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FIDEL CASTRO STEPS DOWN: TRADE PROSPECTS; U.S. POLICY

U.S. businesses are eager to jump in

For many, the question is when, not if, trade barriers against Cuba will be lifted, a veteran observer says.

February 20, 2008|Marla Dickerson | Times Staff Writer

MEXICO CITY — With Fidel Castro stepping aside, California vegetable growers, Alabama chicken producers and Kansas wheat farmers -- not to mention scores of other nonagricultural businesses -- see new opportunity to push for an expansion of U.S.-Cuba trade.

America has quietly become the largest foreign supplier of food products to the communist nation, thanks to a loosening of the long-standing U.S. trade embargo against the island nation in 2000. U.S. farmers sold an estimated $437 million worth of agricultural products to Cuba last year, according to the U.S.-Cuba Trade and Economic Council. The Cuban government puts the figure even higher, at more than $600 million.

Though the U.S. has limited its trade to mostly agricultural items, economic rivals such as China have been much more aggressive -- cutting deals with Cuba to develop its oil reserves and other natural resources. With a population of more than 11 million just 90 miles off the U.S. coast, Cuba is a largely untapped market for American goods and services.

"We're leaving billions of dollars on the table," said Kirby Jones, president of Alamar Associates, a Maryland-based consulting firm that advises companies interested in doing business in Cuba. "By any measure, [U.S. policy] has been a failure."

U.S. officials said Tuesday that there were no immediate plans for further easing of the 46-year-old trade embargo. Experts said American policymakers would proceed cautiously given that Castro is still alive, and given that Florida, with its powerful anti-Castro lobby of Cuban Americans, may play a decisive role in the U.S. presidential election.

Still, some veteran observers said that Castro's departure marks another small but inevitable step toward closer trade ties with Cuba, particularly at a time when globalization is forcing the U.S. to fight for market share in every corner of the globe.

"Most [American] businesspeople are thinking in terms of 'when' instead of 'if' " the embargo is lifted, said Mario Sacasa, senior vice president for international programs with the Beacon Council, a Miami-based economic development organization. "Their question is always: 'Why does the U.S. trade with other non-democratic governments but not with Cuba?' "

For nearly half a century, the trade embargo has been an unassailable feature of U.S. foreign policy, strongly supported by South Florida's conservative Cuban American community. Thousands of people lost their homes, businesses and other private property to Castro's communist regime, a bitter memory that has shaped U.S. policy ever since.

But another powerful U.S. lobby -- farmers -- has managed to crack that blockade ever so slightly.

Under pressure from agriculture groups, Congress in late 2000 approved sales of commodities and food products to the island, as long as Cuba paid upfront in cash and the transactions weren't handled by U.S. banks.

Despite those tricky terms, trade took off almost immediately. By 2003, the United States had surpassed the European Union as Cuba's largest foreign supplier of agricultural products, according to the U.S. International Trade Commission.

Major exports include corn, chicken, wheat, soybeans and rice. A parade of U.S. representative and trade delegations have traveled to Cuba in recent years to try to strike trade deals.

But California, America's largest farm state, sells virtually nothing to Cuba. Exports in 2006 totaled a paltry $735,000, mostly in tomatoes, almonds and table grapes, according to the latest figures available from the state.

Last month California sent a large agricultural delegation to Cuba in the hopes of cultivating stronger trade ties with the Caribbean nation. Golden State growers are looking for opportunities wherever they present themselves, said Ken Gilliland, director of international trade for the Western Growers Assn.

He said critics' contention that California farmers would be propping up a communist regime by selling fruit and vegetables to Cuba just doesn't ring true with the state's producers.

"We're not talking about some sensitive technology or computers or arms or anything like that. We're talking about food," Gilliland said. "Practically the whole world is already trading with Cuba." U.S. policy "just kind of puts us growers and producers at a disadvantage."

Countries such as China and Canada are exploring for petroleum in Cuban waters and helping the country develop its nickel reserves. Spanish companies have invested heavily in Cuba's tourism sector, and Brazil is looking to build roads and other infrastructure. India wants to cooperate with Cuba in science and high technology.

Some U.S. firms complain that the Cuban government has pressed them to lobby their legislators for an end to the American trade embargo in exchange for contracts -- a price some have found too steep, according to John Kavulich, a senior policy advisor with the U.S.-Cuba Trade and Economic Council.

"The problem is when the Cubans start putting conditions" on the contracts, said Kavulich, who declined to name companies that have been pressured in such a way.

Kavulich said that so far, U.S. businesspeople have shown little excitement about the changing of the guard in Cuba. "They know that nothing has changed," he said.

Still, consultant Jones said that the real shift that American businesses are waiting for will come out of Washington, not Havana, with the U.S. elections in November.

He said the departure of Castro, an impossibly polarizing figure, combined with new leadership in the White House could lead initially to small changes such as liberalizing U.S. travel restrictions to Cuba -- and perhaps bigger ones down the road.

"It's a recipe for rethinking and change," he said.

--

marla.dickerson@latimes.com

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