Fogo In Florida Confirms 2nd Charcoal Purchase From Cuba; Two 20ft Containers

Hialeah, Florida-based Fogo Premium Lump Charcoal has confirmed an additional two (2) 20ft containers of charcoal from the Republic of Cuba were purchased and delivered from the Republic of Cuba to the United States in July 2018. 

The company reported no transactional issues with the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, Bureau of Industry and Security (BIS) of the United States Department of Commerce, or Office of Legal Adviser (OLA) at the United States Department of State.

The July 2018 purchase was the second for the company; the first in January 2017 when the company purchased two (2) 20ft containers: 

https://www.cubatrade.org/blog/2017/1/5/charcoal-joins-coal-to-become-second-commodity-exported-from-cuba-to-the-united-states?rq=Fogo 

A thirty-three (33) pound bag of the charcoal costs US$49.95 with free shipping.

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Council Of Economic Advisors Issues Report On Socialism; Cuba Featured

Today, the Council of Economic Advisers (CEA) released a report outlining the opportunity costs socialism on the macro economy, including standards of living, and the impact on the Federal budget.  Below is the executive summary.  Read the full report here.  

Coincident with the 200th anniversary of Karl Marx’s birth, socialism is making a comeback in American political discourse. Detailed policy proposals from self-declared socialists are gaining support in Congress and among much of the electorate.  

It is unclear, of course, exactly what a typical voter has in mind when he or she thinks of “socialism.” But economists generally agree about how to define socialism, and they have devoted enormous time and resources to studying its costs and benefits. With an eye on this broad body of literature, this report discusses socialism’s historic visions and intents, its economic features, its impact on economic performance, and its relationship with recent policy proposals in the United States.  

We find that historical proponents of socialist policies and those in the contemporary United States share some of their visions and intents. They both characterize the distribution of income in market economies as the unjust result of “exploitation,” which should be rectified by extensive state control. The proposed solutions include single-payer systems, high tax rates (“from each according to his ability”), and public policies that hand out much of the Nation’s goods and services “free” of charge (“to each according to his needs”). Where they differ is that contemporary democratic socialists denounce state brutality and would allow individuals to privately own the means of production in many industries.  

In assessing the effects of socialist policies, it is important to recognize that they provide little material incentive for production and innovation and, by distributing goods and services for “free,” prevent prices from revealing economically important information about costs and consumer needs and wants. To this end, as the then–prime minister of the United Kingdom, Margaret Thatcher (1976), once argued, “Socialist governments . . . always run out of other people’s money,” and thus the way to prosperity is for the state to give “the people more choice to spend their own money in their own way.”  

Whether socialism delivers on its appealing promises is an empirical question. We begin our investigation by looking closely at the most highly socialist cases, which are typically agricultural economies, such as Maoist China, Cuba, and the Union of Soviet Socialist Republics (USSR). Their nondemocratic governments seized control of farming, promising to make food more abundant. The result was substantially less food production and tens of millions of deaths by starvation. Even if highly socialist policies are peacefully implemented under the auspices of democracy, the fundamental incentive distortions and information problems created by large state organizations and the centralized control of resources are also present in industrialized countries, as is currently the case in Venezuela. Lessons from poorly performing agricultural economies under socialist regimes carry over to government takeovers of other modern industries: They produce less rather than more.

These countries are examples of a more general pattern of socialism’s negative output effects. Such outcomes have also been observed in cross-country studies of the effect of greater economic freedom—quantified as an index of taxation and public spending, the extent of state-owned enterprises, economic regulation, and other factors—on real gross domestic product (GDP). This literature finds a strong association between greater economic freedom and better economic performance. It suggests that replacing U.S. policies with highly socialist policies, such as Venezuela’s, would reduce real GDP at least 40 percent in the long run, or about $24,000 per year for the average person.  

Although they are sometimes cited as more relevant socialist success stories, the experiences of the Nordic countries also support the conclusion that socialism reduces living standards. In many respects, the Nordic countries’ policies now differ significantly from what economists have in mind when they think of socialism. For instance, they do not provide healthcare for “free”; Nordic healthcare financing includes substantial cost sharing. Marginal labor income tax rates in the Nordic countries today are only somewhat higher than in the United States, and Nordic taxation overall is surprisingly less progressive than U.S. taxes. The Nordic countries also tax capital income less and regulate product markets less than the United States does. However, the Nordic countries do regulate and tax labor markets somewhat more; thus, American families earning the average wage would be taxed $2,000 to $5,000 more per year net of transfers if the United States had current Nordic policies. Living standards in the Nordic countries are at least 15 percent lower than in the United States.  

It may well be that American socialists are envisioning moving our policies to align with those of the Nordic countries in the 1970s, when their policies were more in line with economists’ traditional definition of socialism. We estimate that if the United States were to adopt these policies, its real GDP would decline by at least 19 percent in the long run, or about $11,000 per year for the average person.  

The Nordic and European versions of socialized medicine have been viewed as so desirable by modern U.S. socialists that they have proposed nationalizing payments for the healthcare sector (which makes up more than a sixth of the U.S. economy) through the recent “Medicare for All” proposal. This policy would distribute healthcare for “free” (i.e., without cost sharing) through a monopoly government health insurer that would centrally set all prices paid to suppliers such as doctors and hospitals. We find that if this policy were financed out of current Federal spending without borrowing or tax increases, then more than half the entire existing Federal budget would need to be cut. Or if it were financed through higher taxes, GDP would fall by 9 percent, or about $7,000 per person in 2022, due to high tax rates that would reduce incentives to supply the factors of production. Evidence on the productivity and effectiveness of single-payer systems suggests that “Medicare for All” would reduce both short- and long-run longevity and health despite increasing somewhat the population with health insurance.

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Why Won't Governor Cuomo Confirm If He Met With President Diaz-Canel In NYC During UNGA?

The Honorable Andrew Cuomo (D), Governor of the State of New York, visited the Republic of Cuba in April 2015.

His office is refusing to disclose if the Governor met with H.E. Miguel Diaz-Canel, President of the Republic of Cuba, during the United Nations General Assembly held in New York City in September/October 2018.

LINK to three-year-since report on visit of Governor to the Republic of Cuba.

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Ag/Food Exports To Cuba Turn Negative For The Year; And It's Counterintuitive

With prices of United States-sourced agricultural commodities and food products lower in 2018 compared to 2017 primarily due to political issues with China, Russia and European Union (EU)-member countries, the Republic of Cuba would have been expected to increase its purchases from the United States- spending less to obtain more as they have done in previous years when commodity prices were to their advantage.

However, primarily due to commercial and economic issues within the Republic of Cuba, lack of foreign exchange and necessity for long-term payment terms (365 days is not an uncommon request), there have been no sustained efforts by the government of the Republic of Cuba to take advantage of lower prices from the United States- and attempt to curry favor with United States-based exporters and public sector advocates.

For the period January 2018 through July 2018, agricultural commodity and food product exports (on cash-in-advance terms as required by statute) from the United States to the Republic of Cuba had increased 2.8%, although at a month-to-month declining rate, from the same period in 2017.

For the period January 2018 through August 2018, agricultural commodity and food product exports from the United States to the Republic of Cuba have decreased 8.8%.

ECONOMIC EYE ON CUBA©

October 2018

August 2018 Food/Ag Exports To Cuba Decrease 46.4%- 1

-8.8% Decrease Year-To-Year-5

Cuba Ranks 54th Of 224 U.S. Food/Ag Export Markets- 2

August 2018 Healthcare Product Exports US$42,320.00- 2

August 2018 Humanitarian Donations US$1,151,123.00- 3

Obama Administration Initiatives Exports Continue To Increase- 3

U.S. Port Export Data- 15

AUGUST 2018 FOOD/AG EXPORTS TO CUBA DECREASE 46.4%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in August 2018 were US$15,322,008.00 compared to US$28,627,776.00 in August 2017 and US$17,227,971.00 in August 2016. Exporters in August 2018 included among others: Wellesley, Massachusetts-based Grove Services (poultry); Atlanta, Georgia-based AJC International (poultry); Atlanta, Georgia-based Intervision Foods (poultry); Salisbury, Maryland-based Perdue Agri-Business (soybeans); Northbrook, Illinois-based PCS Sales (phosphates); and Little Rock, Arkansas-based Mountaire Farms (poultry).  Morristown, New Jersey-based Capsugel (2017 revenues US$1 billion), a subsidiary since 2017 of Basel, Switzerland-based Lonza Group (2017 revenues US$5.5 billion) exported gelatin capsules valued at US$25,826.00 (.84 metric tons) to the Republic of Cuba in August 2018; the first reported shipment valued at US$3,914.00 in April 2018.  Capsugel reported that the export was licensed on behalf of a Europe-based company.

Link To Complete Report With Port Data

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From Marseille, France "Current State Of Play: US-Cuba Trade & Investment Relations"

4 October 2018

Cuba Business Club

9:00 am to 6:00 pm

Current State Of Play: United States-Republic Of Cuba Trade & Investment Relations

Villa Valmer

Avenue Corniche Président John Fitzgerald Kennedy

Marseille, France

 

PREPARED REMARKS (subject to editing)

 

John S. Kavulich

President

 

Good afternoon…. 

