Cubana Operational Issues May Provide Intra-Cuba Opportunities For U.S. Airlines

On Friday, 18 May 2018 a thirty-nine-year-old Boeing 737 aircraft leased by Republic of Cuba government-operated Cubana de Aviacion (Cubana) from Celaya, Guanajuato, Mexico-based Damojh Aerolineas S.A. de C.V. crashed, killing 110 of 113 passengers.  The crew, all of whom died, was provided by Damojh Aerolineas S.A. de C.V.

This event may create impetus for Cubana and United States-based airlines (American Airlines, Delta Air Lines, Jet Blue Airways, Southwest Airlines, and United Airlines among others) to seek approval, if required, from the United States Department of Transportation (USDOT) and/or Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and/or United States Department of Commerce (USDOC) for United States-based airlines to a) lease aircraft (with or without repainting) to Cubana and/or b) offer aircraft to code-share with Cubana for intra-Republic of Cuba routes. 

Either action would provide increased safety, increased frequency, and increased connective opportunity for Republic of Cuba nationals to travel throughout the country and authorized travelers originating in the United States. 

For example, Miami-Havana-Santiago de Cuba-Havana-MiamiMiami-Havana-Holguin-Havana-MiamiFt. Lauderdale-Havana-Camaguey-Havana-Ft. LauderdaleTampa-Havana-Cienfuegos-Havana-Tampa.  

From the USDOT:

On February 16, 2016, the United States and Cuba signed a Memorandum of Understanding (MOU) that will allow for the resumption of scheduled air services between the United States and Cuba. For scheduled combination or all-cargo services to and from Havana, under the terms of the MOU, U.S. carriers may operate up to twenty (20) daily round-trip frequencies. For scheduled combination or all-cargo services to and from each of the other nine (9) international airports in Cuba, U.S. carriers may operate up to ten (10) daily round-trip frequencies, for a total of ninety (90) daily non-Havana U.S.-Cuba round-trip frequencies.1 The MOU also allows for unlimited charter services to and from any point in Cuba, in accordance with the regulations of each country.2 This proceeding accordingly will not address charter services. Its sole focus will be on the allocation of scheduled service frequencies.

1 The nine airports, other than Havana’s José Marti International Airport (HAV), that are authorized for international services are: the Ignacio Agramonte International Airport in Camagüey (CMW); the Jardines del Rey Airport in Cayo Coco (CCC); the Vilo Acuña Airport in Cayo Largo (CYO); the Jaime González Airport in Cienfuegos (CFG); the Frank País Airport in Holguín (HOG); the Sierra Maestra Airport in Manzanillo (MZO); the Juan Gualberto Gómez Airport in Matanzas (VRA); the Abel Santamaría Airport in Santa Clara (SNU); and the Antonio Maceo Airport in Santiago de Cuba (SCU). 

2 The MOU does not place limits on the number of carriers that may provide U.S.-Cuba services, nor does it limit aircraft capacity for scheduled or charter services.  

LINK TO COMPLETE TEXT OF 2016 MEMORANDUM OF UNDERSTANDING

PBS NewsHour Continues Depersonalization Of U.S.-Cuba Relationship

On Friday, 18 May 2018, during the PBS NewsHour "News Wrap" segment, anchor Ms. Judy Woodruff mentioned the crash of a Boeing 737 aircraft leased by Republic of Cuba government-operated Cubana de Aviacion from Celaya, Guanajuato, Mexico-based Damojh Aerolineas S.A. de C.V.

Significant is Ms. Woodruff not referencing the name of the President of the Republic of Cuba, Miguel Diaz-Canel, who was inaugurated on 19 April 2018.  President Diaz-Canel is the successor to H.E. General Raul Castro.

Not mentioning the name of the president of the Republic of Cuba represents a continuing depersonalization of the relationship between the United States and the Republic of Cuba.

JUDY WOODRUFF:

"In the day’s other news: A Cuban passenger plane crashed shortly after takeoff today, killing over 100 people on board. State media reported that the three survivors were in critical condition. The Boeing 737 was headed toward the eastern city of Holguin, when it plummeted into a field just outside Havana.

Cuba’s president visited the scene and said officials would investigate the cause."

judy-woodruff-newsroom-1024x683.jpg

UK Cautions: "Take care in central Havana at night. Use a taxi rather than walk, even if you’re only a few blocks away from your destination."

On 18 May 2018, the Government of the United Kingdom issued an updated Travel Advice for the Republic of Cuba.

The Travel Advice included the following passage:

"Car-related crime and muggings occur from time to time, not only in Havana but also in Santiago de Cuba and other areas. Take care in central Havana at night. Use a taxi rather than walk, even if you’re only a few blocks away from your destination. There have been attacks on foreigners in hire cars after their tyres have been deliberately punctured. If you get a puncture in a remote area, drive on to a town before stopping. Don’t stop for hitch-hikers as they’ve also been known to carry out attacks."

The complete Travel Advice:

https://www.gov.uk/foreign-travel-advice/cuba

index.png

32nd Hotel On Conde Nast Traveler Magazine's "The Hot List" Is In Havana

In the May/June 2018 issue of Conde Nast Traveler Magazine, "The Hot List- What's Hot Now" contains 102 properties from throughout the world.

The 32nd listed property is the Gran Hotel Manzana Kempinski in Havana, Republic of Cuba, which opened in 2017.

Geneva, Switzerland-based Kempinski Hotels SA has a management contract with Republic of Cuba government-operated Gaviota SA., controlled by Republic of Cuba government-operated Grupo de Administracion Empresarial S.A. (Enterprise Management Group), or GAESA, which is, in turn, controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR).  

Kempinski Hotels SA operates seventy-five (75) five-star properties in thirty (30) countries.  The Bangkok, Thailand-based Thailand Crown Property Bureau has a majority shareholding in Kempinski AG, which owns Kempinski Hotels SA.

From the Kempinski Hotels Internet site: "Originally built between 1894 and 1917 as the first European style shopping arcade in Cuba, Gran Hotel Kempinski Manzana La Habana is situated in the heart of the old Havana with a direct view of the Capitol and the Great Theatre of Havana and amidst UNESCO World Heritage sites. The famous Castillo del Morro is accessible within a 10 minute drive. Experience the first true luxury hotel in Cuba and indulge yourself while staying in one of our 246 large rooms or suites with extra high ceilings and French windows opening out to the old city. Experience a variety of restaurants and bars, which also includes a one of a kind cigar lounge and a roof top Panoramic Restaurant and Bar with spectacular views over the old city. Relax in our spa, fitness center and rooftop pool."

Link To Previous Blog Post:

https://www.cubatrade.org/blog/2017/4/29/cubas-1st-potentially-five-star-aaa-diamond-property-kempinski-manzana-la-habana-welcoming-guests-on-9-june-2017?rq=Kempinski

 

Vice President Pence Mentions Cuba In Remarks To OAS

THE WHITE HOUSE
Office of the Vice President
For Immediate Release
May 7, 2018

REMARKS BY VICE PRESIDENT PENCE DURING A PROTOCOLARY MEETING AT THE ORGANIZATION OF AMERICAN STATES

Organization of American States
Washington, D.C.

Excerpts.......

THE VICE PRESIDENT:  Ambassador Gonzalez, Secretary General Almagro, Ambassador Trujillo, permanent representatives, distinguished members of Congress, ambassadors, all of our honored guests, it is my great honor to be here in the House of the Americas to address this session of the Organization of American States.  Thank you for the honor of being with you today.  (Applause.)

And I bring greetings first and foremost from a great champion of security, prosperity, and freedom in the Western Hemisphere.  I bring greetings from the 45th President of the United States of America, President Donald Trump.  (Applause.)

I’m here today because the Western Hemisphere is a key priority of our administration and our country.  Under President Trump, the United States will always put the security and prosperity of America first.  But America first does not mean America alone.

Our nation has always cared deeply about our neighbors across the Western Hemisphere.  This region is filled with diverse cultures, distinctive traditions, and unique identities beyond number, but we are all bound together by geography, by history, and by the enduring aspiration for freedom.

Ours was always meant to be a hemisphere of freedom, and that vision is why the Organization of American States exists.

One week ago today, this body celebrated the 70th anniversary of its founding, when 21 nations from across the Western Hemisphere declared to the world, and I quote, “that the historic mission of America is to offer a land of liberty.”  And that vision endures to this very day.

Today, this institution essentially represents our entire Western Hemisphere.  And the United States is proud -- proud to stand with the OAS.  And we're especially grateful for the principled leadership of Secretary General Almagro.  Thank you for your outstanding words today.  

