$40 million Paid to Cuban individuals from sharing their home, since April 2015
33 nights The average number of nights Cuban hosts share their space per year
$164 The average amount paid per booking to a Cuban host
43 years old The average age of Cuban hosts
$2,700 The average annual payout for a Cuban host
58% Of Cuban Airbnb hosts are women
A Cuban-American Republican Congressman Is Cuba’s New US$8 Billion Best Friend
Cuba Pays Nothing & U.S. Pays Everything
President Trump Can’t Negotiate More Than US$.02 Cents On The Dollar? Really?
An Illegal Export Tax
Fifth Amendment Issues
Should Riceland Foods Pay Starwood Hotels
Should Cargill Pay Texaco
Should Grove Enterprises Pay InterContinental Hotels
Will Cuba Importers Have Access To US Government Financing Programs
Why are two Members of Congress from the Republican Party, one from Arkansas and the other from Florida, who present themselves as fiscally and constitutionally conservative- believing in responsibility for actions, constructing an alliance to provide a bailout to the government of the Republic of Cuba at the expense of United States-based companies?
For one, betrayal of the concept of fiscal responsibility. For the other, betrayal of a multi-generational family-connected and colleague-connected positions requiring that the government of the Republic of Cuba be held accountable.
For those who complained, and legitimately so, that the Obama Administration provided much and received little during its two-plus years (December 2014-January 2017) of initiatives, and was, perhaps, the last lifeguard to the government of the Republic of Cuba, the Obama Administration did not provide an US$8 billion write-off and then send a collective invoice to the 322+ million residents of the United States. That’s what two members of the United States Congress have proposed.
By withdrawing the requirement for the government of the Republic of Cuba compensate certified claimants, the United States Congress is invalidating the validity of the certified claims. The government of the Republic of Cuba will respond that if the United States isn’t asking it to make payment, they, the certified claims, must have never been valid.
Legislators often believe themselves to be physicians and legislation is their prescription to problems. The proposed legislation is a prescription that should remain unfilled. The legislation solves nothing; at minimum it postpones a resolution, at maximum it establishes a multilateral terrible precedent.
Examples Of Potential Payment Transfers
Let’s examine a series of transactions and determine the fairness quotient. In each of the following transactions, US$1 million represents 2% of the value of the product exported to Republic of Cuba government-operated Alimport. The 2% export tax is the mechanism proposed legislation uses to repay certified claimants. Food product and agricultural commodities are authorized on a “cash-in-advance” basis by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.
Will the owners, shareholders and management of these exporters be comfortable with transferring revenues- potentially to a competitor? Will there be legal action? Fifth Amendment claims?
Stuttgart, Arkansas-based Riceland Foods sells US$50 million in rice to Alimport and pays US$1 million indirectly to Stamford, Connecticut-based Starwood Hotels & Resorts International (a subsidiary of Bethesda, Maryland-based Marriott International) which has a claim valued at approximately US$51 million. The company manages the Four Points Sheraton Havana.
Minnetonka, Minnesota-based Cargill sells US$50 million in wheat to Alimport and pays US$1 million indirectly to White Plains, New York-based Texaco (a subsidiary of San Ramon, California-based Chevron Corporation) which has a claim valued at approximately US$28 million.
Wellesley, Massachusetts-based Grove Enterprises sells US$50 million in poultry to Alimport and pays US$1 million indirectly to Denham, United Kingdom-based InterContinental Hotels Group PLC which has a claim valued at approximately US$4.6 million.
Chicago, Illinois-based ADM sells US$50 million in corn to Alimport and pays US$1 million indirectly to Cincinnati, Ohio-based Procter & Gamble Co.
Salisbury, Maryland-based Perdue Agribusiness sells US$50 million in soybeans to Alimport and pays US$1 million indirectly to Atlanta, Georgia-based The Coca-Cola Company.
Chattanooga, Tennessee-based Koch Foods of Chattanooga sells US$50 million in poultry to Alimport and pays US$1 million indirectly to Boston, Massachusetts-based General Electric. The company will soon announce commercial activity in the Republic of Cuba.
Atlanta, Georgia-based AJC International sells US$50 million in poultry to Alimport and pays US$1 million indirectly to Irving, Texas-based Exxon Mobil Corporation.
Bedford, Virginia-based Sellari Enterprises sells US$50 million in poultry to Alimport and pays US$1 million indirectly to Phoenix, Arizona-based Freeport McMoRan.
The result of these eight (8) transactions from a total export value of US$400 million is a payment of US$8 million to be divided among the 5,913 claims certified by the United States Foreign Claims Settlement Commission (USFCSC) valued without interest at US$1,902,202,284.95 and with interest at approximately US$8 billion. Of the 5,913 claims certified by the USFCSC, thirty (30) companies account for approximately 57% of the value without interest.
The US$7 million represents .037% of the original value of the certified claims and .09% of the estimated current value of the certified claims.
For reference, the following are the U.S. Dollar export values for TSREEA-related exports since the first deliveries in December 2001; the 2% export tax would represent US$106,932,095.30 from all TSREEA-related exports:
Reporting Year
U.S. Dollar Value Of TSREEA-Authorized Exports To Cuba
Export Market Ranking
2017
US$57,313,560.00
55th (of 221)
2016
US$232,064,645.00
55th (of 232)
2015
US$170,551,329.00
60th (of 230)
2014
US$291,258,881.00
49th (of 223)
2013
US$348,747,293.00
46th (of 224)
2012
US$457,318,357.00
43rd (of 229)
2011
US$358,457,389.00
50th (of 232)
2010
US$366,467,782.00
45th (of 228)
2009
US$528,482,955.00
36th (of 232)
2008
US$710,086,323.00
29th (of 228)
2007
US$437,564,824.00
37th (of 230)
2006
US$340,433,442.00
34th (of 227)
2005
US$350,218,040.00
30th (of 228)
2004
US$391,990,382.00
25th (of 228)
2003
US$256,901,471.00
35th (of 219)
2002
US$138,634,784.00
50th (of 226)
2001
US$4,318,906.00 (December- 1st sales under TSREEA)
144th (of 226)
Total Sales US$5,346,604,765.00
These two members of the United States Congress are establishing a treacherous precedent for resolving issues of expropriation not only with the Republic of Cuba, but with other countries which may take similar actions… The new rule will be take what you want, and United States citizens will make restitution.
Representative Rick Crawford (R- 1st District, Arkansas) believes Representative Carlos Curbelo (R- 26th District, Florida) suggested linkage of repayment for certified claimants to permitting payment terms (currently “cash-in-advance” by statute) for food products and agricultural commodity exports from the United States to the Republic of Cuba as a means of assisting, of resolving the issue of the certified claims. Representative Crawford seems jubilant.
Representative Curbelo created linkage to impede rather than encourage commerce with the government of the Republic of Cuba as it remains (as he expects it will through the Trump Administration) in the form that it does- with members of the Castro family and military officers substantively participating in the direction and leadership of the country.
A goal is to retain statutory control of bilateral issues; and, specifically, retain control by the United States Congress for changing the bilateral relationship with the Republic of Cuba rather than risk the uncertainty of decisions by the Executive Branch.
Ask the question: Why would a Cuban-American member of the United States Congress support an effort to absolve the government of the Republic of Cuba of its financial obligations when for years there was a position that “stolen property” should be returned or adequate compensation should be provided to the owner?
Perhaps, because unknown is whether the funds that would be maintained at the United States Department of the Treasury on behalf of the certified claimants might be available to individuals who have unrelated civil judgements against the government of the Republic of Cuba.
The 5,913 certified claimants have endured previous occupants (Democrat and Republican) of The White House redirecting funds reserved for repayment of the certified claims to satisfy civil judgements unrelated to the certified claims; and the invasion of those funds was supported by those with whom Representative Crawford is negotiating his legislation.
If the legislation is presented to the commercially value-focused and export-advocating Trump Administration including the Secretary of Commerce and Secretary of the Treasury, along with members of the Ways & Means Committee of the United States House of Representatives as a proposal with a potential ROI (Return On Investment) of 47 years, 133 years, 200 years, 400 years, 563 years and 1,723 years; and, this ROI calculation does not consider the impact of continuing the interest on the principal value of the certified claims, what is the logical business-school-shapedresponse? And, then add that there will be a 2% export tax.
For the legislation to have resulted in repayment to the certified claimants in 2017, the legislation would have needed to have been law during these notable dates (from recent to distant): the first Earth Day, the first roller coaster at Coney Island, the invention of the bicycle, Jamestown settlers in residence, the fall of Constantinople, and the tenure of Galerius as Emperor of Rome.
The legislation only serves Members of Congress who created it, Members of Congress who support it, and those lobbyists/activists who encourage it; the harmed are (and remain) the 5,913 companies and individuals who have certified claims against the government of the Republic of Cuba.
This legislation is about preserving opportunities for political contributions, advocate/lobbyist fees and media coverage. There seems to be an epidemic of courage of ignorance sweeping through certain offices in the nation’s capital….
The legislation is like a person being sick and doing everything possible to prolong the recovery. It’s stealing from one to make payment to another.
From a philosophical perspective, United States-based companies believe that they, not the United States government, should determine the credit worthiness of a customer. If management makes a mistake; that’s on management. The generally-accepted codicil to that position is when financing is provided to a United States-based company by a third-party financial institution who would have a fiduciary responsibility to access the ability of a customer’s customer to repay a debt; and if repayment of the obligation is insured (provided by) in any manner by an entity affiliated with the United States government. Representative Crawford’s legislation does envision United States-based companies accessing United States government financing/payment programs.
What should be done rather than legislation? Request that the Trump Administration engage in direct, consistent, high-level, resolution-date-imposed, negotiations to resolve the issue of the certified claims. The Trump Administration believes that it, through those who serve within it, specifically those with experience in the private sector, are natural negotiators. Unleash them.
Constitutionality
There are practitioners within the legal community who present that Representative Crawford's legislation is per se unconstitutional. See United States v. Int’l Bus. Machs. Corp., 517 U.S. 843, 846-48 (1996) “[t]he Export Clause states simply and directly: ‘No Tax or Duty shall be laid on Articles exported from any State.’ U.S. Const., Art. I, § 9, cl. 5. There have been occasions to interpret the language of the Export Clause, but cases have broadly exempted from federal taxation not only export goods, but also services and activities closely related to the export process . . . the Export Clause strictly prohibits any tax or duty, discriminatory or not, that falls on exports during the course of exportation.”
Mistaken Logic
Representative Crawford was quoted by the Arkansas Democrat-Gazette on 3 June 2017 offering "To my knowledge there's never been any attempt to ever address this problem before." That statement is false.
1) The Libertad Act of 1996 references the importance of and includes requirements for resolving the certified claims. 2) The Obama Administration placed a “high priority” upon seeking a resolution to the certified claims, although the effort was comical: two meetings in two years where a second meeting was not scheduled after the first meeting and a third meeting was not scheduled after the second meeting. 3) Representatives of United States companies with certified claims have visited the Republic of Cuba and met with representatives of the government of the Republic of Cuba; the Libertad Act provides a mechanism for private settlements- one of which has been in the public domain relating to telecommunications services. 4) There has been consideration of the value in obtaining the services of a mediator: http://www.cubatrade.org/blog/2016/12/1/zigs56x0gme3a9rqg7aecx9vf2gqgk?rq=feinberg
There is another reason “there's never been any attempt to ever address this problem before." The logic at the foundation of the attempt is misguided- it focuses upon “let’s do anything” as the basis for a solution rather than analyzing the rationality and practicality for delivering upon the premise.
There is commentary from an advocate that the legislation will “make it easier for Americans to sell food to private Cuban citizens…,” The Obama Administration authorized United States-based companies to export products and services directly to registered independent businesses (entities) in the Republic of Cuba; the government of the Republic of Cuba has not authorized that initiative despite efforts by officials of the Obama Administration, Members of Congress and from representatives of United States companies.
The lack of selling “food to private Cuban citizens” is not solely due to the “cash in advance” requirements of the TSREEA, it is a result of prohibitions by the government of the Republic of Cuba- which also extend to other products that the Obama Administration authorized for export (with payment terms) to registered independent businesses (entities) in the Republic of Cuba.
The published text of H.R. 525 states “there is no opportunity for United States agricultural businesses to trade directly with the Cuban people and there is no Cuban market; United States businesses have only one venue to trade with Cuba and that is through ALIMPORT, the state-owned and state-controlled entity.” That statement is correct because the government of the Republic of Cuba has refused to authorize United States-based companies to export directly to individuals and entities other than Alimport. The prohibition is not a result of United States statute or regulation; it’s a result of the policy of the government of the Republic of Cuba.
Historically, the United States business community privately favored the “cash-in-advance” provision of the TSREEA due to routine defaults (and/or rescheduling) on credit purchases by the government of the Republic of Cuba.
However, the United States business community does not support relieving the government of the Republic of Cuba of its obligation to the certified claimants. The legislation supported by Representatives Crawford and Curbelo creates an additional impediment to resolving an existing problem.
The legislation as currently written seems to provide an opportunity for the Republic of Cuba to access United States taxpayer-funded and taxpayer-guaranteed financing programs. The government of the Republic of Cuba has always viewed access to government export programs as the “holy grail” of their advocacy efforts. Why have Members of Congress accepted what has traditionally been anathema to them? Why has this enormously significant change in policy not been publicized by Representatives Crawford and Curbelo? Link to United States government programs:http://www.cubatrade.org/blog/2016/3/20/8iiwr41blj6mzfk8w921iadkexhmze?rq=government%20programs
Is this a realistic trajectory?