My four (4) most important messages to you:   

First, United States companies want to engage with the Republic of Cuba.   

Second, the Republic of Cuba is reluctant to engage with United States companies.   

Third, the Trump Administration has decimated the interest by United States companies towards the Republic of Cuba. 

Fourth, United States companies are not optimistic for any near-term to medium-term expansion of the commercial, economic or political bilateral relationship. 

United States laws, regulations and policies do authorize United States companies to engage in a substantive range of exporting, importing and the provision of services.  Obviously, the range of opportunities are constricted- and United States companies generally prefer to determine their survivability in terms of identifying and engagement with markets rather than their local, state or federal government determining their destiny.     

What is the United States commercial relationship with the Republic of Cuba?  Sixty (60) companies with a limited presence in Cuba; there nine (9) sales offices (five airlines, two travel agencies, and distribution facility in ZED Mariel (controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR)), managed by the Territory of Puerto Rico-based distributor for Illinois-based equipment manufacturer Caterpillar Inc.), one (1) healthcare product joint venture (also located in ZED Mariel), and no assembly or manufacturing operations.  Connecticut-based General Electric Co. due to its acquisition of France-based Alstom, has undertaken a multi-million-dollar valued power generation project for which it is being paid to perform.  General Electric has a certified claim against the Republic of Cuba valued at US$5.9 million registered with United States Foreign Claims Settlement Commission (USFCSC). 

The sixty (60) United States companies have combined global revenues of US$1 trillion and employ 2,000,000 worldwide.   

Since 2001, approximately ninety-five (95) companies have exported more than US$5.8 billion in agricultural commodities and food products to the Republic of Cuba.   

Since 2003, United States companies have exported approximately US$25 million in healthcare products to the Republic of Cuba including medical equipment, medical instruments, medical supplies and pharmaceuticals.   

For the period 2016 through 2019, the three-largest United States cruise lines (Florida-based Carnival Corporation & PLC, Florida-based Royal Caribbean Cruises, Ltd. and Florida-based Norwegian Cruise Lines Holdings) and some smaller companies have announced more than 375 sailings; potentially delivering more than 624,000 passengers to the Republic of Cuba.  The companies could earn more than US$834 million in gross revenues- and US$89+ Million would be spent in the Republic of Cuba by passengers; and port fees to the Republic of Cuba of approximately US$23 million. 

In conjunction with and independent of the cruise line activities, United States airlines will earn gross revenues of approximately US$800 million from transporting passengers to/from Florida in conjunction with the cruises and for other visits to the Republic of Cuba by individuals subject to United States jurisdiction; with an additional US$200 million going to hotels & restaurants located in Florida. 

Some United States airlines have relinquished their routes to the Republic of Cuba citing low demand, high operating costs, and fare competition.  Then, some other air carriers have sought those routes and requested new routes.  The Trump Administration has approved those new routings with a hope that its policies will result in fewer flights.   

More than 3,000 representatives of United States companies- sole proprietorships, consultants, partnerships; small, medium and large; privately-held and publicly-held; organizations, associations, co-operatives, groups- if you can think of a type of business, then it has probably visited the city of Havana since 17 December 2014.  Some visited with official invitations; most on their own. 

Thus far, the Republic of Cuba has responded by focusing upon Obama Administration initiatives that will bring it revenue with the least depth of footprint in the Republic of Cuba by United States companies. 

So how does it look since 17 December 2014 when The Honorable Barack Obama, President of the United States, and H.E. General Raul Castro, President of the Republic of Cuba, addressed their respective nations to discuss the commercial, economic and political re-engagement? 

When President Obama addressed the nation in December 2014, he wore a dark suit, stood at a podium, and for fifteen minutes (using 2,283 words) shared with specificity what he wanted to do to, with, and for the citizens of the Republic of Cuba.   

When President Castro addressed his nation the same day, he wore a military uniform, sat at a desk, and spoke with vagueness for five minutes (using 682 words).   

Those Presidential Optics mattered…. 

Other than permitting a substantial increase in the number of visitors to the Republic of Cuba, and thus earning significant revenues, there has been no embrace (or authorization) for most of the commercially-focused initiatives offered through the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, Bureau of Industry and Security (BIS) of the United States Department of Commerce and United States Department of State (OLA- Office of Legal Advisor)- unless they primarily focus upon hospitality and travel:   

·        Maryland-based Marriott International is managing one property, the Four Points Sheraton Havana, and has announced that the Hotel Inglaterra in Havana will be under its management in December 2019- three years behind schedule; a third property management opportunity vanished without explanation.  As a result of a series of mergers and acquisitions during the last fifty-eight (58) years, a US$63 million certified claim against the Republic of Cuba for assets (including land) initially made by New York-based International Telephone & Telegraph Corporation (ITT), which became ITT Sheraton, then acquired by Connecticut-based Starwood Hotels & Resorts Worldwide which was itself was acquired in 2016 by Marriott International which can use this value as a means to secure opportunities within Cuba; and a provision within the Libertad Act (“Helms-Burton”) of 1996 permits Marriott International to settle, sell, rent, lease, barter or obtain short-term, medium-term, long term or permanent disposition.  In 2016, the OFAC granted a license(s) to Starwood Hotels & Resorts Worldwide to manage three properties owned by Republic of Cuba government-operated entities.    

·        California-based Airbnb is managing reservations for approximately 23,000 residences in the Republic of Cuba.   

·        New York-based Verizon, Texas-based AT&T, Kansas-based Sprint and Washington-based T-Mobile have roaming agreements in the Republic of Cuba.   

·        A recently-announced joint venture (in conjunction with clinical trials of a therapeutic) located within ZED Mariel to develop pharmaceuticals relating to the treatment of cancer with Roswell Park Comprehensive Cancer Center from my hometown of Buffalo, New York.  ZED Mariel is controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR). 

·        Texas-based American Airlines, Georgia-based Delta Air Lines, New York-based JetBlue Airways, Texas-based Southwest Airlines and Illinois-based United Airlines are operating regularly-scheduled flights to cities in the Republic of Cuba.  Four (4) airlines have ticket offices in Havana; one airline, Jet Blue Airways, has two.  In 2016, eight (8) airlines requested 3.4 million seats from the authorized 1.2 million passenger seats for the 110 daily United States-Republic of Cuba routes.  The 3.4 million was nearly the total number of visitors to the Republic of Cuba from throughout the world in 2016.     

·        In August 2016, Switzerland-based Nestle, through its New York-based Nestle Nespresso subsidiary, began importing to the United States “Cafecito de Cuba” capsules.  A journey for the coffee beans of 10,000 miles (Republic of Cuba-Switzerland-United States) rather than hundreds of miles (Republic of Cuba-United States) … The Republic of Cuba was sending a message to United States-based companies; watch, but don’t participate.  

What Hasn’t the Republic of Cuba Done With United States Companies?   

·        Ferries await authorization 

·        Authorization for a wide variety of United States companies to open offices has yet to materialize 

·        United States companies continue to await permission to export products directly to independent businesses in the Republic of Cuba.   

·        A proposal remains under consideration, more than two years after initially proposed, to establish a wholesale distribution center in Havana. 

·        One Alabama-based company has waited more than two (2) years to deliver agricultural equipment that was ordered by a Republic of Cuba government-operated entity. 

The United States business community is in this place precisely because the Obama Administration and Castro Administration believed in inevitability rather than uncertainty.  And this place is frustrating.  And this place is unnecessary.     

Each government expected their respective negotiation platforms to remain afloat until 12:00 pm on 20 January 2017 rather than 3:00 am on 9 November 2016.  They didn’t prepare for Mr. Donald Trump to become President-Elect Donald Trump.  They only prepared for President-Elect Hilary Clinton. 

Companies always model for the results that want and for the results they do not want.  Neither the Obama Administration nor the Castro Administration modeled for what they did not want.   

With respect to the interests of the United States business community, the Obama Administration and Castro Administration were reckless.  They should have permitted more commerce so there would be strong commercial roots immune from interruption.  And now we have the Trump Administration. 

The Obama Administration should have lessened restrictions upon the use of the U.S. Dollar by the Republic of Cuba for its international transactions; should have authorized Direct Correspondent Banking (DCB)- rather than one-way accounts; should have done something relating to certified claims settlements; and should have permitted more than coffee and charcoal to be imported to the United States for commercial sales. 

Noticeable, however, the Trump Administration has not impeded meetings between representatives of the United States Department of State and their counterparts at the Ministry of Foreign Affairs; nor have meetings been disrupted with respect to other bilateral issues.  Diplomatic travel visas continue to be issued; and the Trump Administration was criticized by its allies in the United States Congress for permitting too many officials to accompany H.E. Miguel Diaz-Canel, President of the Republic of Cuba, to the United Nations General Assembly (UNGA) in New York City in September 2018.  Republic of Cuba government-operated Prensa Latina’s Washington, DC bureau was permitted to re-open.  And, while in New York City at a meeting with United States business representatives, H.E. Miguel Diaz-Canel, President of the Republic of Cuba, intimated that he might return to the United States, not to New York City, but to Washington DC.  A cryptic message.   

