Business

In Cuba Thaw, Associations See Economic Opportunity

President Barack Obama's move to loosen the five-decade-old embargo that's defined the relationship between the U.S. and Cuba received mixed reviews last week. Many industry groups see potential created by the decision—but others see risks.

It’s not clear whether Congress will allow President Barack Obama’s move to end the 52-year-old trade embargo against the Cuban government, but the fact that he said anything has gotten some associations to think big picture.

“Today, the United States of America is changing its relationship with the people of Cuba,” Obama said last week. “Neither the American nor Cuban people are well served by a rigid policy that’s rooted in events that took place before most of us were born.”

For most people, the “rigid policy” Obama is referring to is an economic embargo that has largely barred travel between the two countries, along with imports and exports. For most of that time, the two countries have had no diplomatic relations, a period that ended last week when Obama talked with Cuban President Raul Castro.

If trade comes back into play between the two countries, industry groups are ready.

Tourism, No; Conferences, Maybe

Looking to take a vacation to Cuba?

Not so fast, says Fund for Reconciliation and Development Executive Director John McAuliff.

While the nonprofit generally favors normalizing relations with the country, McAuliff notes that tourism won’t yet be allowed—but conferences might.

“I think it’s very clear that people can go as long as they are going for non-tourist purposes,” McAuliff told USA Today. “It includes people-to-people [exchange programs]. It includes conferences. It means Americans can organize conferences in Cuba of any kind. An auto dealer association can organize conferences to Cuba.”

One association in the higher-ed space is pitching the idea of conferences in the country.

NAFSA: Association of International Educators Senior Adviser for Public Policy Victor C. Johnson told Inside Higher Ed that “it appears [Obama’s policy change] will remove the remaining restrictions on academic conferences in Cuba; it’s going to make it possible to study not for credit under a general license which was not the case under the regs [Obama] announced in 2011.”

And while the Cruise Lines International Association, like other tourism groups, sees opportunity when it comes to Cuba, the association noted in a statement that it’s not as easy as simply entering a port.

“There are a number of factors for consideration before a cruise line would commit to adding a destination to an itinerary,” the association said. “With Cuba, these include infrastructure and port facilities, and regulatory and policy considerations.”

Agricultural Recovery

Associations like the American Farm Bureau Federation and National Farmers Union have long pushed for normalized relations with Cuba, despite the fact that base agricultural goods like wheat and corn have been among the trade embargo’s few exceptions.

Why? Because of the tight regulations in general, other nearby countries have had more luck with exports in recent years. Cuba stopped buying wheat in 2011, for example, but might start up again if the embargo ends.

“If Cuba resumes purchases of U.S. wheat, we believe our market share there could grow from its current level of zero to around 80-90 percent, as it is in other Caribbean nations,” U.S. Wheat Associates President Alan Tracy said in a statement to The Associated Press.

Lighting Up

With Cuban cigars among the most high-profile of exports to come from the country, enthusiasts are looking forward to trying them out. The International Premium Cigar and Pipe Retail Association, which represents producers worldwide—not just in Cuba—sees the interest as a net positive.

“If and when Cuban cigars are allowed to be imported, I think there will be a spike in retail tobacco sales,” spokesman Kip Talley told the AP. “The curiosity of a new product in the marketplace will drive people out to try those products.” One problem, though: Just 300 million premium cigars are sold yearly, a tiny part of a market that averages 13 billion cigars sold annually.

Banking Not a Sure Thing

It’s not clear if bankers will put their energies toward the Cuban market, an American Bankers Association lawyer suggested to Reuters, noting that the newness of the territory might make it a no-go.

“I know that when restrictions were lifted on Myanmar/Burma, many banks decided that the rules were so complex and the penalties … were so significant that it didn’t make sense to go all out with business to that country,” Rob Rowe, a lawyer with ABA, told the wire service.

In nearby Florida, however, the reaction was more mixed. Florida International Bankers Association CEO David Schwartz told American Banker [subscription] that the market represents “a tremendous opportunity.”

However, Florida Bankers Association President Alex Sanchez expressed concern to the Tampa Bay Business Journal that the Cuban-American community might stigmatize banking companies that choose to cater to the Cuban market.

Cigars are just one potential sector that could benefit from normalized relations with Cuba. (iStock/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

Got an article tip for us? Contact us and let us know!


Comments