For 2017, the Republic of Cuba expects to import approximately US$1.8 billion to US$2 billion in food products and agricultural commodities compared to approximately US$1.8 billion in 2016 and 2015, US$2.5 billion in 2014; compared to approximately US$2.5 billion in 2008 and US$1.5 billion in 2007. The funds spent change with available foreign exchange and due to changes in commodity prices, with lower commodity prices still resulting in adequate quantities, but requiring lower expenditures.
There are those who view the Republic of Cuba through a prism which shows a country that they believe to exist, but does not.
How can a credible argument be made that the United States will supplant virtually all existing importing sources within one year? But, the logic gets even more spectacular….
According to the Arkansas Democrat-Gazette on 3 June 2017, “The original version of HR525, the Cuba Agricultural Exports Act, didn't include the fee when it was filed in January. In an interview Friday, Crawford said he plans to file an amended version of his legislation next week to reflect the change. The lawmaker estimates the 2-percent fee would generate roughly $30 million per year initially, rising to perhaps $60 million within five to seven years.”
For US$30 million to equal 2% of the value for all food product and agricultural commodity exports from the United States to the Republic of Cuba, the total value of those exports would need to be US$1.5 billion, which Representative Crawford was reported to believe would be the “within five to seven years.”
For US$60 million to equal 2% of the value for all food product and agricultural commodity exports from the United States to the Republic of Cuba, the total value of those exports would need to be US$3 billion, which Representative Crawford was reported to believe would be the “within five to seven years.”
How does any reputable economist evaluate the commercial, economic and political structures of the Republic of Cuba, as they exist today, and suggest that the country has a trajectory to increase imports of food products and agricultural commodities at an annual rate of 10% or more... and these would be imports only from the United States. What about the Republic of Cuba’s current sources of imports? Particularly, Vietnam which provides two years to make payment for rice? And, what about other countries where the Republic of Cuba, and the exporters, access government guarantees and access programs with provide for extended payment terms generally far exceeding commercial payment terms?
Has the government of the Republic of Cuba provided any public statement(s) as to whether they are prepared to increase purchases of food products and agricultural commodities from the United States if they are permitted to seek and then accept payment terms?
Has the government of the Republic of Cuba provided any public statement(s) as to what payment terms they would require as a condition to increase the value of purchases? 30-days, 60-days, 90-days, 120-days, 180-days, 360-days, 720-days?
Today, as has been the constant during the last five-to-ten years, extended payment terms for almost every product or service that is imported by Republic of Cuba government-operated companies, with the standard payment terms ranging from 180-days to 360-days.
Individuals and companies who work with and represent non-United States-based companies which export products and services to the Republic of Cuba posit that if United States-based companies provided 30-day repayment terms for food product and agricultural commodity exports, the result may be a 5% to 10% increase in the total value of exports to the Republic of Cuba; with primary beneficiaries exporters/distributors located in the State of Florida who can swiftly process and deliver food products (primarily for use in the hospitality sector) when inventories are unexpectedly depleted and replenishment from sources in Canada, Panama, and on the European Continent would result in further delays- even though the payment terms might be more advantageous.
If United States companies (with or without the support of United States financial institutions) were to provide payment terms of at minimum 180-days, but nearing or 360-days, then, perhaps, primarily agricultural commodity exports could be US$1 billion.
Until all that is considered by the government of the Republic of Cuba to be defined as “the embargo” is removed, likely market share for United States-based companies will be limited and the interest of United States-based companies will continue to be used as bait to entice interests in other countries.
However, the limitation will remain a limitation until the Republic of Cuba embraces fundamental commercial, economic and political changes which will increase public sector and private sector efficiencies and productiveness.
Thus far, however, none of the United States companies who have exported food products and agricultural commodities to the Republic of Cuba have publicly reported what payment terms they would offer if permitted to offer payment terms. And, United States financial institutions have not reported that they would provide financing for exports to the Republic of Cuba. Stating those positions would be helpful.
List Of Largest Certified Claimants:
Cruise Lines Could Deliver 380,000+ Passengers During 245 Sailings To Cuba In 2017/2018/2019
US$502+ Million In Gross Revenues To Companies From Cumulative 2017/2018/2019 Sailings
US$53+ Million Spent In Cuba By Passengers
US$14+ Million In Port Fees To Cuba
And, transporting, housing, and feeding those potential passengers could mean an additional US$110+ Million to United States airlines and US$45+ million to hotels and restaurants located in South Florida. Gross United States airline revenues for 2017, excluding the cruise-related revenues, are projected to be US$173 million for United States-Republic of Cuba routes.