Yet even as we celebrate this exercise in freedom, the dark cloud of tyranny still hangs heavy over too many of our neighbors in this hemisphere.

In Cuba, the longest-surviving dictatorship in the Western Hemisphere still clings to power.  For nearly 60 years, the Castro family systematically sapped the wealth of a great nation and of the Cuban people.  While the Castro name is now fading, the oppression and police state they imposed is as powerful as ever.

Today, the United States once again stands with the Cuban people in their stand for freedom.  No longer will our dollars fund Cuba’s military, security, and intelligence services -- the core of that regime.  And in this administration, we will stand and we will always say, "Que Viva Cuba Libre."  (Applause.)

But Cuba’s leaders have never been content to stifle just their own people’s freedom.  For generations, that communist regime has sought to export its failed ideology across the wider region.  And today, the seeds of Cuban tyranny are bearing fruit in Nicaragua and Venezuela.

OAS.jpg

President Trump Can Help Offset China’s Decrease In Soybean & Corn Imports With One OFAC License

President Trump Can Help Offset China’s Decrease In Soybean & Corn Imports 

CEO of Home BancShares In Arkansas Has A Key To Unlock Potential

US$1.4 Billion In Soy Products & US$1.1 Billion In Corn Purchased Under TSREEA

One OFAC License Could Increase Exports

In 2018, China Imports Have Decreased 15.5%; Cuba’s Imports Have Increased 20.8%

One Governor, Two Senators, Four Members Of The House Of Representatives

On 4 May 2018, The Honorable Donald J. Trump, President of the United States, was quoted as saying: “My people are coming back right now from China, and we will be doing something, one way or the other, with respect to what's happening in China.  And let me say this:  I have great respect for President Xi.  That's why we're being so nice.  And we have a great relationship.  But we must bring fairness into trade between the U.S. and China.  And we'll do it.”

On 5 May 2018, The Wall Street Journal reported that exports of soybeans and corn from the United States to the People’s Republic of China had substantially decreased.  According to The Honorable Charles Grassley (R- Iowa), a member of the United States Senate, “If [the Chinese] market closes, it could be devastating for local communities across the Midwest.”  

Increasing the export of soybeans and corn, and other agricultural commodities and food products, from the United States to the Republic of Cuba would not be a panacea, but could be a material offset with no risk to United States taxpayers because United States law requires payment of cash-in-advance for deliveries of agricultural commodities and food products from the United States to the Republic of Cuba.  The law does not need to be altered for exports to increase.

President Trump could take immense satisfaction from using rational commercial logic to correct simple commercial arithmetic that escaped comprehension of the Obama Administration: When export opportunities exist, assist and do no harm.  And, if there are two parts to create success, don’t authorize one part and then self-congratulate for not authorizing the other part.  President Trump would certainly concur that’s a terrible deal.

Since December 2001, when the first deliveries from the United States to the Republic of Cuba commenced under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, the Republic of Cuba has purchased, on a cash-in-advance basis, more than US$5.6 billion in agricultural commodities and food products from United States companies.  

In 2017, the Republic of Cuba ranked 53rd amongst 229 agricultural commodity and food export markets for United States companies according to the United States Department of Commerce; ahead of Poland, Jordan, Argentina, Russia, Qatar and Greece among others.  

Thus far in 2018, the Republic of Cuba maintains that ranking with 2017-to-2018 exports having increased 20.8% while exports from the United States to the People’s Republic of China have decreased 15.5% according to the United States Department of Commerce.

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.4 billion in soybean products: more than US$621 million in soybeans, more than US$531 million in soybean oil cake, and more than US$245 million in soybean oil.

Thus far in 2018, the Republic of Cuba has purchased approximately US$15 million in soybeans and soybean oil, compared with US$8,493,537.00 (soybeans; no soybean oil) during the same period in 2017.  That is a 76.6% increase.

Soybean products represent approximately 25% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.15 billion in corn.

Thus far in 2018, the Republic of Cuba has purchased approximately US$9.4 million in corn, compared with US$14,462,001.00 during the same period in 2017.  That is a 53.8% decrease.

Corn represents approximately 20% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

To assist towards increasing agricultural commodity and food product exports, along with other authorized exports (agricultural machinery and farm implements, for example), Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion), who through its Centennial Bank subsidiary purchased Pompano Beach, Florida-based Stonegate Bank in September 2017, should seek to augment its existing license from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.  Home BancShares has experience with agriculturally-focused transactions on behalf of its customers in Arkansas, Alabama, Florida and New York.

Mr. C. Randall Sims, President and Chief Executive Officer of Home BancShares, along with Mr. John W. Allison, Chairman of Home BancShares, may want to seek assistance from their Governor (who visited the Republic of Cuba in 2015) and their Members of Congress:

The Honorable Asa Hutchinson (R), Governor of the State of Arkansas; United States Senators: The Honorable John Boozman (R) and The Honorable Tom Cotton (R); and the four members of the United States House of Representatives: The Honorable Eric “Rick” Crawford (R) who has visited the Republic of Cuba, The Honorable French Hill (R), The Honorable Steve Womack (R), and The Honorable Bruce Westerman (R).

In 2015, the OFAC authorized Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA).  

However, because the Obama Administration would not authorize BICSA under a general or specific license from the OFAC to have an account with Stonegate Bank, United States export-related funds have been sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.  

Without bilateral direct correspondent banking accounts, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more secure, more transparent, more timely (same day versus two or more days), and less costly.  

The augmentation of the OFAC license would be consistent with the export-focused mandates of the United States Department of Agriculture (USDA) and United States Department of Commerce (DOC).

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved.

From the OFAC:

55.  Are financial institutions other than banks permitted to open correspondent accounts in Cuba?  Depository institutions, as defined in 31 CFR §515.333, which include certain financial institutions other than banks, are permitted to open correspondent accounts at banks in Cuba. See 31 CFR §515.584(a).

(f) Any banking institution, as defined in §515.314, that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to §515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. With the exception of transactions related to exports or reexports of medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo, or trade, nothing in this paragraph authorizes a direct financial transaction prohibited by §515.209.

56.  Are Cuban banks permitted to open correspondent accounts at U.S. banks? No. U.S. depository institutions are permitted to open correspondent accounts at Cuban banks located in Cuba and in third countries, and at foreign banks located in Cuba, but Cuban banks are not generally licensed to open such accounts at U.S. banks. See note to 31 CFR §515.584(a).

What To Do?

Home BancShares should be proactive and seek the 50% of its correspondent banking license from the OFAC that it does not possess to then transparently, securely, and efficiently receive funds from the Republic of Cuba and transfer funds to the Republic of Cuba.

A fully-implemented direct correspondent banking agreement will lessen transaction costs by up to 2%; and that 2% could result in additional soybean products and corn and other agricultural commodities and food products exported from the United States to the Republic of Cuba.   

Since December 2001, the Republic of Cuba has transferred US$5.6 billion to United States-based companies for the purchase of agricultural commodities, food products and healthcare products; approximately US$150 million went to third-country financial institutions to process those payments.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

The government of the Republic of Cuba may believe, and not without some reasonableness, that if the OFAC does not want United States companies to save on transaction fees, and gain from the potential savings in terms of increased product exports, then so be it.  

The government of the Republic of Cuba has a responsibility to gain as much as possible from each bilateral commercial relationship; and United States companies can provide high quality product, with competitive pricing, on a consistent basis, through efficient ground and rail and port transportation networks.  That’s a benefit to the 11.3 million citizens of the 800-mile long archipelago.   

United States companies (large, medium and small; and individual farmers) who engage in authorized transactions with any country should not be financially penalized.

There exists an available use of the OFAC licensing pathway to solve a payment problem.  Home BancShares and BICSA should make use of it.  The USDA and DOC should support it.

Complete Text In PDF Format

Link To Previous Blog Post:

https://www.cubatrade.org/blog/2017/12/12/president-trump-deserves-opportunity-to-right-an-obama-administration-wrong-sftcp-dcb?rq=Stonegate%20Bank

https _s3-ap-northeast-1.amazonaws.com_psh-ex-ftnikkei-3937bb4_images_8_9_8_3_13543898-3-eng-GB_20180402_xi-and-trump.jpg

USDOT Finalizes New US-Cuba Routes Without Changes; United Receives Approval For Aircraft Change

The United States Department of Transportation (USDOT) has finalized its new route awards for the Republic of Cuba, receiving no objections to it interim decisions of April 2018.

