US Foreign Subsidiaries Evaluating Export Credit/Guarantee Programs For Cuba

An increasing number of United States-based companies are evaluating the availability of export credit programs and export guarantee programs of countries within which they have foreign subsidiaries where those countries have programs available to support activities within the Republic of Cuba.  

While there may be issues relating to provisions (515.559 of title 31, Code of Federal Regulations) of the Cuban Democracy Act (CDA) of 1992 which curtailed foreign subsidiary transactions, there are companies who believe that provisions of the CDA may not be applicable in all circumstances.

At present, this focus is primarily towards the export of products to the Republic of Cuba that are authorized (statute or regulation) by the United States government, but have issues relating to the provision of long-term financing, such as projects for healthcare, transportation, agriculture, infrastructure, machinery, and energy (power generation).  

To be eligible for these programs, regardless of country, the foreign subsidiary must be more than an office and more than importing parts, technology, or know-how from the United States (or other countries) and then seeking support to export products from the subsidiary to the Republic of Cuba.  

The primary goal for any government export supporting entity is to use taxpayer funds to support products substantially created/assembled within their borders; by their citizens... not as a primary assist to United States-based companies and their shareholders.

The host country evaluates the content of what is to be exported to the Republic of Cuba- as will the United States government through the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and the Bureau of Industry and Security (BIS) of the United States Department of Commerce and, perhaps, other departments and agencies.

Some country export support facilities include France (COFACE, AFD); Germany (Hermes, KFW); Italy (SACE); Brazil (BNDES); UNited Kingdom (BFID, ECGD); and Spain (CESCE) among others.

For example (and this is typical for most countries), Montreal, Canada-based Export Development Canada (EDC) "is Canada’s trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private and public-sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment." 

The Republic of Cuba page at the EDC:

Canada Account is used to support export transactions which the EDC is unable to support, but which are determined by the Minister for International Trade to be in Canada's national interest. This is usually due to a combination of risks, including the size of the transaction, market risks, EDC's country capacity, borrower risks, and/or the financing conditions.

We negotiate, execute and administer these transactions on the same basis as Corporate Account activities but the risks are assumed by the Federal government. Before we enter into a Canada Account transaction, we require authorization from the Minister for International Trade, with the concurrence of the Minister of Finance. Transactions exceeding $50 million or those of a sensitive nature are, in practice, approved by Cabinet.

How the EDC assisted Ottawa, Canada-based Intelcan Technosystems Inc. with a civil aviation project in the Republic of Cuba: