South Florida Business Journal: What will Trump's Cuba policy mean for business in South Florida?

South Florida Business Journal

 

http://www.bizjournals.com/southflorida/news/2017/06/14/what-will-trumps-cuba-policy-mean-for-business-in.html?mc_cid=d39e947dc9&mc_eid=4a5749a5b4

 

The same Florida businesses that made history by reviving long-stalled business relations between the U.S. and Cuba could be heavily impacted by President Trump’s expected tougher stance on transactions and travel between the countries, experts say.

The White House on Tuesday began taking names of reporters planning to cover a possible – but unconfirmed – presidential visit to Miami on Friday, at which Trump reportedly may announce a rollback of an Obama-era order relaxing restrictions on doing business with Cuba.

Political insiders and business experts said they believe Trump is specifically looking to restrict U.S. companies' business dealings with the Cuban military.

While that may sound like a targeted approach, in Cuba much of the country’s economy is controlled by the military through GAESA. GAESA is a holding company run by the military that operates many different enterprises in the country including hotels, banks, restaurants and gasoline stations. By some accounts, GAESA controls more than 60 percent of the country’s economy.

“It’s a great big spider that’s weaving an ever bigger web,” said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council, Inc., a business organization focusing on Cuba without taking political positions.

He said that if the Trump administration were to implement a policy preventing any U.S. company from dealing with the Cuban military, nearly all U.S. business in Cuba could shut down.

“The Cuban military component cannot be under appreciated within Cuba, and there’s almost an inability of any company engaging with Cuba to avoid it [the military],” Kavulich said.

It has also been reported that the Trump administration is looking to re-impose travel restrictions that were relaxed under the Obama administration, which allowed tourism to increase to the island nation.

These restrictions could particularly affect South Florida companies that are in the cruise line, airline and hospitality industries that have already established business ties to Cuba in the past year.

Last May, Doral-based Carnival Corp., became the first American cruise company to take U.S. travelers to Cuba in more than 50 years.

Soon others followed suit. Norwegian Cruise Line made its first stop to Cuba last month and recently announced plans for 62 sailings to the island through 2018. Royal Caribbean has announced plans for 58 sailings between South Florida and Cuba from January 2018 through March 2019.

Meanwhile, JetBlue and Southwest offer regular nonstop air service to Havana from Fort Lauderdale-Hollywood International Airport, and Delta and American Airlines fly to Cuba from Miami International Airport.

Beyond the cruise lines and airlines, Trump’s policy decisions would likely have a direct impact on some Florida corporations that were poised to benefit because of Cuba’s proximity — in logistical, agricultural, financial and technological endeavors.

For instance, Miami-based International Port Corp. was the first U.S. company to open a staffed office in Cuba. It had received its license to ship between Miami and Havana in July 2012, and four years later, used a government-run employment agency in Cuba to finally secure six employees on the island.

Pompano Beach-based Stonegate Bank(NASDAQ: SGBK) issued MasterCardcredit cards for use in Cuba last year, and was the first bank to launch a debit card for use by U.S. travelers in Cuba. A spokesman for the bank said limitations on its Cuba business would have a "small economic impact" for the bank.

Some trade organizations on Cuban-American relations said that Trump’s expected policy changes could have negative economic impacts on South Florida.

Engage Cuba, a coalition of private companies working to end the U.S. embargo against Cuba, estimated that an anticipated reversal of loosened Cuba policies would cost the U.S. $6.6 billion and affect 12,295 jobs in the next few years.

Madeleine Russak, a spokeswoman for Engage Cuba, said South Florida would take the brunt of the economic blow.

"South Florida businesses would be impacted by this decision," said Russak, who does not believe Trump's decision later this week will be favorable to U.S.-Cuba relations.

Whatever Trump’s policy on Cuba, business leaders in South Florida will be paying attention.

“We are all watching with great interest what the details of the new policy would be and how the new administration crafts its new approach to Cuba,” said Pedro Freyre, who is the chair of the Akerman law firm's International Practice and a nationally recognized authority on the U.S. embargo on Cuba.