The Trump Administration believes that lessening support from Venezuela and increasing inability of countries making payment for services provided by Republic of Cuba nationals will force the Republic of Cuba to make further changes. 

The (relatively) slow-motion implosion of the Bolivar Republic is an unwelcomed catalyst for the Diaz-Canel Administration to absorb changes that it would not engage within the context of a voluntary program. 

Note that as the Republic of Cuba is meaningfully responsible for the endurance of the Maduro Administration in Caracas, the Diaz-Canel Administration could leverage that influence to assist the Duarte Administration in Colombia and the Trump Administration in bringing stability to Venezuela.   

However, a result of a re-stabilized Venezuela is increased oil production which would benefit Venezuela- and the People’s Republic of China and Russian Federation to whom Venezuela is substantially indebted; and would benefit the Republic of Cuba by lessening rationale for necessary changes to its commercial, economic and political infrastructure.  Those necessary changes are primarily a result of decreased (and inconsistent) commercial and economic benefits received during the last five (5) years from Venezuela.   

A prosperous Venezuela and a stable Republic of Cuba would be challenges for the Trump Administration.  Global oil prices would likely decrease, but stabilize from increased oil production in Venezuela as there would be greater dispersion among producers- thus competition.  Lower oil prices would benefit the Republic of Cuba, and the People’s Republic of China; not so much the Russian Federation.  

The Trump Administration has been brilliant (which doesn’t mean that the United States business community is supportive) with its focus upon the role of the military throughout the economy of the Republic of Cuba.  No United States company executive wants to be interviewed on television explaining why their company prefers to be in business with a country where the military controls the economy. 

United States companies are prepared for increased restrictions upon transactions and relationships with entities controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR): Enterprise Administration Group (GAESA) and its subsidiaries including, but not limited to Gaviota (tourism). 

Being Used As Bait 

United States companies are under no illusion as to their role in today’s Republic of Cuba.  They appreciate, but do not approve of being proffered as bait to entice companies from European Union (EU)-member countries and other countries. 

The Republic of Cuba encourages United States companies to want to be in the Republic of Cuba- and to say so in public.  However, the Republic of Cuba does not necessarily want United States companies operating in the Republic of Cuba. 

Examples include the first agreement to export coffee from the Republic of Cuba through the United Kingdom (where the coffee beans had previously been shipped) then to Switzerland rather than to United States-based companies who had for many years expressed an interest.  There was an export of charcoal from the Republic of Cuba to the United States- ironically brokered by the United States-based attorney for the United States citizen whose reckless behavior and subsequent imprisonment in the Republic of Cuba disrupted most of the Obama Administration’s time in office; executives of United States companies were appalled by the optics of that transaction process.  Other opportunities have gone unanswered.  

United States companies have licenses from the OFAC and BIS and authorizations from the OLA which remain unannounced, unimplemented, and unpublicized.  Executives are concerned about being used as the subject of a Presidential Tweet or mention during a Presidential Speech. 

Despite the repeated introduction of legislation in the United States Congress which, if enacted into law, would remove prohibitions upon the provision of payment terms for the sale of agricultural commodities and food products to the Republic of Cuba, there have been no financial institutions or companies which have publicly said what payment terms they would provide to Republic of Cuba government-operated Alimport (under the auspice of the Ministry of Foreign Trade of the Republic of Cuba- MINCEX) which contracts for most United States exports and other Republic of Cuba government-operated entities.   

That’s a problem and a (not the) reason there has been no legislation that has become law in more than 6,500 days- that’s almost eighteen (18) years.  However, during the last eighteen (18) years, more than US$5.8 billion in agricultural commodities and food products have been exported from the United States to the Republic of Cuba on a “cash in advance” basis. 

Note that United States exporters did not want payment terms when the last legislation (Trade Sanctions Reform and Export Enhancement Act of 2000- TSREEA) was moving through the United States Congress in 1999 and 2000 which ultimately re-authorized the direct export, on a payment of cash-in-advance basis, of agricultural commodities and food products; they preferred the security from cash payments even if the requirement resulted in less sales; they were keenly aware of a risk of payment default and what the result would be for overall commercial and political engagement from the report of a default.  Unfortunately, the TSREEA also specifically prohibited individuals subject to United States jurisdiction from visiting the Republic of Cuba for the purpose of tourism.  It was an unfortunate, and likely avoidable compromise by a Member of the United States Congress.  

United States Exports & Imports 

Of 232 global export markets for food products and agricultural commodities from the United States, since 2001 the Republic of Cuba has ranked from 25th to 60th.  That’s impressive. 

Why doesn’t the Republic of Cuba doesn’t purchase rice from the State of Arkansas?  Because government of Vietnam-owned companies provide the Republic of Cuba with up to two years to pay for rice; and some Republic of Cuba government-operated companies generally request from one year to three years to make payments for most imports.  No United States company will provide those payment terms. 

United States export (product and service) opportunities to the Republic of Cuba have expanded from food products and agricultural commodities to telecommunications equipment and services, agricultural and construction equipment, power generation machinery, almost any product for the direct use by an independent business and (quasi) private cooperative, and provision of micro-credits.  However, the Republic of Cuba has yet to authorize United States companies to directly export products or services to independent businesses.

Equipment manufacturer Illinois-based Deere & Company has offered to provide financing for its exports to the Republic of Cuba; that is a first such public offering by any United States company. 

Import opportunities from the Republic of Cuba remain limited to software, coffee, charcoal, music, artwork, informational materials, crafts, and items produced by the self-employed and independent businesses. 

Foreign Subsidiary Opportunities 

United States companies have explored the use of export credit and export guarantee programs of countries within which they have foreign subsidiaries, Canada for example.   

At present, this limited focus is primarily towards the export of products to the Republic of Cuba that are authorized by the United States government, but have issues relating to the provision of long-term financing, such as those for power generation projects.   

Direct Foreign Investment (DFI) 

In the United States individuals in government or at companies vie to be the last signature on a document that authorizes a project- so that they might gain the most credit for the project.   

In the Republic of Cuba, the general rule is to avoid being the last signature on a document- because that person may be held accountable for the project… they “made it happen.”   

Important to appreciate the view of DFI from the perspective of the Republic of Cuba, today’s Republic of Cuba…. DFI is not regarded as a means to change the Republic of Cuba; it is permitted as a means to sustain the Republic of Cuba, to preserve the Republic of Cuba. 

During the last twenty-five (25) years, when the presence of DFI has fulfilled its need to provide foreign exchange, the Republic of Cuba has throttled-back its impact. 

Today, however, as the Republic of Cuba can no longer depend upon the financial largess of Venezuela; and the governments of Russia, Iran, and China are incapable of replacing the billions of dollars in annual value that’s been provided by Venezuela and to a lesser extent by countries on the continent of Africa, since the signing of a discount oil agreement in 2000, DFI is a beast that must now be embraced, albeit reluctantly.  

For United States businesses, there is a prospect of 11.3 million consumers residing 93 miles south of Key West, Florida, who have one of the highest awareness’s and preferences for United States brands of any non-English-speaking country. 

President Obama may have been the last lifeguard to save the Republic of Cuba from retaining the status quo.  He provided a twenty-five-month (25) lifeline valued at a potential US$12 billion in earnings and savings to the Republic of Cuba.  He was disruptive.  He required little and some would argue nothing from the Republic of Cuba.   

Certified Claimants- 30 of 5,913 Can Make The Difference 

Neither the Obama Administration nor the Castro Administration focused upon the difficult issues and, as a result, the foundation for what is known as “the embargo” has not shifted.  The Trump Administration and the Diaz-Canel Administration could change that lack of resolve.   

From 17 December 2014 through 20 January 2017, there were two (2) meetings in more than 700 days where the issue of the 5,911 certified claims was discussed- two meetings.  And, at the end of first meeting, a second meeting was not scheduled.  And, at the end of the second meeting a third meeting was not scheduled.  And, the meetings were discussions rather than negotiations.  The Obama Administration reported that the issue of the certified claims was a “high priority.” 

With a publicly established timetable for completion and publicly established benchmarks to manage progress.  United States companies, and not only certified claimants, would applaud this effort as the foundation for United States statutes, regulations and policies are constructed upon the issue of the certified claims.  The Republic of Cuba would also gain mightily as a result- from governments and countries with whom it seeks commercial, economic and political value- specifically European union (EU)-member countries.  With a settlement of the certified claims, there truly would be a reason for non-United States-based companies to believe that competition from United States-based companies would be more than a marketing strategy by the Republic of Cuba.  The Trump Administration wants to make deals; settling the issue of the certified claims is precisely the type of legacy deal that is attractive to the Trump Administration and should be attractive to the Diaz-Canel Administration.  Be bold. 

If the Republic of Cuba wants to move the bilateral relationship forward, then the Diaz-Canel Administration should propose directly to the Trump Administration that each country appoint a negotiating team and immediately commence negotiations, not discussions, to settle the issue of the certified claims- and only the certified claims.  The issue of the certified claims will not simply vanish if ignored.   

