U.S., Cuba Push Forward on Ties

U.S News

By: Sabrina Rodriguez

Commerce Secretary Penny Pritzker on Wednesday urged Cuban officials to ease restrictive economic policies to spur the growth of U.S. companies investing in the island, while Cuba's top trade official responded that the real obstacle to expanding business opportunities is the U.S. embargo against the country.

Pritzker and Rodrigo Malmierca, the Cuban minister of foreign trade and investment, are meeting this week in Washington along with delegations from both countries to discuss ways to implement regulatory changes and deal with challenges U.S. companies face in doing business in Cuba. During opening remarks for what's being called the second U.S.-Cuba Regulatory Dialogue, Pritzker emphasized that U.S. efforts will have a much greater impact on Cubans if the country's communist government matches them.

"Without specific changes on your side that allow the private sector to engage, our changes will not unlock the opportunities for the Cuban people that both of us hope to see," Pritzker said.

President Barack Obama announced the restoration of diplomatic relations with Cuba in December 2014, and this week's talks are the latest effort by the Obama administration to push forward with the loosening of business and investment restrictions in Cuba. Although most trade with Cuba remains banned under the more than 50-year-old economic embargo – which can only be formally lifted by Congress – Obama has used executive authority to promote building ties between the countries.

Last month, for example, the Treasury and Commerce departments announced regulations that make it easier for U.S. companies to finance exports to the country and work on infrastructure projects there. And on Tuesday, Transportation Secretary Anthony Foxx and Cuban Transportation Minister Adel Yzquierdo Rodriguez met in Havana to sign an accord allowing for commercial flights between the two countries.

Malmierca this week has called on Obama to allow the dollar to be used in transactions with Cuba and to lift the U.S. ban on importing Cuban-made products like rum and cigars.

"These [previous] measures have been positive and are in the right direction, but still they are not sufficient in terms of the lifting of the main obstacle that we still confront that is the blockade," he said in Spanish on Wednesday.

However, Malmierca also acknowledged the difficulty of eliminating that obstacle, which is unlikely under a Republican-controlled Congress.

"We are not naive," he said. "We know that lifting the embargo and any measures have a large political impact."

U.S. companies are eager to reach the untapped market on the island, Pritzker said. In 2015, she said, the Commerce Department issued 490 authorizations worth $4.3 billion to do business in Cuba. In 2016, the department had already issued 28 authorizations worth $300 million. Commerce and Treasury approval is needed to do business on the island.

"The administration is very carefully reading the embargo in the most narrow way possible to encourage the most possible trade," said Augusto Maxwell, head of law firm Akerman LLP's Cuba practice.

President Barack Obama speaks while El Salvador's President Elias Antonio Saca, Venezuela's President Hugo Chavez, Dominica's Prime Minister Roosevelt Skerrit and Canada's Prime Minister Stephen Harper listen during the opening ceremony of the 5th Summit of the Americas in Port of Spain, Trinidad, on April 17, 2009.

Maxwell has advised multiple companies on how to deal with Cuban policy. He said Cuba has to do a better job at simplifying and communicating its rules, but that the regulations of both the U.S. and Cuba are in flux now.

"You can't undo 50 years of actively avoiding trade to within a year actively promoting it," Maxwell said. "This isn't a stable, mature legal environment yet, but that's exactly where the opportunity is."

This week's meetings open a second round of negotiations on how the two countries will deal with financial claims against each other. Around 6,000 American companies, including Coca-Cola and Colgate-Palmolive, have filed claims for property reportedly worth a total of $1.9 billion when seized by the communist government after the country's 1959 revolution. Cuba is also trying to recover financial damages caused by the embargo.

"Some people are saying Cuba needs to pay this amount before anything can move forward, but we have an embargo that impedes them from economic opportunity," said James Williams, president of Engage Cuba, a Washington-based group that promotes trade with Cuba. "We have to open the opportunity for Cuba to be able to resolve this, and that's where I see things going."