U.S. Opens up Cuba to Export Financing

CFO

By: Matthew Heller

In the latest round of measures to open doors to trade between the U.S. and Canada, the Obama administration has lifted restrictions on American financing of exports to the island nation.

The revised rules, which took effect on Wednesday, allow U.S. banks to provide direct financing for the export of any product other than agricultural commodities, which are still walled off under the trade embargo with Cuba.

Before the change, American products sent to Cuba had to be paid for in advance in cash or routed through a third country, a costly and burdensome process. Cuban officials told Commerce Secretary Penny Pritzker in October that if they needed to buy tractors from a foreign supplier, they would rather purchase them on credit from Brazil, for instance, than pay cash to a U.S. company.

“We recognize that in allowing some exports that primarily benefit the Cuban people, there may also be some ancillary benefits to the government,” a senior administration official told the New York Times. “But we’re really focused on those sorts of things that benefit the everyday Cuban.”

Although most U.S. trade with Cuba remains banned under the embargo, President Barack Obama has been using executive authority to allow commerce that is not specifically banned by Congress.

Other changes announced Tuesday will make it easier for U.S. companies to film movies and do business with the Cuban government on public infrastructure projects. As Reuters reports, “Cuba has a host of infrastructure needs following decades of U.S. sanctions and the fall of the Soviet Union, its longtime former benefactor.”

“They are basically saying we are opening the door to allow for approval if you want to sell to a state-owned enterprise,” said James Williams, president of Engage Cuba, a Washington-based group promoting trade with Cuba.

A general policy of denying licenses will apply to exports for use by state-owned entities that primarily generate revenues for the Cuban government and for use by the Cuban military, police, intelligence and security services.