There were 8,821 claims of which 5,913 awards certified by the United States Foreign Claims Settlement Commission (USFCSC) are valued at US$1,902,202,284.95.  The USFCSC permitted interest to be accrued in the amount of 6% per annum; the current total value is approximately US$6 billion to US$8 billion.  Thirty (30) United States-based companies hold 56.85% of the total value. 

The Republic of Cuba seeks from US$134 billion to US$933 billion for damages it believes were inflicted by United States laws, regulations and policies from 1962 onward; the United States seeks from US$1.9 billion to US$8 billion for expropriated assets (beginning with an oil refinery).  Can there be a negotiation when the parties are potentially US$925 billion apart? 

A certified claims settlement should be based upon the payment of 100% of the value of each certified claim.  Even with a full settlement based upon principal and interest, the annual rate of inflation has substantially diminished the value of each certified claim.   

Opportunities for settlement include, but are not limited to, debt-for-equity swaps and substitution investments (one structure for another; one piece of land for another, etc.).  In combination with or separately from compensation formats, the Republic of Cuba could provide transferable values to the certified claimants including: 

·        Income tax holidays

·        Import duty exemptions

·        Reduced energy rates

·        Property tax credits

·        Earned income tax credits  

The Republic of Cuba should consider hosting a multi-day Certified Claimant Settlement Forum- and any certified claimant who desires to return to the Republic of Cuba marketplace and has a proposal would be welcomed; and all proposals would be subject to a thirty (30) day yes-or-no response.   

Given the lack of progress, the Trump Administration might step aside and authorize a Certified Claims Committee (using the thirty (30) largest certified claimants) to directly negotiate a certified claims settlement with the Republic of Cuba; or, as the Libertad Act (“Helms-Burton”) of 1996 permits, create individual private settlements amongst themselves and the Republic of Cuba. 

Some certified claimants have pondered asking the Obama Administration to retain Mr. Kenneth Feinberg, a New York, New York-based attorney specializing in mediation and alternative dispute resolution, who served as Special Master for the September 11th Victim Compensation Fund and TARP Executive Compensation; Administrator of the BP Deepwater Horizon Disaster Victim Compensation Fund; and retained to assist in the Michigan-based General Motors recall response and compensation for Volkswagen owners.  Mr. Feinberg, who could be appointed as a Special Envoy, appreciates the singular importance of deadlines. 

What’s Truly Important? 

The legacy of the Diaz-Canel Administration should not be that it attempted to preserve what could not be preserved; its legacy can be having removed the foundation upon which conflict with the United States is based- and as a result, dismantle a significant component, not the component of hardship inflicted upon the citizens of the Republic of Cuba. 

The Obama Administration initiatives towards the Republic of Cuba helped to expand the desire of citizens to communicate with one another, inside and outside of the Republic of Cuba, with family and friends; and increased both the desire and the opportunities for independent (self-employed) commerce.    

During the coming years, the Republic of Cuba will increasingly find a magnetism from the United States that will be impossible to reject- and the forces created by the desire of youth, equipped with the means to communicate within the country and outside of the country- principally to the United States, will result in societal schisms that will require careful management. 

The Republic of Cuba continues to struggle with the definition of success- how much may a person make and retain and disperse?  Must there be a limitation upon earnings; a level at which the government will seek to mandate, regulate, legislate so that citizen equality is forcibly maintained.  

The Republic of Cuba will restrain economic prosperity for its citizens if the perceived result from re-engagement with the United States government, and United States companies, and United States citizens (focused upon South Florida and Northern New Jersey) means increased uncertainty in commercial, economic and political control. 

The Republic of Cuba is continuing a period of cautiousness and a full-on re-engagement with the United States is problematic as the policy of the United States remains to use all means to seek commercial, economic and political change within the Republic of Cuba.  Not regime change, rather change of behavior by the regime.   

Any re-engagement with the United States results in uncertainty… the Republic of Cuba dislikes uncertainty.   

The Republic of Cuba often believes that it need not make any changes, concessions, repatriations or reparations.  It does, and it will. 

We hear often that for the Republic of Cuba, the reason for a limited response to the Obama Administration initiatives was and remains “the embargo.”  Granted, there are statutory and regulatory impediments to a “normalized” relationship. 

However, the question for the Republic of Cuba is to what extent will the people of the country be denied opportunities solely because not all bilateral issues have been resolved?   

There is no sugar-coating of the impact of United States polices, regulations and laws- they are comprehensive and exterritorial and unlikely to be removed as a package; they will be lessened in pieces; that’s the political reality. 

The relationship between the United States and the Republic of Cuba has never been about a moment; its been about a series of moments.  Awaiting a moment is futile. 

Which leaves us where?  

The initiatives proposed and implemented by President Obama (some of which were unsuccessfully attempted by predecessors) were designed to tear at the social fabric of the Republic of Cuba; with a goal of recreating a middle class and a professional class abridged by the 1959 Revolution… a challenging landscape today defined by those who have (through earnings or remittances or labor) and those who have not. 

President Obama's message… Create your worth as opposed to the government of the Republic of Cuba determining your worth.  Be what you can, what you want... not what you're told to be. 

The private restaurants- or paladares, have become cathedrals representing the demise of the Republic of Cuba’s Socialist model.  The owners and the workers want more and are willing to work to get more.  Socialism does not provide them with everything that they need or want or aspire to have. 

There are entrepreneurial Republic of Cuba nationals, mostly young, who are using the revised landscape as incubators for their talents- initiate, develop, and then for some, they believe the only means to flourish is to leave the country.  These individuals know that they have talent- that their talent may be expressed, to limits…. They want more. 

Where We’re Headed?...  

The Obama Administration used visitors as an army, airlines as an air force, cruise ships as a navy and, to a lesser extent thus far, companies as marines to create a beachhead in the Republic of Cuba that can't be pulled or pushed off the island- either by political forces in the United States or in the Republic of Cuba.
In Internet terms, The Obama Administration wanted to create “CubaLegacy 2.0”- too big to roll back, too visible to hide, too collaborative, too many participants to remove, too bilateral to untangle.  President Obama wanted to bring change to the Republic of Cuba far more and far faster than the Republic of Cuba wanted change to arrive in the Republic of Cuba.    

H.E. Excellency General Raul Castro, then-President of the Republic of Cuba wanted, and now H.E. Excellency Miguel Diaz-Canel, current-President of the Republic of Cuba, wants to withstand (almost) everything that is coming his direction, yet find a means to gain value from it and not be perceived as rejecting it by governments and companies that are needed to fund what the Republic of Cuba believes it requires; a complex series of juggling maneuvers.   

The Republic of Cuba will never have a more energetic negotiating partner than they did in President Barack Obama.  There were lost opportunities in Washington and in Havana.  The Republic of Cuba was hoping to wait-out the Obama Administration until the transition to the expected Clinton Administration.  And now there is the Trump Administration.   

The Next Months (Or Years) …  

One member of the United States Senate is, today, the most influential Member of the United States Congress relating to the Republic of Cuba- The Honorable Marco Rubio (R-Florida).  He is of Cuban descent.  Senator Rubio is the chairman of the Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights, and Global Women's Issues of the Committee on Foreign Relations of the United States Senate.  He is thinking about the next opportunity to run for president of the United States; his first effort in 2016 having been unsuccessful.  The second-most influential member of the United States Senate with respect to the Republic of Cuba is The Honorable Robert Menendez (D- New Jersey), who is also of Cuban descent.  The third-most influential member of the United States Senate with respect to the Republic of Cuba is The Honorable Ted Cruz (R- Texas), who is also of Cuban descent.  They represent three percent (3%) of the one hundred (100)-member United States Senate. 

If the Democrat Party gains control of the United States Senate, Senator Robert Menendez likely (should he be re-elected one 6 November 2018) will become chairman of the Committee on Foreign Relations of the United States Senate.  Senator Menendez was not supportive of Obama Administration initiatives relating to the Republic of Cuba.  The Honorable Benjamin Cardin (D- Maryland) would likely become chairman of the Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights, and Global Women's Issues of the Committee on Foreign Relations of the United States Senate.  Senator Cardin supported Obama Administration initiatives relating to the Republic of Cuba. 

If the Democrat Party gains control of the United States House of Representatives, The Honorable Ed Royce (R- California) chairman of the Foreign Affairs Committee of the United States House of Representatives, who is retiring, would likely be replaced by The Honorable Eliot Engel (D- New York), the ranking Democrat member who was supportive of Obama Administration initiatives relating to the Republic of Cuba.  The Honorable Christopher Smith (R- New Jersey) would likely become the ranking Republican on the Foreign Affairs Committee; Representative Smith was not supportive of Obama Administration initiatives relating to the Republic of Cuba.  The Honorable Paul Cook (R- California), chairman of the Western Hemisphere subcommittee would likely be replaced by The Honorable Albio Sires (D- New Jersey), the ranking Democrat member who is of Cuban descent and was not supportive of Obama Administration initiatives relating to the Republic of Cuba.  

Regardless of which political party controls which chamber of the United States Congress, the Trump Administration will likely pursue commercial, economic and political policies, through the use of regulations and other processes, which will be influenced by the Republican party, especially with respect to the Republic of Cuba.  The OFAC, BIS and OLA will continue to be weaponized. 

A new Senior Director for Western Hemisphere Affairs at the National Security Council (NSC) in The White House is The Honorable Mauricio Claver-Carone, a highly competent and skilled political operative… who is of Cuban descent.  His role in shaping the United States relationship with the Republic of Cuba should not be undervalued and ignored at one’s peril. 

An amendment to what is known as the “Farm Bill” is expected to soon be enacted into law.  The amendment, authored by The Honorable Heidi Heitkamp (D- North Dakota), a member of the United States Senate (who polls indicate may lose her re-election effort on 6 November 2018), was made likely (and ironically) to be included in the legislation specifically due to efforts by Senator Marco Rubio.  The amendment will permit United States taxpayer funds to be used for United States Department of Agriculture (USDA) programs managed by independent organizations for agricultural commodity and food product promotion in the Republic of Cuba.  Senator Rubio added language to prohibit any of the USDA funds from being directed to any FAR-owned/controlled/affiliated entity.    

Legislative history has shown the Republic of Cuba to be a low-value commodity; to be traded away in most instances because it lacks importance.  The legislative calendar is littered with Members of Congress pronouncing they would not permit legislation unrelated to the Republic of Cuba to proceed unless issues relating to the Republic of Cuba were resolved.  In the end, no Member of Congress was going to seek to hold appropriation or other legislation of national importance because of the Republic of Cuba. 

Prudent to again remember that the last change in United States law relating to the Republic of Cuba was more than 6,500 days ago- nearly eighteen (18) years. 

Final Observations… 

United States companies are not delusional with respect to the construct within which they observe and analyze the Republic of Cuba; they are generally sober in appreciating the complex and often, from their perspective, self-defeating decision-making process and resulting decisions by the Republic of Cuba relating to the interests of United States companies. 

There will be a significant presence in the Republic of Cuba by United States companies.  The current government of the Republic of Cuba will seek to limit that presence; and they will likely succeed.  Successor governments of the Republic of Cuba will have neither the political desire nor commercial interest to do so.  

Thank you.

LINK To Complete Text

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Trump Administration Travel Regulations Claim A High Profile Victim: American Airlines

Excerpts:

28 September 2018

MOTION OF AMERICAN AIRLINES, INC. FOR THE REMOVAL OF THE U.S. GATEWAY CONDITIONS APPLICABLE TO ALL U.S.-CUBA FREQUENCIES

American desires route flexibility to move its daily Charlotte (CLT) – Havana (HAV) flight to its Miami (MIA) hub for the near future. American’s CLT-HAV service is underutilized, with an average load factor of under 55 percent for the first half of 2018. Of the passengers who fly this route, fewer than one in five is a local passenger. Both local passengers and connecting passengers on American’s CLT-HAV service will retain multiple connecting opportunities via MIA. 

In every month in 2018, since the new restrictions on U.S.-Cuba travel became effective, the load factor on this route has been substantially lower than at the same point in 2017.

The evolving restrictions on travel to Cuba have caused sharp changes in demand for U.S.- Cuba scheduled service, creating unique challenges for carriers. When the U.S. Government normalized relations with Cuba and authorized “individual people-to-people” travel to Cuba, traffic to Cuba from several U.S. gateways surged. But the new restrictions on individual people- to-people travel, which became effective on November 9, 2017, reduced demand by non-Cuban- American travelers and caused U.S.-Cuba traffic at many gateways to drop significantly.5 As a result, Alaska and Delta terminated their daily Havana services from Los Angeles and New York, respectively. Both carriers attributed their service terminations to the new U.S.-Cuba travel restrictions.6 Frontier and Spirit cancelled service as well, and several other Havana services were downgauged, greatly reducing overall Havana capacity, to the detriment of passengers. 

The cuts to Havana service that began in 2017 have reduced Havana seats by nearly 20 percent from the Department’s initial allocation in 2016, even accounting for the new services that will begin later this year.

American respectfully requests that the Department remove the U.S. gateway conditions applicable to the current allocations and future awards of U.S.-Cuba frequencies.1 This request, if granted, will provide all carriers that offer scheduled service to Cuba the flexibility to operate service from any U.S. gateway where the carrier holds underlying route authority. Route flexibility will enable carriers to respond quickly and efficiently to the unusually frequent and marked changes in demand for U.S.-Cuba travel since the re-introduction of scheduled service in 2016. Passengers will be the winners as scarce frequencies will be more likely to remain in continuous usage and to be directed to gateways with the greatest demand. The current gateway-specific awards have proven not to maximize public benefits. Due to sharp and unforeseeable demand fluctuations, frequencies have gone unutilized pending Department reallocations and carriers have been unable to provide sufficient service where it is most needed. Granting carriers route flexibility resolves these problems by allowing market forces to work while maintaining the Department’s important role in the allocation of scarce frequencies. 

Executive Summary

American seeks route flexibility to allow all carriers to adjust their Cuba services efficiently in response to the rapid shifts in demand that are unique to U.S.-Cuba travel. Changing restrictions on travel to Cuba have already contributed to the failure of several Cuba services in the two-year period following the reinstitution of scheduled passenger service. The effect of those changes and the likelihood of further change warrant providing carriers more tools to ensure that Cuba capacity at all U.S. gateways can be realigned to match demand. Without this flexibility, carriers, passengers, and the Department must endure lengthy and repeated frequency allocation proceedings before frequencies can be moved to other gateways. Passengers suffer during the extended period when the frequencies at issue remain unused.

LINK TO COMPLETE MOTION

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Honey From Cuba Could Be Imported To The U.S.; Thus Far Cuba Says No

In 2016, The Obama Administration expanded the variety of products that were authorized to be directly imported from the Republic of Cuba to the United States for commercial use. The first products authorized were textiles, coffee and charcoal. The government of the Republic of Cuba has thus far resisted permitting other products, including honey and dried fruit, to be directly exported to the United States. Note: The government of the Republic of Cuba has thus far not permitted the direct export of coffee; only the indirect import to the United States.

The State Department's Section 515.582 List

Bureau of Economic and Business Affairs

April 22, 2016

Goods and Services Eligible for Importation

In accordance with the policy changes announced by the President on December 17, 2014, to further engage and empower the Cuban people, Section 515.582 of the Cuban Assets Control Regulations (31 CFR Part 515 – the CACR) authorizes the importation into the United States of certain goods and services produced by independent Cuban entrepreneurs as determined by the State Department as set forth on the Section 515.582 List, below.

Goods

The goods whose import is authorized by Section 515.582 are goods produced by independent Cuban entrepreneurs, as demonstrated by documentary evidence, that are imported into the United States, except for goods specified in the following sections/chapters of the Harmonized Tariff Schedule of the United States (HTS):

LINK: https://static1.squarespace.com/static/563a4585e4b00d0211e8dd7e/t/571a83d4b6aa608067034e42/1461355477041/WhatMayBeImportedFromCubaEntrepreneurs.pdf

Worker bee’s paradise Cuba’s thriving honey business

Agricultural backwardness makes for healthy hives

The Economist

The Americas

20 September 2018

ARTEMISA

ALBERTO QUESADA loads a flatbed lorry in a field in the middle of the night for a two-hour drive to the dense mangrove swamps on the Gulf of Batabanó. “It’s important that they wake up in their new habitat,” he says of his cargo of bees. In the summer his 30,000 hive-dwellers feast on coastal flowers; in the autumn they forage on milkweed and morning glories further north. Around October it is off to the mountains, as Cuba’s trees reach their prime, before he brings the bees back to his farm about an hour’s drive from Havana. There, they have their pick of palm, mango and avocado trees, fresh vegetables—an uncommon luxury in Cuba—and a garden teeming with sunflowers, lilies and bougainvilleas. The diets of these well-travelled insects are more diverse than that of most Cubans.

It is good to be a bee in Cuba. Beekeepers elsewhere lose around 20% of their colony in the winter. Climate change, parasites, the intensification of pesticide use, urbanisation and an obsession with tidiness are causing colonies to collapse. “We mow our lawns and trim our hedges so much that there are now fewer places even for wild bees to nest,” says Norman Carreck of the British-based International Bee Research Association.

Communism has done Cuba few favours but it has proved a boon for its bees. Impoverished farmers cannot afford pesticides. A lack of modern equipment and little economic incentive to farm mean much of the island’s vegetation is wild in a way that keeps bees well nourished and produces high-quality honey.

While honey production in most countries has taken a hit along with hives, Cuba’s healthy bees have been busy. The population is growing by an average of 7,000 hives a year, each yielding around 52kg of honey in 2017, double the average from American hives. Although nine-tenths of total production, around 10,000 tonnes last year, is managed by private farmers like Mr Quesada, they are obliged to sell it to the government at a little over $600 a tonne. It is then exported, mostly to Europe, where it fetches $4,600 a tonne for ordinary honey and $14,000 for the 16% that counts as organic. Were a costly certification process not required, much more could fetch such a premium.

Cuba’s honey industry is tiny compared with that of world leaders (bees in China, the biggest producer, make over 500,000 tonnes a year) but it is a valuable agricultural export. And despite the state reaping most of the rewards, farmers, who profit from selling some honey to fellow Cubans, are keen to expand.

