NOTE: There are no United States Government statutory, regulatory or policy prohibitions upon Peoria, Illinois-based Caterpillar Inc. (2017 revenues exceeded US$38 billion) from providing, directly or indirectly, payment terms and/or financing for equipment exports from the United States to the Republic of Cuba.
Without the provision of substantial discounts in conjunction with extended payment terms and low-interest financing, United States companies remain at a competitive disadvantage as the government of the Republic of Cuba and Republic of Cuba government-operated companies prefer government-to-government transactions and government-to-government financing agreements.
For example, the governments of the People's Republic of China, Russian Federation, France, Belarus, Japan and India provide substantial long-term financing for durable product exports to the Republic of Cuba; and those financing agreements are generally extended when repayment is problematic, which is often.
The Special Development Zone of Mariel (ZEDM) is affiliated with the Revolutionary Armed Forces (FAR) of the Republic of Cuba.
The Trump Administration has posited that it will use regulations and policies administered by the United States Department of State, Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, and Bureau of Industry and Security (BIS) of the United States Department of Commerce to discourage United States companies from engagement with FAR-related entities, although some engagement may be grandfathered once regulations are issued, which was expected to be in September 2017 subsequent to a speech by The Honorable Donald Trump, President of the United States, in June 2017.
Neither John Deere nor Caterpillar have issued media releases or posted information on their respective Internet sites.
Neither Rimco nor Caterpillar have provided information as to financing/payment terms for any products exported from the United States to the Republic of Cuba.
Rimco has reported that the company will rent, sell and service Caterpillar equipment, including power generation systems.
The Triangular Payment Problem
Due to inaction by the Obama Administration throughout its two terms in office, despite repeated requests from representatives of the United States business community, payments from the Republic of Cuba to John Deere and Caterpillar will be routed through financial institutions located in third countries.
The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury does not authorize Republic of Cuba government-operated financial institutions to have correspondent accounts with United States-based financial institutions. However, the OFAC does authorize United States financial institutions to have correspondent accounts with Republic of Cuba government-operated financial institutions.
Without a change to this OFAC regulation, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more timely (same day versus two or more days), and less costly.
In 2015, the OFAC authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.5 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA). There is also Republic of Cuba government-operated Banco Financiero Internacional SA (BFI) which handles international payments. Unfortunately, because BICSA (and BFI) are not permitted to have an account with Stonegate Bank, funds are sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.
Additional effort. Additional time. Additional expense. And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.
Why should Stonegate Bank, which on 13 October 2016 reported having sixty (60) United States-based companies that are or would like to engage in commercial transactions with Republic of Cuba-based entities, need to share its business (and lessen benefits to its shareholders) with a financial institution located in Panama?
1 November 2017: HAVANA (Reuters)- Rimco, Caterpillar Inc’s dealer for Cuba, said on Wednesday it would open a distribution center for the U.S. heavy equipment maker at Havana’s Mariel special development zone, making it the first U.S. company to open up shop there.
The deal, signed this week, came as worsening U.S.-Cuban political relations curb U.S. business interest in the Communist-run island of 11 million inhabitants in the wake of the historic 2014 detente.
The United States voted against a U.N. General Assembly resolution that was passed on Wednesday calling for the lifting of the decades-old U.S. economic embargo against Cuba, reversing an abstention by Washington last year.
“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, Vice President of the privately-held Puerto Rican company Rimco, said in a news conference at Cuba’s annual trade fair. “We have a license from the commerce department and other agencies.”
A license from the Treasury Department’s Office of Foreign Assets Control (OFAC), which handles economic and trade sanctions, was not necessary, she said.
Mariel Director Ana Teresa Igarza said at the news conference that Rimco hoped to open up shop in 2018, and the deal was one of 30 projects, including 11 Mariel had signed off on this year.
Cuba created the zone, just west of Havana, three years ago to attract foreign capital with tax and customs breaks to boost its anemic economy. It hopes the port there could become a hub for the Caribbean and Central and South America.
It is controlled by Almacenes Universales, a company belonging to the Armed Forces Business Enterprises Group (GAESA), which could prove problematic for U.S. companies.
U.S. President Donald Trump in June ordered a ban on business dealings with the military as part of a tightening of trade and travel restrictions.
The new regulations, including that ban, have yet to be unveiled. The Trump administration has said that any deals signed before then would be grandfathered in.
Caterpillar has been building relations with Cuba, which needs to update its ageing infrastructure, and lobbying to lift the U.S. embargo on the country.
Former Chief Executive Doug Oberhelman visited in May last year to meet with the government and make a donation to the foundation that preserves the heritage of U.S. writer Ernest Hemingway in Cuba.
FOR IMMEDIATE RELEASE
February 10, 2016
Caterpillar Names Rimco Official Dealer for Cuba
PEORIA, Ill. – Caterpillar Inc. (NYSE: CAT) today announced that it has selected Rimco, a privately owned Puerto Rico-based company, to be the Cat dealer for Cuba. Currently, Rimco serves as the Cat dealer for Puerto Rico and the Eastern Caribbean. Upon easing of trade restrictions, customers in Cuba will be able to purchase Cat products through Rimco in accordance with U.S. and Cuba regulations.
“We’re pleased to take this important step with our longtime partner, Rimco,” said Philip Kelliher, vice president with responsibility for the Americas & Europe Distribution Services Division. “Cuba needs access to the types of products that Caterpillar makes and, upon easing of trade restrictions, we look forward to providing the equipment needed to contribute to the building of Cuba’s infrastructure. This momentous announcement is part of our preparations in anticipation of the United States lifting its 55-year-old trade embargo on Cuba.”
Caterpillar, an advocate for change in policy toward Cuba for nearly two decades, will continue its work with the Administration and Congress to end the embargo.
“We’re exceptionally proud of our 34-year relationship with Caterpillar,” said Richard F. McConnie, President of Rimco. “There is great affinity between Cuba and Puerto Rico as a result of our shared language, culture and traditions. Rimco will be honored to serve the Cuba market once the United States and Cuba re-establish commercial relations.”
On December 17, 2014, President Obama announced that the United States would move to normalize relations with Cuba. Since that historic day, embassies have opened in each nation and there have been gradual steps to open diplomatic and economic ties between the two countries.
While steps remain until relations are fully normalized, including lifting the embargo, Rimco and Caterpillar will continue preparations to best serve the Cuban marketplace with construction and mining equipment, power systems, marine and industrial engines.
For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2015 sales and revenues of $47.011 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.
Rimco is the Caterpillar dealer for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Barbados and the Eastern Caribbean Islands. It is a privately-held Puerto Rico company founded by the McConnie family in 1981. The company has built a strong reputation in the industry with its superior sales, rental and product support capabilities. Rimco sells construction equipment, power systems and engines to its customers in the construction, quarry & aggregates, waste, industrial, commercial and marine segments. Rimco also has a complete fleet of equipment and power systems available for rental through its 5 Cat Rental Stores located in Puerto Rico and Barbados. Additional information about the Rimco organization, its products and services can be found at www.rimcocat.com.