LINK To USDOT Final Decision

Chicago, Illinois-based United Airlines received approval on 4 May 2018 from the USDOT for its Newark-Havana aircraft change request.

LINK to USDOT Final Decision

Seal_of_the_United_States_Department_of_Transportation.svg.png

Home BancShares Reports On Its Risks Associated With Cuba-Related Banking Services

In September 2017, Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion) through its Centennial Bank subsidiary purchased Pompano Beach, Florida-based Stonegate Bank.

In 2015, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorized Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA).  

However, because the Obama Administration would not authorize BICSA under a general or specific license from the OFAC to have an account with Stonegate Bank, United States export-related funds have been sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.  

Without bilateral direct correspondent banking accounts, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more secure, more transparent, more timely (same day versus two or more days), and less costly.

2017 Annual Report Of Home BancShares

Page 8

Stonegate Bank – On September 26, 2017, the Company, completed the acquisition of all of the issued and outstanding shares of common stock of Stonegate Bank (“Stonegate”), and merged Stonegate into Centennial. The Company paid a purchase price to the Stonegate shareholders of approximately $792.4 million for the Stonegate acquisition. Under the terms of the merger agreement, shareholders of Stonegate received 30,863,658 shares of HBI common stock valued at approximately $742.3 million at the time of closing plus approximately $50.1 million in cash in exchange for all outstanding shares of Stonegate common stock. In addition, the holders of outstanding stock options of Stonegate received approximately $27.6 million in cash in connection with the cancellation of their options immediately before the acquisition closed, for a total transaction value of approximately $820.0 million.

Including the effects of the purchase accounting adjustments, as of acquisition date, Stonegate had approximately $2.89 billion in total assets, $2.37 billion in loans and $2.53 billion in customer deposits. Stonegate formerly operated its banking business from 24 locations in key Florida markets with significant presence in Broward and Sarasota counties.

Page 15

Other Banking Services

As a result of our acquisition of Stonegate in September 2017, we also offer credit cards to both consumers and businesses. Credit cards typically involve a higher degree of credit risk since outstanding balances are unsecured and repayment of such balances is often negatively impacted by a decline in economic conditions. Our credit cards offer a variety of benefits and features designed to meet the needs of our customer. In addition, our consumer credit cards can be used in Cuba.

Page 40

Our banking relationships with the Cuban government and Banco Internacional de Comercia, S.A. (“BICSA”) as a result of our Stonegate acquisition may increase our compliance risk and compliance costs.

U.S. persons, including U.S. banks, are restricted in their ability to establish relationships and engage in transactions with Cuba and Cuban persons pursuant to the existing U.S. embargo and the Cuban Assets Control Regulations. However, we maintain a customer relationship to handle the accounts for Cuba’s diplomatic missions at the United Nations and for the Cuban Interests Section (now the Cuban Embassy) in Washington, D.C. This relationship was established in May 2015 pursuant to a special license granted to Stonegate Bank by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) in connection with the reestablishment of diplomatic relations between the U.S. and Cuba. In July 2015, Stonegate Bank established a correspondent banking relationship with Banco Internacional de Comercio, S.A. (“BICSA”) in Havana, Cuba.

Cross-border correspondent banking relationships pose unique risks because they create situations in which a U.S. financial institution will be handling funds from a foreign financial institution whose customers may not be transparent to the U.S. financial institution. Moreover, Cuban financial institutions are not subject to the same or similar regulatory guidelines as U.S. banks; therefore, these foreign institutions may pose a higher money laundering risk to their respective U.S. bank correspondent(s). Investigations have determined that, in the past, foreign correspondent accounts have been used by drug traffickers and other criminal elements to launder funds. Shell companies are sometimes used in the layering process to hide the true ownership of accounts at foreign correspondent financial institutions. Because of the large amount of funds, multiple transactions, and the U.S. bank’s potential lack of familiarity with a foreign correspondent financial institution’s customer, criminals and terrorists can more easily conceal the source and use of illicit funds. Consequently, we may have a higher risk of noncompliance with the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) rules due to its new correspondent banking relationship with BICSA and will likely need to more closely monitor transactions related to correspondent accounts in Cuba, potentially resulting in increased compliance costs. Our failure to strictly adhere to the terms and requirements of our OFAC license or our failure to adequately manage our BSA/AML compliance risk in light of our new correspondent banking relationship with BICSA could result in regulatory or other actions being taken against us, which could significantly increase our compliance costs and materially and adversely affect our results of operations.

Page 54

Acquisitions

Stonegate Bank

Through our acquisition and merger of Stonegate into Centennial, we maintain a customer relationship to handle the accounts for Cuba’s diplomatic missions at the United Nations and for the Cuban Interests Section (now the Cuban Embassy) in Washington, D.C. This relationship was established in May 2015 pursuant to a special license granted to Stonegate by the U.S. Treasury Department’s Office of Foreign Assets Control in connection with the reestablishment of diplomatic relations between the U.S. and Cuba. In July 2015, Stonegate Bank established a correspondent banking relationship with Banco Internacional de Comercio, S.A. in Havana, Cuba. As of December 31, 2017, this correspondent banking relationship does not have a material impact to the Company’s financial position and results of operations.

LINK to Home BancShares 2017 Annual Report

index.png

March 2018 Food/Ag Exports To Cuba Decrease 2.2%; Total Remains 20.8% Above 2017

ECONOMIC EYE ON CUBA©
May 2018

March 2018 Food/Ag Exports To Cuba Decreased 2.2%- 1
20.8% Increase Year-To-Year-5
Cuba Ranks 53rd Of 229 U.S. Food/Ag Export Markets- 2
March 2018 Healthcare Product Exports Zero- 2
March 2018 Humanitarian Donations US$477,484.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
Germany-Based Subsidiary Of Deere & Company Exports Construction Equipment- 3
U.S. Port Export Data- 15

MARCH 2018 FOOD/AG EXPORTS TO CUBA DECREASED 2.2%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in March 2018 were US$24,454,451.00 compared to US$25,018,148.00 in March 2017 and US$10,332,130.00 in March 2016.

LINK To Complete Report

2.jpg

What Does The Inauguration In Havana Of Miguel Diaz-Canel Mean For U.S. Companies?

In the short-term to medium-term, there will be no new meaningful and sustainable commercial (export, import, provision of services, vertical direct foreign investment, horizontal direct foreign investment) opportunities for United States companies.

The transition and succession from the two Castro Administrations to the Diaz-Canel Administration absent of a robust presence by United States companies throughout the Republic of Cuba is a wretched reality.

United States statutes (Trading with the Enemy Act, Cuban Democracy Act, Libertad Act, and Trade Sanctions Reform and Export Enhancement Act) and regulations (primarily those through the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry and Security (BIS) of the United States Department of Commerce) prohibit and impede most practical overtures by United States companies towards the Republic of Cuba.

In addition to the impediments by the United States government, United States companies remain demonstrably hampered by constraints embraced by the government of the Republic of Cuba which constrict foreign exchange earnings, public sector development, and private sector development. 

There is no near-term or mid-term expectation that the thirty-plus (30+) non-travel-related companies, partnerships, and sole proprietorships who have expressed an interest in establishing a presence (office(s)/location(s)) in the Republic of Cuba will be authorized by the government of the Republic of Cuba.  These entities include law firms, accounting firms, consultancies, wholesale operations, retail establishments, hospitality operations, assembly facilities, manufacturing facilities, and restaurants.

The inauguration of the Trump Administration in January 2017 was not the singular impediment to the continued engagement by United States companies with the Republic of Cuba.

The inauguration of the Diaz-Canel Administration in April 2018 will not be the singular stimulant to the continued engagement by United States companies with the Republic of Cuba.

Important to note that President Canel is a civilian who wears a guayabera and, when required, a suit and tie.  His two predecessors never relinquished their military uniforms except in limited circumstances where protocol made epaulets unappealing.  While the “struggle” which his predecessors reminded the population with a uniform, President Canel’s choice of clothing emphasizes civilian leadership of the government.  That’s an important optic for management of United States companies. 

While the optics of the inauguration of a new president of the Republic of Cuba will visually reinforce a lack of a presence by United States companies, management of those companies who have or seek to introduce or re-introduce their products and services throughout the Republic of Cuba lament the willingness of the Obama Administration to resist implementing expansive regulations (direct correspondent banking, expanded list of imports, among others) and second Castro Administration to resist authorizing Republic of Cuba government-operated companies and Republic of Cuba nationals to make use of Obama Administration regulations.

Since 2015, the government of the Republic of Cuba has focused upon embracing a presence by United States-based companies whose mission is travel-related; where the transactions are primarily a provision of funds to the Republic of Cuba.  There have been limited opportunities granted for exports from the Republic of Cuba, coffee (indirect) and charcoal.  There is a power generation project with a non-public source of funding.  There are two equipment distributorships.  A healthcare product is in a clinical trial. 

The increased commercial presence in the Republic of Cuba by the government of the Russian Federation, government of the Russian Federation-controlled entities and companies, government of the People’s Republic of China, and government of the People’s Republic of China-controlled entities and companies has primarily been diffused through debt rescheduling, debt forgiveness, long-term government guaranteed payment terms, and donations.  Commercial logic has not been immune from a political calculus.

The government of the Republic of Cuba prefers to accept donations rather than accept invoices; not uncommon for governments of emerging economies and re-emerging economies.

For private-sector companies located throughout the seven (7) continents who may engage in commercial transactions with Republic of Cuba government-operated entities and companies, there is a marketplace in selling accounts receivables at a discount to third parties. 

The current (and soon-to-be) government of the Republic of Cuba prefers to engage in commercial transactions on a government-to-government basis, which tend to be less transparent and more available for restructuring.

Given the commercial, economic and political models of the Russian Federation, People’s Republic of China, and Republic of Cuba, both the government of the United States and United States-based companies will remain at a disadvantage until the 11.3 million citizens of the Republic of Cuba determine a commercial, economic and political transformation process within which has been defined the word “success” and to what level “success” may be achieved by an individual or owners of a commercial enterprise before conflicting with societal norms.

Attachments:

U.S. Companies With A Presence In Cuba

U.S. Companies Exporting To Cuba

Government Officials, Governors, Members of Congress Visiting Cuba

hosted2.ap.org.jpg

Vice President Pence Mentions Cuba At Summit Of The Americas In Lima, Peru

THE WHITE HOUSE

Office of the Vice President
April 15, 2018

REMARKS BY VICE PRESIDENT PENCE AT FIRST PLENARY SESSION OF THE SUMMIT OF THE AMERICAS
Lima, Peru

THE VICE PRESIDENT:  Secretary General Almagro, President Vizcarra, Presidents, Prime Ministers, and leaders from across the Western Hemisphere -- it is my great honor to join you today, as Vice President of the United States of America, at the 8th Summit of the Americas. 

And I bring greetings and great respect to each of you from the 45th President of the United States of America, President Donald Trump.

Excerpts....

And as all freedom-loving nations know as well, the greatest corruption of government is when the people lose their voice, their vote, their freedom, and their basic human rights under the heavy hand of dictatorship.  And the free nations of this conference are right to focus in renewed ways on ending dictatorship here in the New World. 

As we speak, a tired communist regime continues to impoverish its people and deny their most fundamental rights in Cuba.  The Castro regime has systematically sapped the wealth of a great nation and stolen the lives of a proud people.  Our administration has taken decisive action to stand with the Cuban people, and stand up to their oppressors. 

No longer will the United States fund Cuba’s military, security and intelligence services -- the core of that despotic regime.  And the United States will continue to support the Cuban people as they stand and call for freedom. 

But Cuba’s dictatorship has not only beset its own people, as we all well know -- with few exceptions in this room acknowledging that.  Cuba’s dictators have also sought to export their failed ideology across the wider region.  And as we speak, they are aiding and abetting the corrupt dictatorship in Venezuela. 

In Venezuela, as in Cuba, the tragedy of tyranny is on full display.  As this body knows well, Venezuela was one of our hemisphere’s richest nations once, and not too long ago. It is now among the poorest. Venezuela was also once a flourishing democracy.  It has now collapsed into dictatorship and tyranny.

WireAP_0c4142a2e63d458b86260f522d5b3c76_12x5_992.jpg

U.S. Food/Agricultural Product Exports To Cuba Increase 44%; Led By Poultry, Corn & Soybeans

ECONOMIC EYE ON CUBA©
April 2018

February 2018 Food/Ag Exports To Cuba Increased 44%- 1
February 2018 Healthcare Product Exports US$4,920.00- 2
February 2018 Humanitarian Donations US$419,869.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
U.S. Port Export Data- 15

FEBRUARY 2018 FOOD/AG EXPORTS TO CUBA INCREASED 44%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in February 2018 were US$26,122,933.00 compared to US$18,145,564.00 in February 2017 and US$17,847,747.00 in February 2016.

CLICK FOR COMPLETE REPORT IN PDF FORMAT

46.jpg

A US$495 Million Very "Good Friday" For U.S. Airlines & Cuba; A Jekyll & Hyde Moment For Trump Administration

Trump Administration Takes Contradictory Decision About Cuba Travel Options

Commercial Equivalent Of A Jekyll & Hyde Moment

A Very “Good Friday” For U.S. Airlines & Cuba

American, Delta, JetBlue, Southwest And United/Mesa Obtain New Routes

A Blue State Victory

Easter Bunny’s Delivers A US$495 Million Basket To Cuba

On 30 March 2018, or “Good Friday” to millions of followers of Christ in the United States and in the Republic of Cuba, the Trump Administration quietly provided a further monetary lifeline to the government of the Republic of Cuba and, specifically, to entities within the country controlled by the Revolutionary Armed Forces (FAR) of the Republic of Cuba. 

It was a very good Friday for the Republic of Cuba.  If the newly-allocated flights are at capacity on an annual basis, the total value (including their round-trip airfares) of passenger expenditures could be approximately US$495 million; at 60% capacity, the value could be approximately US$300 million.

The United States Department of Transportation (USDOT) could have denied any or all of the applications by United States airlines for additional service to the Republic of Cuba, using the phrase that permitting such activity would be “inconsistent with United States policy” as the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury has for decades when an application for an activity is denied.  For example, the U.S. Food & Agribusiness Exhibition held in Havana, Republic of Cuba, in September 2002, was denied a license by the OFAC for three years before inter-agency review and approval by the United States Department of State.

Excerpts from the USDOT filing….

"Summary

By this order the Department tentatively allocates the four daily and six weekly available frequencies to provide scheduled services between the United States and Havana, Cuba. The Department also tentatively approves the request of United Airlines, Inc. (United) and Mesa Airlines, Inc. (Mesa) for flexibility to use either carrier’s aircraft in the Houston-Havana market.

Background

Under the terms of the Memorandum of Understanding (MOU) between the United States and Cuba, signed February 16, 2016, U.S. carriers may operate up to twenty (20) daily combination or all-cargo scheduled round-trip frequencies between the United States and Havana, Cuba.”

The most consequential decision by the USDOT was to award Long Island City, New York-based JetBlue Airways service from Logan International Airport (BOS) in Boston, Massachusetts, to Jose Marti International Airport (HAV) in Havana, Republic of Cuba.

While the USDOT did reference the impact to all United States airlines by changes to OFAC and United States Department of State regulations implemented by the Trump Administration, nevertheless, the USDOT stated that Boston is “home to healthcare, biotechnology, and educational institutions that JetBlue and the Massachusetts Port Authority (Massport) assert could support authorized travel to Cuba outside of the “family visits” category.”  Thus, the USDOT confirms that there are opportunities for commercial engagement that should not be impeded by a denial of the application by JetBlue Airways.

“Boston

The Department also tentatively allocates one weekly frequency to JetBlue for its proposed Boston-Havana service on Saturdays. Unlike the other proposals in this proceeding, Boston does not have any nonstop scheduled Havana service and JetBlue’s Boston proposal would establish a new gateway to Havana at a major northeastern city that is home to healthcare, biotechnology, and educational institutions that JetBlue and the Massachusetts Port Authority (Massport) assert could support authorized travel to Cuba outside of the “family visits” category.”

CLICK For Complete USDOT Document In PDF Format

Boston-Related Blog Post Links:

https://www.cubatrade.org/blog/2017/5/18/nez9vv71hkndkzexqe9nfgmq8u2ish?rq=Boston

https://www.cubatrade.org/blog/2017/4/22/what-does-jetblue-know-or-doesnt-know-seeking-additional-routes-to-cuba?rq=Boston

 

EasterFlyingBunny.jpg

Updates To List Of U.S. Companies With A Presence In Cuba

U.S. Companies With A Presence In Cuba Since 17 December 2014
Eight Sales Offices
No Manufacturing/Assembly Operations
Licenses Issued By OFAC/BIS Not Yet Disclosed & Implemented

With the Republic of Cuba, United States-based companies engage in the export of products, import of products, provision of services and horizontal Direct Foreign Investment (DFI).  

