Is Utah ready to build trade relations with Cuba?

Is Utah ready to build trade relations with Cuba?

(Derek Miller, World Trade Center Utah)


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SALT LAKE CITY — Utah is among the top exporting states in the United States, ranking as the sixth-fastest growing exporter over the past decade, according to World Trade Center Utah. The U.S. Department of Commerce reported the state exported $12.1 billion in goods and services in 2016.

If the state is going to continue its economic upward trend, it will need to tap into as many markets in the global economy as possible. And one of the top potential international markets lies just 90 miles off the southern coast of the Sunshine State — the Latin American nation of Cuba. Despite its close proximity, the tiny picturesque island country is in some ways a world away.

This month, the Salt Lake Chamber and World Trade Center Utah conducted a week-long trade mission to Cuba that included local business and civic leaders. The trip was an effort to establish relations with the Cuban government with the long-range aim of building ties that could potentially benefit the Beehive State and Cuba economically in the long-term future.

"I would characterize it as a general fact-finding mission," said Derek Miller, president and chief executive officer of World Trade Center Utah. "This was an opportunity to go and meet with people and understand in a way that you cannot understand unless you spend time in a place."

While the mission was to establish what could someday be beneficial relationships for Utah and Cuba, there are still significant political and diplomatic hurdles that have to be overcome before any such export relationships can begin.

Since 1962, Cuba has been under a restrictive travel and trade embargo instituted by the United States by then President John F. Kennedy. Still in place, the embargo severely impacted the Cuban economy and caused strong feelings of animosity toward the U.S. from many Cuban citizens, Miller explained.

He said the trip was arranged to help Utah businesses position themselves favorably as trade restrictions ease in the wake of policy changes initiated under the Obama administration.

In late 2014, President Barack Obama and Cuban President Raúl Castro, who assumed power when his brother, Fidel, became too ill to lead the nation more than eight years ago, announced the reinstatement of full diplomatic ties between the U.S. and Cuba, including the reopening of embassies. Since that announcement travel restrictions have been reduced, as well as bilateral cooperation in science and arts reinstituted. Additionally, Obama made the first presidential visit to Cuba in nearly 90 years.

In April 2015, Obama met with Castro in the first face-to-face conversation between leaders of the two countries in 50 years. Miller said over the past 50-plus years, the economic embargo on Cuba has forced American businesses to watch from the sidelines as other countries conducted trade with Cuba.

Residents walk along a street in Havana, Cuba. The World Trade Center Utah and the Salt Lake Chamber conducted a trade mission to Cuba with local business leaders in an effort to develop potential economic relationships for the mutual benefit of the state and the Caribbean nation. The U.S. has had no diplomatic relations with Cuba since 1963, but relations have eased in recent years. (Photo: Derek Miller, World Trade Center Utah)
Residents walk along a street in Havana, Cuba. The World Trade Center Utah and the Salt Lake Chamber conducted a trade mission to Cuba with local business leaders in an effort to develop potential economic relationships for the mutual benefit of the state and the Caribbean nation. The U.S. has had no diplomatic relations with Cuba since 1963, but relations have eased in recent years. (Photo: Derek Miller, World Trade Center Utah)

With relations possibly set to improve in the coming years, Miller said Utah businesses could be poised to take advantage of some key opportunities in tourism, infrastructure development and exporting.

He said any economic activity could only take place if the Trump administration determines if it will continue the path toward full normalization of trade and diplomacy. Such a determination has yet to be made and there is no timetable for it. And lifting the embargo would require congressional approval and the issue has yet to be seriously considered.

"They are really in a state of limbo in terms of a new (U.S.) administration coming in," Miller said.

Until then, states like Utah are taking their own steps to forge the alliances necessary to move ahead if and when the time comes, he noted.

"We don't know where the Cuban restrictions will be, but if theoretically the U.S. lifted the embargo and U.S. countries started doing business there, we would pretty quickly figure out where the tolerance level of (foreign trade) from the Cuban side," Miller said.

One key issue that any foreign trade partner will face with Cuba is the fact that the average citizen only earns about $30 per month, said Sue Ashdown, president of IcarusCuba — a consulting firm that facilitates business relationships with foreign companies interested in operating in Cuba. That relatively low standard of living creates a challenge for residents to develop a sustainable consumer economy in the foreseeable future, she said.

Vintage vehicles are parked in a lot in Havana, Cuba. The World Trade Center Utah and the Salt Lake Chamber conducted a trade mission to Cuba with local business leaders in an effort to develop potential economic relationships for the mutual benefit of the state and the Caribbean nation. The U.S. has had no diplomatic relations with Cuba since 1963, but relations have eased in recent years. (Photo: Derek Miller, World Trade Center Utah)
Vintage vehicles are parked in a lot in Havana, Cuba. The World Trade Center Utah and the Salt Lake Chamber conducted a trade mission to Cuba with local business leaders in an effort to develop potential economic relationships for the mutual benefit of the state and the Caribbean nation. The U.S. has had no diplomatic relations with Cuba since 1963, but relations have eased in recent years. (Photo: Derek Miller, World Trade Center Utah)

"They just don't have the purchasing power to buy right now," she said. Cuba's foreign ministry is looking for companies to come in and produce goods that will provide well-paying jobs for the Cuban people, thereby building a stronger economy, she said.

A few American companies have made inroads into Cuba already, she noted, including General Electric, Marriott Hotels and Air B&B. But for others to do so, it will take some investigation and education on local business practices, she said.

"The business system there is very different and (U.S. firms) need to learn how it functions in order to make a decision on whether it makes sense to do business there," Ashdown said. She added that the range of the kinds of businesses the country wants is vast.

"I have seen the foreign investment portfolio and it is enormous," she said. "Almost anything that you could imagine, they're looking for investment."

Among the business leader participating in the trip was Vance Checketts, vice president and general manager of Dell EMC — the world's largest privately held information technology company. The company's Utah operation employs about 1,300 people, he said.

He said creating a relationship with Cuba at some point will serve both countries in many ways, particularly the citizens of Cuba who have a strong desire to connect with the people of America.

"The Cubans themselves were all very warm and welcoming to me," he said. "They said they wished they had better relations with (their) neighbors just across the way."

Meanwhile, Miller noted that the future of Cuba is heavily dependent upon what happens in next year's presidential election in which Cuban citizens will elect a new leader, the first not named Castro since 1959.

"Who the new president is and what his or her policies will be (will) set the tone for for next (several) years," he said.

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