In anticipation the government has opened a new bottling facility that will increase production capacity to 15,000 tonnes a year, and plans to sell more organic honey and by-products such as beeswax. But high-quality hives need to be mobile. Cuba’s terrible roads and scarce fuel do not help. Even the wood and netting required to build hives are hard to come by. All these will need to improve to keep the business abuzz.

Radio Angulo

28 September 2018

Holguin, Republic of Cuba

Successful Honey Harvest Predicted in Holguin, Cuba

Beekeepers from the northeastern Cuban province of Holguin expect to increase beehoney production by more than 470 tons in plan for export before 2018 closes.

The beekeepers of the eastern Cuban territory expected to collect some 107 t by that date; however, they already produced 332 tons, which shows the expertise reached in honey production in the territory, where some 12 thousand 700 beehives are in operation, 800 more than in a similar stage to 2017.

Other derivatives of honey are wax and propolis, with an overproduction of 309 percent and 140, respectively, according to information from the provincial delegation of the Ministry of Agriculture (MINAG).

In recent visit to the province, Gustavo Rodríguez Rollero, Minister of Agriculture, called to start the production of pollen and royal jelly, highly coveted in the international market for its high nutritional values used in the naturopathic pharmaceutical industry as well as in cosmetics.

Rodriguez Rollero expressed the need to promote the wax not only in its pure state, but also processed in ornamental and utilitarian items, which gives added value and increases its selling price.

In the European market, main recipient of this product, its value exceeds 3 thousand euros, hence the importance of implementing techniques for its production, which will contribute the 500 tonnes set for export in this year. / By Luly Legra Pichs - Ahora.

RELATED LINKS:

https://www.cubatrade.org/blog/2017/1/5/charcoal-joins-coal-to-become-second-commodity-exported-from-cuba-to-the-united-states?rq=charcoal

https://www.cubatrade.org/blog/2016/6/20/nespresso-to-indirectly-import-coffee-from-cuba-to-usa?rq=coffee

https://www.cubatrade.org/blog/2016/6/10/obama-administration-could-open-us-markets-to-all-agriculturalfood-products-from-cuba?rq=charcoal

https://www.economist.com/the-americas/2018/09/22/cubas-thriving-honey-business

https://www.cubatrade.org/blog/2017/5/12/n6fras0d0v3uri8jlx8w0s1t2vx6vh?rq=charcoal

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Cuba Will Require Long-Term Financing For Agricultural Equipment Purchases From Belarus

Cuba interested in Belarusian agricultural machines Economy 27.09.2018 | 13:23

MINSK, 27 September (BelTA) – Cuba is interested in buying Belarusian agricultural machines and is getting ready to sign the contracts, representatives of the Applied Research Center for Agriculture Mechanization of the National Academy of Sciences of Belarus told BelTA.

“We are genuinely interested in Belarusian products for Cuban agriculture. Your machines have worked successfully in complicated climatic conditions in Cuba for many years. It is time to take our relations to the next level. We would like to buy even more of the latest samples of industrial products,” said Jose Suarez Leon, Director General of the Agricultural Engineering Office of the Cuban Agriculture Ministry.

The Cuban delegation is staying in Belarus on 23-30 September. The Applied Research Center for Agriculture Mechanization of the National Academy of Sciences of Belarus is the receiving organization. Signing a bilateral agreement on R&D cooperation is one of the items on the itinerary.

“The Cubans have shown a live interest in our applied research center. They've decided to borrow our organizational practices and assimilate them in the relevant organizations in Cuba,” noted representatives of the NASB Applied Research Center for Agriculture Mechanization.

The Cuban delegation visited the center's experimental manufacturing branch. The sides reached an agreement that a specialist of the enterprise will be sent to Cuba to prepare the delivery of a lineup of potato harvesters, machines for calibrating, polishing, and washing potatoes and packing them into sacks.

The Cuban delegation has also decided to buy everything necessary in Belarus in order to arrange a soil box just like the one used by the NASB Applied Research Center for Agriculture Mechanization for the sake of cheaply testing agricultural machines at any time of the year.

The Cuban delegation also visited some other branches of the NASB Applied Research Center for Agriculture Mechanization, including a hot zinc plating plant in Lida and the Zazerye facility with its biogas plant, a grain drying complex, and a dairy farm.

The Cuban delegation demonstrated interest in a lot of Belarusian industrial products ranging from Motovelo motorcycles to utility vehicles made by Amkodor, Gomselmash harvesters, MTZ tractors, and MAZ trucks. The delegation visits four to five enterprises in different cities every day, said the source.

President Responds During His Press Conference To Two Questions About Cuba

President Donald Trump Discusses the Republic Of Cuba in response to two questions at press conference on 26 September 2018:

LINK To Video

https://www.cnbc.com/video/2018/09/26/ive-been-very-proactive-on-cuba-trump.html

THE WHITE HOUSE

Office of the Press Secretary

September 26, 2018

PRESS CONFERENCE BY PRESIDENT TRUMP

Lotte New York Palace

New York, New York

Q Yes, Mr. President. My name is Tomás Regalado from Radio and TV Marti. Mr. President, yesterday at the speech at the U.N., you spoke about how Venezuela's problem was because of Cuba and the Castros -- how they went in there and they brought socialism and communism to Venezuela, and now to Nicaragua as well.

Mr. President, are you going to be more proactive now against Cuba as well?

THE PRESIDENT: I've been very proactive against Cuba. I don't like what's happening in Cuba. As you know, President Obama gave them a pass and I didn't like it. Neither do Cuban people based in Miami and based in our country that came from Cuba and suffered in Cuba.

I don't like what he did. I've ended much of it -- most of it. I don't like what's happening in Cuba, and I certainly don’t like what's happening in Venezuela.

Yes, please.

Q Mr. President.

THE PRESIDENT: Go ahead.

Q Mr. President, just to finish really fast. You said also that you had a call-to-action to ask the leaders around the world to also end socialism. Would you like to be recognized as --

THE PRESIDENT: Well, I wouldn't say that socialism has bene working really well around the world, okay. You can take a look at Venezuela as your number one -- your number one -- I guess, the one that is most obvious. But you take a look around the world, socialism is not exactly riding high.

Please.

Q Thank you, Mr. President.

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Roswell Park Announces Joint Venture In Cuba For Healthcare Product Development

Excerpts From Media Rlease: 

26 September 2018

Buffalo, New York: This joint venture biotech company, Innovative Immunotherapy Alliance S.A., will be based in Cuba and will be operated jointly by CIM’s commercial affiliate, CIMAB S.A., and by a Roswell Park subsidiary, GBCT II LLC. The company will: 

Focus on conducting additional U.S. research studies on CIMAvax and the other products over the first five years; 

Seek U.S. FDA approval upon demonstration of successful outcomes in advanced-phase clinical testing for the products; 

Seek patent protection for discoveries arising from development of the four cancer drugs, seek sub-licensing opportunities for the entity’s intellectual property rights, collaborate on research and share improvements on the intellectual property on a reciprocal basis with CIM and CIMAB; and

In the long term, facilitate the import and distribution of products into the U.S., either directly or through sublicensing arrangements, upon regulatory approval to benefit U.S. patients. 

This initiative will move forward in accordance with permissions issued by the Office of Foreign Assets Control of the Department of Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce and the U.S. FDA. Clinical studies are the first step toward FDA approval of new therapies. With the access to additional treatments under this joint venture, Roswell Park expects to initiate additional clinical trials, enrolling more than 100 patients in the U.S. within the next three years with plans for additional clinical studies to follow. 

Aside from CIMAvax, these cancer drugs have never been studied before in U.S. patients. The Cuban phase II and phase III clinical trials of CIMAvax have shown increased overall survival and improvement in quality of life for patients with non-small cell lung cancer. 

This new joint venture gives Roswell Park access to CIMAvax-EGF and three additional cancer drugs — unique approaches to treating some of the most deadly and burdensome cancer types both in the U.S. and globally — for U.S. patients and researchers. The milestone marks another step toward researching, developing and eventually commercializing promising cancer drugs for the benefit of patients in the U.S. 

Nearly $4 million in donations is funding Roswell Park’s initial CIMAvax clinical trials.

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U.S. Companies May Be Required To Directly Pay Convertible Currency To Cuban Nationals Who Work For Them

Trump Administration Encouraged To Require U.S. Companies Operating In Cuba To Directly Pay Cuban Employees In Convertible Currency 

If implemented, Equipment Distributors, Airlines, Cruise Lines, Travel Agents & Hotel Management Companies Would Be Impacted 

Would Cuba Suspend U.S. Companies- And Hundreds Of Millions Of Dollars In Revenue? 

Members of the United States Congress and officials within the Trump Administration are discussing whether to require United States companies who directly or indirectly employ Republic of Cuba nationals in the Republic of Cuba to make salary payments in convertible currency directly to those individuals rather than through a Republic of Cuba government-operated entity.   