The global gross revenues of the fifty-seven (57) listed companies exceeds US$1 trillion and the companies employ approximately 2 million within the United States and other countries; not including revenue/employees from the United States Postal Service (USPS).  

The list does not include most travel agents and tour operators, the majority of whom have arrangements with Republic of Cuba government-operated Havanatur Celimar, Asistur, Gaviota and other Republic of Cuba government-operated companies to market itineraries.  

This list does not include United States-based companies that have exported food products and agricultural commodities (Trade Sanctions Reform and Export Enhancement Act of 2000; TSREEA) and medical equipment, medical instruments, medical supplies, medicines, and pharmaceutical products (Cuban Democracy Act of 1992; CDA).  

There is horizontal DFI in the Republic of Cuba by United States-based companies as represented by Marriott International (subsidiary Starwood Hotels & Resorts Worldwide), Deere & Company, Caterpillar, United Airlines, Jet Blue Airways, Delta Air Lines, American Airlines, ABC Charters, and Cuba Travel Services. 

List In PDF Format

Number57.jpg

Texas-Based Company Obtains OFAC License For Clinical Trials Of Diabetes Treatment Developed In Cuba

Dallas, Texas-based Mercurio Biotec (www.mercuriobiotec.com), a company established in 2016, has reported an agreement with Republic of Cuba government-operated Heber Biotec to submit a diabetes treatment to the U.S. Food and Drug Administration (FDA) for clinical trials through a license issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC.  The company has three (3) individuals of Cuban descent among its senior management. 

Granma
21 March 2018

U.S. and Cuban companies reach agreement on Heberprot-p

Given the success of the product and recently established agreements between Cuban and U.S. entities, it is hoped that the medication will soon be available to patients in the United Sates

"Cuban enterprise Heber Biotec and U.S. company Mercurio Biotec have agreed to work together to make Heberprot-P – a Cuban developed medication to treat diabetic foot ulcers - available to patients in the U.S., once it has been approved by the country’s Food and Drug Administration (FDA).

Given the success of the product and following the Memorandum of Understanding signed between the United States Department of Health and Human Services and the Ministry of Public Health of the Republic of Cuba, on June 13, 2016, it is hoped that the Cuban developed medication will soon be available to patients in the United Sates, according to a press release by the BioCubaFarma enterprise. 

Meanwhile, “The United States Department of the Treasury, Office of Foreign Assets Controls, authorized Mercutio Biotec to enter into agreements with the Center for Genetic Engineering and Biotechnology (CIGB), to conduct all transactions necessary to import Heberprot-P to conduct independent clinical trials authorized by the U.S. Food and Drug Administration (FDA),” according to the Mercurio Biotec website.

Almost one million U.S. citizens are diagnosed with diabetic foot ulcers (DFUs) ever year; a condition which increases the risk of lower-limb amputations. In just five years the number of people suffering from this condition in the U.S. has risen from 73,000 to 85,000, with a significant economic and social impact on the patient, their family members and healthcare system."

heberprot.jpg

U.S. Vice President Pence Discusses Importance Of U.S. Food/Ag Exports

THE WHITE HOUSE
Office of the Vice President
For Immediate Release
March 20, 2018

REMARKS BY VICE PRESIDENT PENCE ON NATIONAL AGRICULTURE DAY
Department of Agriculture
Washington, D. C. 

THE VICE PRESIDENT:  Well, thank you, Mr. Secretary, for that overly kind introduction.  Thank you for your leadership of this great department.  It's been almost a year since you started.  And Secretary Sonny Perdue has already visited 34 states, made a remarkable difference for agriculture in America. 

Would join me in giving another round of applause -- (applause) -- to this great Secretary from the great state of Georgia -- the 31st Secretary of Agriculture, Secretary Sonny Perdue.  (Applause.)  

To men and women of the United States Department of Agriculture, to all the distinguished members of Congress who support agriculture every day, to all of you who promote agriculture across our nation, and to the rising generation of leaders in agriculture who are here with us today -- and I hope you spotted my tie.  Is that all right?  I wore my FFA tie.  (Applause.) 

It's a great honor for this son of a farm state to be with you today during National Agriculture Week on National Agriculture Day.  (Applause.)  

And I bring greetings from a great friend to our nation’s farmers, producers, ranchers, and foresters -- a man who’s fighting for American agriculture every single day since Inauguration Day.  I bring greetings this morning from the 45th President of the United States of America, President Donald Trump.  (Applause.)  

And on behalf of the President, the First Family, and our entire administration, Happy National Ag Day, one and all.  This year marks the 45th anniversary of the first Ag Day, when the Agriculture Council of America organized a time for the nation to come together to, in their words, “recognize and celebrate the abundance provided by agriculture,” and to “encourage young people to consider career opportunities” in this all-American field. 

And our administration is proud to lend our voice to this great vision.  In his proclamation honoring this day, President Trump said that National Ag Day is a time to, in his words, “acknowledge the tremendous work ethic, ingenuity, determination, and perseverance that define generations of American farmers.  Because of their efforts, the United States produces an abundant supply of food, feed, and fuel,” benefitting not only our nation, but the entire world.  (Applause.)  

For my part, all my life I've seen firsthand the difference made by the men and women who work in agriculture.  I was raised in the heart of the heartland, in a small town in Southern Indiana, with a cornfield in my backyard.  It's still there to this day. 

And when I served in the Congress, I represented some of the best farmers in the world.  We worked to advance their interests in my position on the House Agriculture Committee.

And when I was Governor of the Hoosier State, I liked to say that in Indiana, we did two things particularly well:  We made things and we grew things.  And things that grow can be found not just on the shelves and stores across the nation, but they’ve been scattered all across the wider world.

And President Trump knows the truth, and I know the truth, and all of you know the truth, as well: Agriculture is the essence of America, and it is the beating heart of a great nation.  (Applause.)  What you sow, our nation reaps.  What you plant bears fruit for all across the world.

And you know the dignity of a hard day’s work.  You model the grit that drives our nation forward, and people in agriculture always have.  In a very real sense, you embody the virtues and the values that are at the root of American greatness.

As President Trump has said, “Our nation was founded by farmers.  Our independence was won by farmers.  Our continent was tamed by farmers.  Our armies have been fed by farmers and made of farmers.  And throughout our history, farmers have always… led the way,” and farmers will always lead the way in America.  (Applause.) 

It really is remarkable to think, on this National Ag Day, what American agriculture does and how advanced it is.  America’s farmers have long led the world in innovation and achievement.  And as this group knows better than anyone, working in American agriculture today is a far cry from your grandfather’s farm. 

In fact, today in America, we grow and produce here on Earth increasingly depends on the satellites and the technology that we have circling the globe in outer space.

Last summer, you might know that President Trump relaunched the National Space Council.  He gave me the great honor of serving as Chairman of it.  Through the work of the Council, I've seen the advances that we have made in space, but I've also seen how American agriculture today uses the technologies of today and tomorrow to increase productivity, maximize crop yields, and prepare for extreme weather events.

Remote sensing allows for soil mapping so that farmers can plant the right crops in the ideal soil and better design irrigation systems.  Weather satellites help farmers and ranchers monitor and predict weather patterns, and plan accordingly.  And of course, GPS has revolutionized farming and allowed farmers to plant, cultivate, and harvest their crops with incredible accuracy, with that cutting-edge precision agriculture that we all know about. 

In countless other ways, our farmers, ranchers, producers, foresters, and researchers, and engineers are enabling us to continue to feed ever more people, using ever fewer resources, proving once again that agriculture is the field of the future.  Let’s give a round of applause to all the great innovators in American agriculture today.  (Applause.)

And it really is a joy to be here today to be joined by so many who advance American agriculture every single day, including the National Association of State Departments of Agriculture and the American Farm Bureau Federation.  Let's give both of these groups a round of applause.  (Applause.)  

And it’s a special honor to be joined by organizations that are passing on the great traditions of American agriculture to the next generation of farmers, ranchers, scientists.  Let's hear it for FFA, 4-H, AFA, and MANRRS.  Thanks for all you do to raise up a new generation of American agricultural leaders.  (Applause.) 

In fact, we just heard from one of those great rising leaders a few moments ago.  How about another round of applause for Spencer Flood for doing a great job being a great example.  (Applause.)

Finally, on this Ag Day, it’s an honor for me to be with so many dedicated public servants of the United States Department of Agriculture and these distinguished members of Congress who support them each and every day.  Give the people at the department a round of applause.  They're working every single day -- and these members of Congress.  (Applause.)  They're working every single day for American agriculture.  

You know, more than 150 years ago, President Lincoln signed the bill that created this department, which our 16th President called “the people’s Department.”  And so you've remained ever since.  Because the work that happens in these halls touches the lives of every single American and every single American family. 

Through the Food and Nutrition Service, you fight hunger in America by bringing the bounty of our nation’s farms to those who are struggling to put food on the table.

Through the Farm Service Agency, you provide loans, credit, and disaster assistance to the men and women who work in agriculture.

Through the Foreign Agricultural Service, you help America’s farmers sell their crops on the world market.

Through the Food Safety and Inspection, you ensure the quality of what Americans eat.

And through the Office of Rural Development, overseen by a fellow Hoosier, Anne Hazlett, you provide support.  You can applaud Anne if you want.  I'm awful proud of her.  (Applause.)  You support small businesses and communities, and help those struggling in the grip of drug addiction.

Through the Forest Service, you protect and conserve America’s most precious natural resources, and inspire the nation with your heroic efforts in fighting wildfires.  Let's give the Forest Service a round of applause.  It was a tough year last year with record wildfires in California.  (Applause.)

And all across this storied department, at home and abroad, nearly 100,000 dedicated public servants advance the USDA’s long-standing mission.  A mission that's summed up in the department’s motto, “Do right, feed everyone."  (Applause.)  I promise you, President Trump and our entire administration, and frankly, every American are all grateful for what you do.  We really and truly are. 

But I’m not just here to say thanks on this National Ag Day.  I’m here today, on President Trump’s behalf, to assure all of you that we’re going to continue fighting every single day for the prosperity, and opportunity, and future of American agriculture.

As you all well know, as I stand before you today, it’s been a challenging time for America’s farmers and ranchers in recent years.  Since 2013, net farm income has been cut in half.  Today, the majority of American farm households are turning to non-farm work in order just to get the bills paid, and an average of 82 percent of income earned by farm households this year is expected to come from off-farm work.  

That’s why, since day one of this administration, President Trump and our entire team have been working tirelessly to stand with our nation’s farmers, producers, ranchers, and foresters, and everyone involved in agriculture.  As the President has said, in his words, in "every decision we make, we are honoring," and supporting "America’s proud farming legacy."  And I promise you we always will.  (Applause.) 

But, you know, it's not just been words; it's been deeds.  President Trump has been busy since the outset of the administration rolling back the heavy hand of government, which particularly puts a burden on people that farm the land.  In fact, this President has repealed 22 federal regulations for every new federal rule put on the books.  (Applause.)  He’s actually canceled or delayed more than 1,500 planned rules -- more than any President in American history. 

The President took decisive action last year to repeal the disastrous Waters of the United States rule to ensure that farmers and ranchers and every American can control the land that they possess and develop.  (Applause.)  The truth is that the freedom to farm, the ability to manage the land and be stewards of the land is at the heart of how we feed our nation, grow our economy, and create jobs.   

But, you know, it’s not just been about rolling back federal regulations.  Nearly three months ago, as all of you may have noticed, with the strong support of these Republicans in the Congress, President Trump won a major victory for our nation’s agriculture when he signed into law the largest tax cuts and tax reform in American history.  (Applause.)  

Now, while the President's tax cuts benefitted every American, in large way and small ways, it gave America’s farmers historic relief when it comes to taxes on their businesses. 

First and foremost, we eliminated the death tax for nearly every American farmer so, as President Trump said, you can “keep your farms in the family.”  In almost every case, the burden is gone.  (Applause.)   

We gave America’s farmers and ranchers an unprecedented opportunity to invest in their future, because for the next five years, farmers, like other business owners, can deduct 100 percent of the cost of every piece of new equipment they buy.  That's real relief for people who face extraordinary input costs, in terms of the equipment that they use.  

We also cut the corporate tax rate from one of the highest in the developed world -- 35 percent, all the way down to 21 percent -- opening the doorway for a more prosperous economy and growing agribusinesses.  (Applause.) 

We empowered particularly small businesses, which most farmers are organized as small businesses, to be able to deduct 20 percent of their business income.

And we cut taxes for working families, doubling the child tax credit; doubled the standard deduction, so American families will actually get their first $24,000 of income completely tax-free.  That's real relief for working Americans, and it will help lift all the boats, including American agriculture, all across this nation.  (Applause.)  

So we’re cutting red tape, been cutting your taxes, but we’ve also been working to open up the world to American agricultural products like never before.

It is remarkable to think agriculture accounts for nearly one-tenth of our nation's economy, in large part because we export more than $100 billion worth of agricultural goods every year.  In fact, every $1 billion in agricultural exports supports approximately 8,000 American jobs.  But the truth is, we believe we’ve only scratched the surface. 

We’ve already taken important steps to modernize this department to make it easier for American farmers to export what they grow and raise and produce.  And we’re working with a friend of mine, a fellow Hoosier who’s here with us today, Ted McKinney, the new Undersecretary of Trade and Foreign Agricultural Affairs, to make sure that we open even more markets for American goods.  (Applause.)  I'm proud of the whole department, but I love mentioning these Hoosiers to you.  (Laughter.)  I really do.    

You know, and President Trump is also working with the USDA and members of our administration to renegotiate existing trade agreements and reach new and better deals for the American people, American businesses, and American farmers -- deals that will bring a bounty into our farms, and ranches, and forests at every corner of the world.

Last year alone, we reached an agreement to expand American rough rice exports to Colombia.  We made a deal, for the first time in over a decade, to sell American beef to China.  And we reopened Vietnam to distillers and dried grains, and we’re just getting started.  We're going to open up the world to America's agricultural goods.  (Applause.)

And beyond trade deals, later this year, we’re going to work with all these great leaders of the House and Senate to pass a farm bill.  As President Trump has said, we're going to pass a farm bill that delivers "for America’s farmers just as they work every single day to deliver for us.”

To ensure that America’s farmers can get their goods to market quickly and efficiently, at home and abroad, President Trump recently unveiled a plan to make historic investments, as well in our nation’s infrastructure.  And working with these members of Congress, I'm going to make you a promise: The builder you elected as President of the United States is going to rebuild the infrastructure of America.  (Applause).

Just over two months ago, the President took an important step to strengthen our infrastructure when he signed an executive order that will bring high-speed broadband Internet to our nation’s most rural areas -- a critical advance benefitting farmers and smaller communities. 

And in the days ahead, we’ll continue to take action to rebuild the nation’s infrastructure, as the President said, to ensure that our rural communities have access to the best roadways, railways, and waterways, and the best high-speed Internet access in the world.  On all these issues and more, you can know with confidence President Trump and our entire administration are going to continue to work tirelessly to advance American agriculture.

We’ll keep fighting to break down barriers for your success, to open up new opportunities for growth, and to ensure that you can continue to make the outsized contribution to our national life, that all of those represented here have made for generations past, today and for generations to come.

And on this National Agricultural Day, I can’t help but think of some words by one of my favorite radio broadcasters, Paul Harvey, and what he said to a gathering not unlike this one, four decades ago.  He said with a smile, "On the eighth day, God looked down on his planned paradise and said, 'I need a caretaker…'  Somebody willing to get up before dawn… work all day in the fields… and then go to town and stay past midnight at a meeting of the school board… Somebody who’d plow deep and straight and not cut corners… Somebody to seed, and weed, and feed, and breed and rake and disc and plow and plant… Somebody who would bale a family together with the soft strong bonds of sharing, who would laugh, and then sigh, and then reply, with smiling eyes, when his son says that he wants to spend his life 'doing what dad does.'  So, God made a farmer."  (Applause.)

Those words bless my heart because I grew up among farmers.  We had a few cattle when I was growing up, a little side operation that my dad was involved in.  I cleaned more than a few stalls in my life and chased a few stray cows, but I know what a farmer is, and Paul Harvey's words capture that.  It's the contributions that farmers made that we remember, on this National Ag Day, go far beyond feeding the world.  They go far beyond the enormous and calculated economic impact that farmers have on communities large and small. 

I truly do believe the greatest contribution that farmers have made throughout the long and storied history of this nation has been to the character of the nation.  I woke up this morning thinking about how many times in the Good Book we see the phrase, "consider the farmer."  Because there's something about the virtues of working the land, of having to rely on the blessings of providence, of having to wait on the weather.  Right?  That the resilience and the faith that it takes, I think it's nurtured not only people in farming, but I think it's, in a very real sense, it's nurtured the character of our nation.

