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Businesses Push White House for More Cuba Access

Businesses Push White House for More Cuba Access
Industries Are Eager to Recover Lost Ground in the Formerly Off-Limits
Nation
Updated Jan. 14, 2015 5:42 p.m. ET

U.S. businesses are pressing the Obama administration to offer wider
access to Cuba’s markets than it has signaled, fearing they could lag
behind overseas competitors as the nation takes steps toward opening up
its economy.

The administration plans to provide its first set of detailed guidance
in coming days, a month after President Barack Obama surprised the world
by moving to renew diplomatic and economic ties after decades of sanctions.

Some American industries, including agriculture and travel, are eager to
recover lost ground in Cuba and are already pressing the administration
to go further than it did in December to open up trade and investment,
despite determined opposition from some lawmakers.

“If we move slowly as Americans, we’re tying one hand behind our backs,”
said Devry Boughner Vorwerk, vice president for corporate affairs at
agribusiness giant Cargill Inc.

But some former U.S. officials and other experts are encouraging the
administration to move cautiously because of Cuba’s state-run economy,
dismal credit record, poor treatment of investors and the tangled web of
restrictive U.S. government laws and rules, many of which require
congressional action to be removed.

“It’s best to move slowly,” said John Kaulich, senior policy adviser at
the U.S.-Cuba Trade and Economic Council, a nonprofit group that tracks
the Cuban business environment. “Cuba is only going to permit what it
believes it can control.”

Opening up Cuba too quickly to U.S. companies could lead to pitfalls
similar to those encountered after the collapse of the Soviet Union,
some economists say. But U.S. firms don’t want European, Asian or Latin
American companies to gain an advantage if Havana is serious about
shifting its economy away from the state. Commerce across the Straits of
Florida also faces a determined political opposition not seen when rules
were relaxed on Vietnam or other countries.

“It’s going to be a while before any U.S. businesses do any real
business in Cuba,” said Sarah Stephens, executive director at the
Washington-based Center for Democracy in the Americas, which backs
closer ties with Havana.

In coming days, the Treasury Department and Commerce Department are
expected to publish regulations that flesh out Mr. Obama’s December
announcement on removing some of the decades-old embargo. The U.S. also
is considering taking Cuba off its list of state sponsors of terrorism,
a move that would lighten some trade restrictions.

Concrete regulations permitting certain types of businesses may
galvanize some firms to enter the Cuban market, even if they’ve waited
for decades and faced disappointment during temporary thaws before.

“When people say, ‘You gotta move slow,’ you have to take it with a
grain of salt when it comes to Cuba,” said Bill Lane, global
governmental affairs director at Caterpillar Inc., at a packed event
hosted Wednesday by the Washington International Trade Association. The
firm, like many others, sees entry into the Cuban market as a long-term
process.

The coming rules will broaden the groups of Americans that can travel to
Cuba without permission, quadruple the maximum amount of U.S. cash
remittances to Cuban citizens, permit exports of some building
materials, further facilitate the trade of agricultural goods and food,
allow the sale of telecommunications equipment and infrastructure, and
give U.S. banks the green light to approve card transactions in Cuba and
set up correspondent account there, the White House said last month.

The rules also may alleviate the global burden of Cuba-related sanctions
and allow U.S. firms to do business with Cuban citizens in other
countries, among other issues.

Once the rules are published, many firms will seek clarification from
the Obama administration on how it will interpret and enforce them in
practice to assess how much leeway they’ll have for commerce with the
island.

Then companies like Coca-Cola Co. and American Airlines Group Inc., for
instance, will be able to analyze whether it makes sense to sell soft
drinks or operate scheduled flights.While some types of trade won’t
automatically be allowed, firms may have better luck getting explicit
permission to go to Cuba in the current environment in Washington.Others
will immediately start pressing for more access to Cuba. Many business
leaders and trade lawyers say Mr. Obama can do a lot more to open up
trade and investment with Cuba without action from Congress, which
passed the Helms-Burton Act and other legislation enshrining Cuban
sanctions in law.

“Even if you still do require a license, you’re going to have more
resources” in the administration, said Jake Colvin, Cuba expert at the
National Foreign Trade Council, which represents businesses and opposes
unilateral sanctions.

The agribusiness community last week organized the U.S. Agriculture
Coalition for Cuba with two-dozen companies, part of an effort to keep
U.S. market share in Cuba from slipping to Brazil and other countries.
The U.S. has long allowed agricultural trade in Cuba on humanitarian
grounds, but only on a “cash-in-advance” basis.

The new rules are expected to give Cuba’s state importers a “bit of
flexibility” in paying for American food, shrinking their disadvantage
in transportation and financing compared with shippers in other
countries, said Ms. Vorwerk of Cargill, who is chairwoman of the
agricultural coalition. “It will take an act of Congress for us to be
able to take advantage of flexible financing,” she said.

Ms. Vorwerk says she’s optimistic Congress could act to lift Cuba
restrictions as early as this year, but most experts don’t see Congress
touching the issue soon.

Sen. Robert Menendez (D., N.J.) said the coming regulatory changes are
“clearly intended to circumvent the intent and spirit of U.S. law and
the U.S. Congress.”

“It’s a fallacy that Cuba will change just because the American
president believes that if he extends his hand in peace that the Castro
brothers suddenly will unclench their fists,” Mr. Menendez, the top
Democrat on the Senate Foreign Relations Committee, said in the Senate
on Tuesday.

Another problem: The Cuban government faces U.S.-recognized claims for
seized property that is now worth $7 billion with accrued interest.

One test will be whether U.S. banks embrace card use in Cuba and
establish correspondent accounts, which would facilitate direct payments
without having to rely on third countries.

“If there are banks opening up correspondent accounts, that will
definitely make trade easier,” said Serena Moe, a former sanctions
official at the Treasury Department who is now at the law firm Wiley,
Fein & Fielding.

But even a green light for the U.S. government may not be enough, since
some banks have paid out billions of dollars tied to Cuba sanctions
violations. The existing web of regulations is so wide that many firms
will be wary of stepping up soon.

“U.S. banks don’t want to have anything to do with Cuba,” said Robert
Muse, a Washington lawyer who advises companies doing business in Cuba
on U.S. law.

Write to William Mauldin at william.mauldin@wsj.com

Source: Businesses Push White House for More Cuba Access – WSJ –
http://www.wsj.com/articles/businesses-push-white-house-for-more-cuba-access-1421270290

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