The primary reasoning is if the companies earn convertible currency, their employees should earn convertible currency.  Among United States companies with a presence in the Republic of Cuba who could be impacted include:  

ABC Charters (Miami, Florida)

American Airlines (Chicago, Illinois)

Carnival Cruise Lines (Miami, Florida)

Cuba Travel Services (Cypress, California)

Delta Air Lines (Atlanta, Georgia)

JetBlue Airways (Long Island City, New York)

Marriott International (Bethesda, Maryland)

Norwegian Cruise Lines (Miami, Florida)

RIMCO (San Juan, Puerto Rico; Caterpillar distributor)

Royal Caribbean Cruise Lines (Miami, Florida)

United Airlines (Chicago, Illinois) 

The government of the Republic of Cuba has experience with not directly first receiving payments to Republic of Cuba nationals.  Owners of properties in the Republic of Cuba registered with San Francisco, California-based Airbnb receive U.S. Dollars, Euros, CUCs (Convertible Pesos) and other currencies directly, without the government of the Republic of Cuba first receiving the funds and then distributing the funds to the owners of the properties, although the government of the Republic of Cuba has considered implementing a first-capture mechanism.   

There is confidence by advocates for the policy change that they can withstand any pressure from United States companies with a presence in the Republic of Cuba.  According to one advocate, “If we can shift even one company to making payments directly, that could permit other governments to pressure their companies operating in Cuba to do the same; a desired result would be squeezing out the military from what should be a civilian-led economy to empowering Cuban employees to demand salaries in the same currencies earned by the companies.” 

Another advocate added, “American, United, Jet Blue, Delta, Caterpillar, Marriott and the cruise lines all receive U.S. Dollars or other convertible currencies as revenue.  Why shouldn’t Cubans working as ticket agents, baggage handlers, salesmen and saleswomen, service technicians, tour guides, tour bus drivers, housekeepers and front desk workers also earn U.S. Dollars or convertible currencies… and be paid directly by those multinational companies?  Isn’t that setting a better example?  Wouldn’t the companies benefit by a better-paid workforce and a happier workforce?”  

United States companies will submit they are abiding by the laws and regulations of the government of the Republic of Cuba, contracting with Republic of Cuba government-operated entities for the employment of Republic of Cuba nationals.  They will submit they make fair-market payments in convertible currency for the monthly salaries of Republic of Cuba nationals they directly and/or indirectly employ.  They will submit they have received licenses from the Office of Foreign Assets Control (OFAC) of the United States Department of Treasury and/or the Bureau of Industry and Security (BIS) of the United States Department of Commerce and/or approval from the Office of the Legal Advisor (OLA) at the United States Department of State to engage in their respective operations- and have done so under the Obama Administration and thus far under the Trump Administration. 

NOTE: Licenses from the OFAC and BIS and approval from the OLA may be reviewed and altered at any time if the license is deemed no longer consistent with United States policy.   

Currently, companies with operations in the Republic of Cuba who employ a Republic of Cuba national generally make payment to a Republic of Cuba government-operated entity in convertible currency and the Republic of Cuba national receives a non-convertible Peso. 

An example: a company wants to employ a Republic of Cuba national and the position would pay US$500.00 per month, the company would pay a Republic of Cuba government-operated entity US$500.00 (or 500.00 CUCs- Convertible Pesos with or without a 10% currency exchange fee implemented in 2004) which would then pay the Republic of Cuba national 1,000 Pesos.  One CUC is worth approximately 25 Pesos, so 500 Pesos is worth approximately US$20.00.  The government of the Republic of Cuba retains approximately US$480.00.  Within the Mariel Special Economic Development Zone (ZED Mariel) companies have increased salary flexibility; the US$500.00 per month could equate to 5,000 Pesos to the Republic of Cuba national.  Joint Ventures also have increased salary flexibility. 

Marriott International would be the most impacted company as it has a management contract (since 2016) for the 186-room Four Points By Sheraton Havana.   

The property is owned by Republic of Cuba government-operated Gaviota which is a subsidiary of the Enterprise Administration Group (GAESA) which is controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR).  GAESA has a substantial role throughout the economy of the Republic of Cuba with a specific focus upon hospitality, transportation and infrastructure. 

Marriott International previously announced that the company would commence in December 2019 (delayed without reason from December 2016) management of the 83-room Hotel Inglaterra, also owned by Gaviota. Link To Blog Post

The Four Points By Sheraton Havana reportedly has approximately 300 employees who are Republic of Cuba nationals.  The Hotel Inglaterra reportedly has approximately 150 employees who are Republic of Cuba nationals. 

United States airlines would also be substantially impacted as they contract for ticket agents (through Republic of Cuba government-operated Havanatur) at five (5) ticket offices within the city of Havana, Republic of Cuba and gate agents, ground handlers, and aircraft maintenance personnel at airports throughout the Republic of Cuba through Republic of Cuba government-operated Empresa Cubana de Aeropuertos y Servicios Aeronauticos (ECASA). 

United States cruise lines would be impacted as they contract for ground transportation and tour guides with Havanatur and Gaviota for hundreds of thousands of passengers who visit the Republic of Cuba.  

Caterpillar dealer RIMCO is located in ZED Mariel, so Republic of Cuba nationals employed by the company may have a higher monthly salary than Republic of Cuba nationals employed by companies outside of the ZED Mariel.

LINK: Complete Analysis In PDF Format

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President Trump Mentions Cuba In Remarks To United Nations General Assembly

THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release

September 25, 2018

REMARKS BY PRESIDENT TRUMP TO THE 73RD SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY

United Nations Headquarters

New York, New York

10:38 A.M. EDT

EXCERPTS…..

“Currently, we are witnessing a human tragedy, as an example, in Venezuela.  More than 2 million people have fled the anguish inflicted by the socialist Maduro regime and its Cuban sponsors.    

Not long ago, Venezuela was one of the richest countries on Earth.  Today, socialism has bankrupted the oil-rich nation and driven its people into abject poverty.

Virtually everywhere socialism or communism has been tried, it has produced suffering, corruption, and decay.  Socialism’s thirst for power leads to expansion, incursion, and oppression.  All nations of the world should resist socialism and the misery that it brings to everyone.  

In that spirit, we ask the nations gathered here to join us in calling for the restoration of democracy in Venezuela.  Today, we are announcing additional sanctions against the repressive regime, targeting Maduro’s inner circle and close advisors.”

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Update 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

One Hotel Management Contract

One Healthcare Joint Venture

No Manufacturing/Assembly Operations

Licenses/Authorizations Issued By OFAC/BIS/OLA Not Yet Disclosed & Implemented

LINK To Complete List

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Port of Wilmington, North Carolina Reports First Export To Cuba

First reported shipment from Port at Wilmington, North Carolina, of 1,243 metric tons of poultry valued at US$358,047.00 to the Republic of Cuba.  

Exporters were Little Rock, Arkansas-based Mountaire Farms (poultry) and Atlanta, Georgia-based Intervision Foods (poultry); and sourcing reportedly included from Laurel, Mississippi-based Sanderson Farms, the third-largest poultry producer in the United States.

LINK TO PORT DATA

U.S. Department Of State May Expand List Of Prohibited Entities

U.S. Department Of State May Update Cuba Military List

Expand To Include All subsidiaries & Subsidiaries-Of-Subsidiaries

Exclude Indirect Payments

Expect Monthly Updates

The Trump Administration, with encouragement from members of the United States Congress and individuals with interests in certified and non-certified claims against the government of the Republic of Cuba, is considering changes to the “List of Restricted Entities and Subentities Associates with Cuba (Cuba Restricted List)” published by the United States Department of State which identifies entities in the Republic of Cuba with whom individuals (and companies) subject to United States jurisdiction are prohibited (unless authorized) from engagement.

The current list is designed to discourage and prohibit individuals (and companies) from engagement with entities within the Republic of Cuba that are controlled by and/or affiliated with the Revolutionary Armed Forces of the Republic of Cuba (FAR) with a specific focus upon the Enterprise Administration Group (GAESA) which through its Gaviota subsidiary, among others, has a substantial role throughout the economy of the Republic of Cuba with a specific focus upon hospitality, transportation and infrastructure.

There are at least five (5) primary goals of the considered changes: 1) Increase uncertainty, and thus cause hesitancy for any transaction with a Republic of Cuba government-operated entity 2) Highlight the (illegitimate they argue) role of the military throughout the commercial and economic infrastructure of the Republic of Cuba with a belief that United States companies can be influenced through scrutiny by members of the United States Congress, specifically using the hearing process (increased significance if the Republican Party retains control of the United States Congress resulting from the 6 November 2018 elections) 3) Persuade the government of the Republic of Cuba to enhance the role of the private sector throughout the Republic of Cuba 4) Belief that an anti-military message is attractive and sustainable to individuals of Cuban descent who reside in the United States- including those who support further United States commercial, economic and political engagement with the Republic of Cuba and 5) Publicizing that the list may be updated monthly will require individuals and companies to devote greater resources to monitoring; with an expectation for fewer individuals and companies believing that the effort is worth the desired result.  

The challenge for the Trump Administration to achieve the goals is multifold; there are too many competing foreign policy priorities that excessively burden those United States government employees who must execute policies created by the goals.

With far fewer staff in 2018 than in 2017 at the United States Embassy in the city of Havana, Republic of Cuba, there are fewer human resources (regardless of agency/department affiliation) to identify military-linked entities.