So as I close, I just want to thank all of you, from my heart, and from the hearts of the American people.  To all of you who work in agriculture, whose labor and life’s work can be found in the food that we eat and so much more in the character of the nation, just thank you on this National Ag Day. 

To all of you who support our farmers, our producers, our ranchers, our foresters, through the work done in this department and through private organizations so well represented here today, thank you for what you do every day. 

And to all of you who are even now considering a career in agriculture and to all who've made the choice to work in this quintessentially American field, thanks for believing in America's agricultural future.  We need more like you. 

And as you prepare to all walk this path, particularly the youngsters among us, I'm just going to pray that you do so with confidence and with faith that God will continue to do as He's done throughout our nation's history.  That He'll “send rain on your land in season."  That He'll "bless all the work of your hands.”

And I close with confidence on this National Ag Day, with the strong support of these leaders in the Congress in both political parties who stand with agriculture every day, with the strong leadership of President Donald Trump in the White House, with the servanthood efforts of the people of this department and all these great organizations that stand with agriculture every day, and with faith in God.  I know we will make America grow again.  We will make America prosper again.  And to adjust a phrase, we will make American agriculture great again.  Thank you very much.  (Applause.) 

God bless you, and God bless the work of this great department.  And God bless the United States of America and all of our farmers.  (Applause.)

download.jpg

The White House Confirms Food/Ag Exports To Cuba Benefits Economy With Jobs/Business Activity

Since December 2001, the Republic of Cuba has puchased on a cash-in-advance basis in excess of US$5.57 billion in agricltural commodities and food products from the United States under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.

Since December 2001, the Republic of Cuba has ranked from 29th to 55th among the 229 agricultural commodity and food product country export markets.

In 2017, the Republic of Cuba purchased US$260,667,075.00 in agricultural commodity and food products from the United States; the Republic of Cuba ranked 55th of 229 country export markets.

According to The White House, the 2017 export value for the Republic of Cuba supported approximately 2,000 United States jobs.

According to The White House, the 2017 export value for the Republic of Cuba created approximately US$331,047,185.25 in "business activity."

THE WHITE HOUSE
Office of the Press Secretary

FOR IMMEDIATE RELEASE

March 19, 2018

NATIONAL AGRICULTURE DAY, 2018

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION

On National Agriculture Day, we acknowledge the tremendous work ethic, ingenuity, determination, and perseverance that define generations of American farmers.  Because of their efforts, the United States produces an abundant supply of food, feed, and fuel for a growing global population.  Our rich and abundant soil provides for more than just sustenance -- it provides a beautiful and bountiful way of life for millions of Americans. 

America's strong agricultural sector is a key component of our Nation's robust economy and trade.  Every $1 of United States agricultural and food exports creates another $1.27 in business activity.  Our country's agriculture exports are valued at more than $100 billion, and every $1 billion in exports supports approximately 8,000 American jobs.  Moreover, agriculture contributes to at least 8.6 percent of our gross domestic product.  The economic boost from our agriculture reaches beyond the fields our farmers tend, with unrivaled skill and diligence, to communities all across America.    

America's farmers, growers, ranchers, foresters, and agricultural scientists and engineers are world-leading innovators, exploring new research and technologies like advancements in biotechnology and the use of automated vehicles that enable precision agriculture to maximize yields and minimize environmental impacts.  My Administration proudly supports them in their pioneering endeavors.  In this new era of American agriculture, the U.S. Department of Agriculture is investing in rural broadband access, roads, and bridges, and is supplying affordable, reliable power to those living on the outskirts of larger cities and towns.  These investments in American infrastructure will improve the quality of life in rural America for years to come.

To help the American agricultural economy succeed in an increasingly competitive global market, I signed the Tax Cuts and Jobs Act, the largest tax cut and reform legislation in American history.  This legislation is providing much needed relief to America's farmers, who can now expense 100 percent of their capital investments, including expenditures for farm equipment, over the next 4 years.  Additionally, under this new legislation, the vast majority of family farms will now be exempt from the death tax. 

American agriculture is an integral part of our success as a Nation, uniquely tied to both our country's culture and economy.  Today, and every day, we cherish our Nation's rich agricultural history and celebrate the greatness of the American farmer. 

NOW, THEREFORE, I, DONALD J. TRUMP, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim March 20, 2018, as National Agriculture Day.  I encourage all Americans to observe this day by recognizing the preeminent role that agriculture plays in our daily lives, acknowledging agriculture's continuing importance to rural America and our country's economy, and expressing our deep appreciation of farmers, growers, ranchers, producers, national forest system stewards, private agricultural stewards, and those who work in the agriculture sector across the Nation. 

IN WITNESS WHEREOF, I have hereunto set my hand this nineteenth day of March, in the year of our Lord two thousand eighteen, and of the Independence of the United States of America the two hundred and forty-second.
 
DONALD J. TRUMP

U.S. Food/Ag Exports To Cuba Increased 32% In January 2018

ECONOMIC EYE ON CUBA©
March 2018

January 2018 Food/Ag Exports To Cuba Increased 32%- 1
January 2018 Healthcare Product Exports US$1,206,160.00- 2
January 2018 Humanitarian Donations US$371,533.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
U.S. Port Export Data- 15
Speaking Schedule- 16

JANUARY 2018 FOOD/AG EXPORTS TO CUBA INCREASED 32%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in January 2018 were US$18,680,345.00 compared to US$14,149,848.00 in January 2017 and US$22,819,258.00 in January 2016.

COMPLETE REPORT IN PDF FORMAT

s735965455334319150_p6_i1_w2048.jpeg

Four Points Sheraton Havana Retains Most Restrictive Reservation Policy Without Needing To Do So

After twenty-one months of operation, Four Points Sheraton Havana continues to have perhaps the most restrictive reservation policy of any property located in the Republic of Cuba.  The company has not commented as to the reason(s) for the reservation policy.
 
Neither the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury nor the Ministry of Tourism (MINTUR) of the Republic of Cuba require the restrictions.

http://www.cubatrade.org/blog/2017/4/28/why-does-sheraton-continue-to-have-the-most-restrictive-reservation-policy-of-any-hotel-in-cuba?rq=four%20points%20sheraton%20havana

On 27 June 2016, Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (a subsidiary of Bethesda, Maryland-based Marriott International) commenced management of the Hotel Quinta Avenida Habana, which was re-branded as Four Points Sheraton Havana.

Four Points by Sheraton Havana (SPG Category 6)
Avenida 5ta A 76 - 80,
Miramar District
Havana, Cuba

"Payment and Cancellations

Reservations for this hotel are prepaid and there are NO REFUNDS for changes or cancellation for any guests, including SPG members. Additional charges at the Hotel must be paid in CASH or credit cards authorized for usage in Cuba (Please note-most US Based Credit Cards are NOT accepted in Cuba—check with your individual financial institution)"

http://www.starwoodhotels.com/fourpoints/property/overview/index.html?propertyID=4531&language=en_US

OFAC Liability Evasion or Government-Approved Avoidance For Cuba Travel?

Rolling A Bowling Ball Through A Waterford Crystal Store

Direct Payment Versus Indirect Payment

OFAC Reportedly Confirms Verbally, Not In Writing

Deposits Are Fungible; Using Fungible Money

Shaken, Not Stirred

Watergate’s “Follow The Money

Travelers May Stay At Kempinski Hotel In Havana?  Maybe Yes

Members Of Congress None Too Amused; Are Departments Going Rogue?

Pulling The Pin Of A Grenade

The Trump Administration has tempered and, in some instances, extinguished interest by United States companies and interest by United States travelers from engagement with the Republic of Cuba; and the government of the Republic of Cuba shouldn’t be excused from enabling complicity by action and inaction.

However, the Miami, Florida-based publication Cuba Standard reported (see article) a New York, New York-based attorney received verbal confirmation from a representative of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC that at least one Trump Administration travel-related narrative believed true by many is not accurate. 

The OFAC did not issue the confirmation to the attorney in writing to preserve deniability and/or flexibility (there might have been “miscommunication”).  This is not unusual for the OFAC.

The landlord of the Gran Hotel Manzana Kempinski La Habana is ultimately Grupo de Administracion Empresariel S.A. (GAESA) which is controlled by the Revolutionary Armed Forces (FAR) of the Republic of Cuba.  The property opened in 2017 and is managed by Geneva, Switzerland-based Kempinski Hotels S.A.  The hotel, which has the highest standards of service and the highest per room prices in the Republic of Cuba, may not be prohibited to individuals subject to United States jurisdiction.

