of current United States rice exports.  Rice imports are decreasing as the People’s Republic of China and Vietnam provide Cuba with new growing and cultivation methods.

The Republic of Cuba has reported the importation of fertilizer from former U.S.S.R. countries and from Nigeria at a cost of US$73 per ton only in seaboard transportation.

Tel Aviv, Israel-based Grupo BM manages a 115,000 acre citrus plantation; and markets fruit in Europe and the Middle East.  The company also has real estate projects. 

Sports

Adidas and Mizuno (the Japan-based athletic equipment manufacturer) have sponsorship contracts with Republic of Cuba government-operated athletic teams and with individual Republic of Cuba national athletes.  Reportedly, the Adidas contract included a payment of approximately US$100,000.00 and Adidas product and the Mizuno contract included the provision of equipment. 

Construction

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury provided a license to a New Jersey-based construction company for the purpose of remodeling the Embassy of Germany in Havana.  The value of the contract was several hundred thousand dollars.

Most new heavy construction equipment in the Republic of Cuba has been imported from Asia.

Oil

Britain's Burmah Castrol Group, through its Dutch subsidiary, has a joint venture to use excess Republic of Cuba refining capacity to process lubricants for sale in the Caribbean.

Cupet-Cimex, a venture between two Republic of Cuba government-controlled companies, operate almost forty 24-hour fuel service stations throughout the country.  These stations sell automobile products, sundries, and food items.  Another Republic of Cuba venture, operated by Cubalse, also operates fuel service stations.

Domestic oil production continues to increase.  Almost 90% of the crude oil is high in sulfur content and can only be used for converted power and cement plants.  Nineteen of 32 exploration blocks are currently under license with companies from Canada, France, and the United Kingdom.

Cuba’s last major discovery was Cupet 1X, an offshore well completed in late 1995.  The well flowed on test at a rate of 3,700 b/d of 16° gravity crude.  Cupet 1X was drilled by Canadian Northwest, a subsidiary of Toronto, Canada-based Sherritt International Corporation.  The oil well’s depth was 2,800 meters and the water depth was 6 meters.  Cuba currently produces crude with gravities of 10° to 27° in four fields: Boca de Jaruco (discovered in 1968), Varadero (discovered in 1969), Perifericos (discovered in 1972), and Pina (discovered in 1989). 

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