With the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury tasked with enforcing sanctions policies towards priority countries including North Korea, Iran, Russia, China and Venezuela, there are not the resources to increase a focus toward the Republic of Cuba absent of additional budgetary allocations from the United States Congress.

Lacking an increase in number of United States government employees, re-tasking existing United States government employees or adding to individual United States government employee portfolios, the remaining sources of information to expand the list maintained by the United States Department of State are from media reporting and from individuals of Cuban descent which are likely require thorough vetting.     

U.S. Department Of State List:

https://static1.squarespace.com/static/563a4585e4b00d0211e8dd7e/t/5a0315a80d92976e482769a7/1510151593500/2017-24449.pdf

November 2017 Regulation Changes:

https://www.cubatrade.org/blog/2017/11/8/treasury-commerce-and-state-implement-changes-to-the-cuba-sanctions-rules?rq=Department%20of%20State

Understanding GAESA:

https://www.cubatrade.org/blog/2017/6/11/want-to-plan-for-the-impact-of-trump-administration-decision-about-cuba-understand-gaesa?rq=GAESA

Direct Versus Indirect Payments:

https://www.cubatrade.org/blog/2018/3/10/2b05qodxrf4d2m8qego70oflydtezl?rq=GAESA

Certified Claims:

https://www.cubatrade.org/blog/2016/12/1/zigs56x0gme3a9rqg7aecx9vf2gqgk?rq=certified%20claims

LINK: COMPLETE ANALYSIS IN PDF FORMAT

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Weber Shandwick Obtained OFAC License, But Two Years Later No Office In Havana

Media Release:

Weber Shandwick Receives U.S. Treasury License to Pursue Opening Operations in Cuba

03.18.2016

NEW YORK – March 18, 2016 – Weber Shandwick, one of the world’s leading global communications and engagement firms and part of Interpublic Group (NYSE: IPG), has been granted a specific license by the U.S. Department of the Treasury authorizing the company to pursue opening operations on-the-ground in Cuba. The license opens the door for Weber Shandwick to proceed with discussions with the Cuban government to secure the permissions necessary to be among the first marketing services and global public relations firms to establish an office in Havana.

With operations already extending to 81 countries around the world, Weber Shandwick is seeking to establish a presence in Havana to provide counsel to clients that can do business legally in Cuba.

“We are delighted to be one important step closer to our goal of opening an office in Havana,” said Jack Leslie, Chairman, Weber Shandwick. “Communications is the currency for change, and for a global firm such as ours, this is a unique opportunity to facilitate engagement at this historic pivot point in U.S.-Cuba relations.”

The license granted by the Office of Foreign Assets Control of the U.S. Treasury Department gives permission for Weber Shandwick to “engage in all transactions necessary to establish and maintain” an office in Cuba, including marketing its services, employing professionals, and opening and maintaining an account at a financial institution in Cuba. Weber Shandwick has submitted an application to the Cuban government, and is awaiting an invitation for an official visit with Cuban authorities.

“President Obama’s leadership in reestablishing U.S. diplomatic relations with Cuba has created a high level of interest from U.S. companies and organizations wanting to engage with the Cuban people,” said Micho Spring, a Cuban-American and chair of Weber Shandwick’s Global Corporate practice. “Our goal is to open an office to help our clients do this as soon as it is legally permissible.”

###

About Weber Shandwick

Weber Shandwick is a leading global communications and engagement firm in 78 cities across 34 countries and operations extending to 126 cities in 81 countries. The firm’s diverse team of strategists, analysts, producers, designers, developers and campaign activators has won the most prestigious awards in the world for innovative, creative approaches and impactful work, including being honored as an Ad Age A-List Agency in 2014 and 2015, The Holmes Report’s Global Agency of the Year in 2014 and 2015 and PRWeek’s 2015 Global Agency of the Year. Weber Shandwick and its Prime unit have won a combined 25 Cannes Lions since 2009. Weber Shandwick was also named a Best Place to Work by Ad Age in 2014 and 2015 and PRWeek in 2013 and 2014. The firm deploys deep expertise across sectors and specialty areas, including consumer marketing, corporate reputation, healthcare, technology, public affairs, financial services, corporate social responsibility, financial communications and crisis management, using proprietary social, digital and analytics methodologies. Weber Shandwick is part of the Interpublic Group (NYSE: IPG). For more information, visit www.webershandwick.com

Adweek Article: 

https://www.adweek.com/digital/interview-micho-spring-discusses-weber-shandwicks-growth-into-cuba/

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President Diaz-Canel Could Have A Provacative Schedule If He Attends UN General Assembly

There is consensus among senior-level executives of United States-based companies who conduct transactions with and/or provide services to and within the Republic of Cuba that His Excellency Miguel Diaz-Canel, President of the Republic of Cuba, will attend the United Nations General Assembly in New York City which commences on 18 September 2018 to deliver remarks on behalf of the Republic of Cuba, which joined the United Nations in October 1945 as one of the original fifty-one (51) founding members.  

As this will be the first United Nations General Assembly since his inauguration on 19 April 2018, important that the Republic of Cuba be represented by its new Head of State rather than Minister of Foreign Affairs. 

A visit to New York City will also permit President Diaz-Canel to meet (and be seen and photographed) with heads of state and/or heads of government of countries of commercial, economic and political importance to the Republic of Cuba (and to the United States). 

A focus would include: Members of the European Union (EU)- France (President Emmanuel Macron), Germany (Chancellor Angela Merkel), Spain (Prime Minister Pedro Sanchez) and United Kingdom (Prime Minister Theresa May); and Argentina (President Mauricio Macri), Brazil (President Michel Temer), Canada (Prime Minister Justin Trudeau), China (President Xi Jinping), Colombia (President Ivan Duque), Iran (President Hassan Rouhani), North Korea (Chairman Kim Jong-un), Russia (President Vladimir Putin), Turkey (President Recip Tayyip Erdogan) and Venezuela (President Nicolas Maduro). 

While generally risk-adverse, some senior-level executives believe given statements by The Honorable Donald J. Trump, President of the United States, of his willingness to meet with those with whom he agrees and to meet with those with whom he has disagreements, an opportunity, while uncertain, of a brief discussion between or a handshake by President Diaz-Canel with President Trump should not be dismissed and perhaps be privately requested, perhaps, if required, through a third-party. 

There is no consensus by senior-level executives with respect to their meeting privately or attending a group meeting with President Diaz-Canel at the Permanent Mission of the Republic of Cuba to the United Nations located on Lexington Avenue in New York City. 

Senior-level executives of sector/category trade organizations are generally positive, often enthusiastic as to opportunities for dialogue with heads-of-state and heads-of-government 

The often-cited reason for not proactively requesting a meeting or not desirous of receiving an invitation to a meeting is concern of scrutiny from the Trump Administration; this is particularly valid with providers of financial services who are subject to scrutiny from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury. 

There are senior-level executives of United States-based companies who remain welcoming of an opportunity to meet with President Diaz-Canel.  The companies tend to be travel-related: airlines, cruise lines, and hotel management, particularly those with a presence in the State of Florida.   

Those companies engaged in the export of agricultural commodities and food products to the Republic of Cuba are circumspect about meeting at this time with President Diaz-Canel given the sensitivity of a desired Republic of Cuba-related provision in the “Farm Bill” under consideration by the United States Congress with a vote expected by the end of September 2018.

LINK To Analysis

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The White House Continues Authority Of Trading With The Enemy Act Relating To Cuba

MEMORANDUM FOR THE SECRETARY OF STATE
THE SECRETARY OF THE TREASURY

SUBJECT: Continuation of the Exercise of Certain Authorities under the Trading With the Enemy Act

Under section 101(b) of Public Law 95-223 (91 Stat. 1625; 50 U.S.C. 4305 note), and a previous determination on September 8, 2017 (82 FR 42927, September 13, 2017), the exercise of certain authorities under the Trading With the Enemy Act is scheduled to expire on September 14, 2018.

I hereby determine that the continuation of the exercise of those authorities with respect to Cuba for 1 year is in the national interest of the United States.

Therefore, consistent with the authority vested in me by section 101(b) of Public Law 95-223, I continue for 1 year, until September 14, 2019, the exercise of those authorities with respect to Cuba, as implemented by the Cuban Assets Control Regulations, 31 C.F.R. Part 515.

The Secretary of the Treasury is authorized and directed to publish this determination in the Federal Register.

DONALD J. TRUMP

LINK To Text Of Trading With The Enemy Act

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Monthly Food/Ag Exports Decrease 36.1%; Year Remains Up 2.8%

ECONOMIC EYE ON CUBA©
September 2018

July 2018 Food/Ag Exports To Cuba Decrease 36.1%- 1
2.8% Increase Year-To-Year-5
Cuba Ranks 51st Of 229 U.S. Food/Ag Export Markets- 2
July 2018 Healthcare Product Exports US$77,781- 2
July 2018 Humanitarian Donations US$656,682.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
U.S. Port Export Data- 15

JULY 2018 FOOD/AG EXPORTS TO CUBA DECREASE 36.1%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in July 2018 were US$15,569,938.00 compared to US$24,379,155.00 in July 2017 and US$20,227,854.00 in July 2016.

Link To Complete Report.

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