In November 2017, the United States Department of State in Washington DC published a list (https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/275331.htm) of Republic of Cuba government-operated entities that were to be restricted from engagement by travelers (and United States companies) subject to United States jurisdiction. 

The list identifies entities affiliated with and/or controlled by GAESA and FAR.  The wording with respect to compliance is “Direct financial transactions with certain entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services are also generally prohibited.” 

Significant the document also contains “*** Entities or subentities owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the list. ***.” 

Republic of Cuba government-operated Havanatur (controlled by GAESA and thus FAR) is not on the list.  The majority of travelers subject to United States jurisdiction use the services of Havanatur. 

The Ministry of Tourism (MINTUR) of the Republic of Cuba reported 1,173,428 individuals subject to United States jurisdiction visited the Republic of Cuba in 2017: 453,905 individuals of Cuban descent, an increase of 137.8% compared to 2016 and 619,523 individuals not of Cuban descent, an increase of 217.4% compared to 2016.  Some individuals visited on more than one occasion and may have been counted more than once.

Follow The Money

The Watergate-era “follow the money” phrase has relevance as the OFAC determines what transactions are permitted and what transactions are prohibited.     

It is the process of engagement that defines the impact upon travelers.  The meaning of “direct” and “indirect” are relevant.  Members of Congress who are seeking clarification from the OFAC and from the United States Department of State want regulations interpreted constrictively rather than expansively.  Uncertain as to the outcome of that effort.

When an individual, travel agent or tour operator contacts (generally by email) Havanatur requesting a reservation at a hotel in the Republic of Cuba, Havanatur contacts the hotel seeking confirmation of availability or deducts the room night(s) from existing room blocks controlled by Havanatur.  NOTE: Individuals subject to United States jurisdiction are authorized by the OFAC to confirm reservations directly with hotels in the Republic of Cuba and make payment at check-in or at check-out. 

Upon receipt of confirmation from Havanatur, payment is transferred from the individual, travel agent, tour operator, organization or company in the United States to a financial institution at which Havanatur has an account whether in a third country or in the Republic of Cuba.  The OFAC authorizes individuals and entities subject to United States jurisdiction to have accounts at Republic of Cuba government-operated financial institutions. 

The payment process may be by currency (through courier using regularly-scheduled commercial flights), but the prevalent means is by wire transfer from a financial institution in the United States to a financial institution in a third country where Havanatur has an account or through that third country to a Republic of Cuba government-operated financial institution in the Republic of Cuba where Havanatur has an account. 

NOTE: The continuation of the inefficient and costly triangular payment requirement is a legacy-building courtesy of the Obama Administration, which could have re-authorized the two-way payment process, but chose not to for undisclosed reasons.  Another materially impactful commercial regulatory lapse by the Obama Administration left to the Trump Administration to correct toward obtaining secure, efficient, cost-effective and transparent transactional integrity.  The Obama Administration believed that United States agricultural, food product, healthcare product and equipment exporters should pay a fee to third-country financial institutions for every transaction with the Republic of Cuba; commerce-appreciating officials within the Trump Administration and Members of Congress believe otherwise.

If Havanatur has one account at a Republic of Cuba government-operated financial institution and all funds received (directly or indirectly) from United States-based entities (individuals and companies and organizations) are directed to this account, then the resulting deposits are co-mingled- a deposit from A cannot be distinguished from a deposit by B or a deposit by C once all are in this account. 

For example, if an individual or company goes to a financial institution with two (2) US$10.00 bills and deposits them together or separately into one account, there will be no means to know which US$10.00 bill is being used the following day to make payment for an invoice to a third-party.  

For this reason, according to the New York City-based attorney who discussed the transaction process with a representative of the OFAC, there would seem to be limited impediments to travelers subject to United States jurisdiction visiting the Republic of Cuba selecting the hotel of their choice, including the Gran Hotel Manzana Kempinski La Habana and under construction GAESA-owned Sofitel So La Habana, under the ultra-luxury Legend category, to be managed by Paris, France-based Accor S.A..

Fungible Funds

What might travelers subject to United States jurisdiction convey to Havanatur?  When Havanatur receives funds for a reservation (which might now include a “fungible money” daily per diem of perhaps US$200.00 or more to spend at the hotel on meals, min-bar, laundry, spa services, etc. with unspent “fungible money” returned to the guest upon check-out) at a restricted property, don’t forward those funds directly to the restricted property.  Place the funds in a Havanatur general account, shake (rather than stir), wait a minute or two, then send the required funds value to the restricted property.  If using a courier with currency, verify the serial numbers on the currency to make certain that the serial numbers on the currency that arrived (directly or indirectly) from the United States are not the same as those delivered to the restricted property.  Is this OFAC-sanctioned money laundering?

The distinction as to use of direct and indirect funds is analogous to the 1990’s when visits to the Republic of Cuba by individuals (other than those of Cuban descent) subject to United States law (before the OFAC began using “jurisdiction” which was more expansive) were far more problematic, there was focus upon “fully hosted travel” which was defined as all payments on behalf of the traveler relating to the visit to the Republic of Cuba were to be paid by an individual and/or entity not subject to United States law (jurisdiction); and there would be no reimbursement, directly or indirectly, to the individual and/or entity making the payments.

The Takeaway

For United States companies and for travelers subject to United States jurisdiction there remains distance between Trump Administration rhetoric about policies, statutes and regulations and how the Trump Administration implements and interprets policies, statutes and regulations.  

Enforcement is a grenade and thus far OFAC, BIS, CPB and the United States Department of State have neither pulled the pin nor thrown the device.  Some would argue that the grenade remains hidden from view... or can’t be found.

Complete Analysis In PDF Format

 Cuba Standard

Miami, Florida

Stricter U.S. travel regulations: More hole than cheese

“The main challenge the travel industry is facing in light of the recent dramatic drop in Cuba business seems to be the U.S. public’s fears and perceptions, rather than the Trump administration’s actual restrictions.

Leaving the impression that Washington’s new regulations for Cuba travel are more hole than Swiss cheese, a U.S. lawyer told a crowd of U.S. travel executives during Cuba Media Day Jan. 29 at the Meliá Cohiba in Havana that there are simple ways for tour operators to legally put up their clients in any of the 83 Cuban hotels the Trump administration included recently placed on a “Cuba Restricted List” of properties controlled by Cuba’s armed forces.

Since the activity incriminated by U.S. enforcers is payment — rather than the actual use of the blacklisted hotels — Cuba could simply switch booking and payment for the hotel to an entity that is not included.

“U.S. travelers can stay even at hotels on the list,” said Lindsey Frank, a principal with New York law firm Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., about new restrictions published by the Office of Foreign Assets Control in November. 

“OFAC confirmed to us recently that, even though direct payment to restricted entities is prohibited, they can still stay in hotels that are on the Restricted List — as long as they make their arrangements and payment through an unrestricted agency that is not subject to U.S. jurisdiction, such as Havanatur. This is a real opening for staying at any hotel here.”

The lawyer told Cuba Standard he received this guidance verbally from an OFAC official, in response to a written inquiry.

Asked how close Cuba is to offering alternative travel arrangement and payment mechanisms, the chief executive of the state holding that combines all major inbound tour operators — including Havanatur — held up his hand, forming a tight “V” with his thumb and index.  “This close,” said José Manuel Bisbé York, president of Grupo Empresarial Viajes Cuba.

The State Department’s “Cuba Restricted List”, published in November with the aim of blocking transactions with all armed forces-controlled businesses, includes practically all hotels in Old Havana, the single most popular tourism destination in the island. All boutique hotels there are operated by state company Habagüanex, which was recently taken over by GAESA, the armed forces-controlled holding. 

Individual travel

Meanwhile, experts at the event also made clear that — despite the Trump administration’s stated intent of blocking it — individual travel is still possible, either under the auspices of an organization, or under “Support for the Cuban People”, one of 12 travel categories permitted by U.S. sanctions. If they decide to use that category, solo travelers have to stay at privately owned accommodations, pursue a full-time schedule of activities, and keep track of what they are doing, in case U.S. officials ask for evidence.

Travel executives at the event said that follow-up by U.S. sanctions enforcers after travel is very rare. With the exception of a musical group from California that was questioned by OFAC officials last year after their Cuba trip, none of the companies that together handle tens of thousands of travelers said they had heard of any OFAC investigations.

“We are not aware of any stepped-up enforcement,” said Tom Popper, organizer of the Cuba Media Day event and owner of Insight Cuba, one of the larger U.S. tour operator.”

bggg.jpg