The three (3) largest United States-based cruise lines have announced more than 222 itineraries amongst their brands for the 2017, 2018 and 2019 sailing seasons which include the Republic of Cuba. Additional itineraries are expected to be announced.
Are the CEO’s of the three largest United States-based cruise lines: Mr. Frank J. Del Rio (Miami, Florida-based Norwegian Cruise Lines Holdings Ltd), Mr. Arnold W. Donald (Miami, Florida-based Carnival Corporation & plc) and Mr. Richard D. Fain (Miami, Florida-based Royal Caribbean Cruises Ltd) presenting a dare to the President of the United States or enticing the President’s corporate salivary gland?
In 2016, the three-largest United States-based cruise lines combined operated a fleet of approximately 144 vessels, managed approximately 14 brands, earned approximately US$28.8 billion in gross revenues, and employed approximately 218,000 men and women.
If each of their vessels sail at capacity, approximately 372,000 passengers will visit the Republic of Cuba from 2017 through 2019. The gross revenues to the cruise lines from the 222 Republic of Cuba sailings would be projected to exceed US$450 million from 2017 through 2019.
The 372,000 passengers would be projected to spend approximately US$52 million while in the Republic of Cuba [approximately US$140.00 per person in expenditures and organized/non-organized excursions including cost(s) for tour(s), meals (government-operated and privately-operated), ground transportation (privately-operated classic car tours), sundries and souvenirs (including spirits, coffee, tobacco, artwork and crafts)]. Some passengers could spend considerably more (cigars for example) given the United States duty-free personal exemption of US$800 per person.
Vessel port charges in the Republic of Cuba may exceed US$14 million, ranging up to approximately US$79,000.00 for the largest vessels (684-passenger to 2,052-passenger).
Included in the calculations are Guilford, Connecticut-based Pearl Seas Cruises has eighteen sailings scheduled for 2017/2018 with projected gross revenues to the company of US$35 million, passenger expenditures in the Republic of Cuba of approximately US$529,000.00 and port fees of approximately US$180,000.00. Los Angles, California-based Viking River Cruises has five sailings scheduled for 2017 with projected gross revenues to the company of US$17 million, passenger expenditures in the Republic of Cuba of approximately US$651,000.00 and port fees of approximately US$225,000.00.
Related Links: http://www.cubatrade.org/blog/2017/5/11/51crppkum1ulnb9icv89r9b4y6ewjx
If the rum brand (and production) was not subject to intellectual property claims and not subject to claims which could brought under the Libertad Act (“Helms-Burton”) of 1996, authorizations created by the Obama Administration for the importation of products from the Republic of Cuba could be implemented:
In 2016, the Obama Administration added coffee to the list of eligible imports from the Republic of Cuba. [Separately, charcoal was authorized.] Rum could be added to the list of eligible imports.
To be eligible for importation into the United States, a listed Cuban Assets Control Regulations (31 CFR Part 515) Section 515.582 product must be “produced by independent Cuban entrepreneurs, as demonstrated by documentary evidence.”
From the United States Department of State: “Persons subject to US jurisdiction engaging in import transactions involving goods produced by an independent Cuban entrepreneur pursuant to 515.582 must obtain documentary evidence that demonstrates the entrepreneur's independent status, such as a copy of a license to be self-employed issued by the Cuban government, or in the case of an entity, evidence that demonstrates that the entity is a private entity that is not owned or controlled by the Cuban government.”
Currently, rum production and rum marketing in the Republic of Cuba is controlled by Republic of Cuba government-operated entities; and global distribution for some brands (including Havana Club) is through a joint venture with Paris, France-based Pernod Ricard (2016 revenues approximately US$10 billion).
The government of the Republic of Cuba would create value by authorizing the creation (licensing) of small, independent, micro, artisan distilleries owned and/or managed by self-employed Republic of Cuba nationals. In this way, rum (and/or rum extract) could be exported directly to the United States for sale-at-retail and for use as flavoring in ice cream. The following brands have had, have, or could have rum raisin ice cream:
365 (owned by Texas-based Whole Foods)
Ben & Jerry's (Vermont-based; owned by Unilever)
Haagen-Dazs (California-based; owned by Minnesota-based General Mills; distributed by Nestle SA)
Breyers (New Jersey-based; owned by Unilever)
Starbucks (owned by Washington-based Starbucks Corporation)
Dreyers (California-based; owned by Nestle SA)
Straus (owned by California-based Straus Family Creamery)
Blue Bell (owned by Texas-based Blue Bell Creameries)
Edy's (California-based; owned by Nestle SA)
Vevey, Switzerland-based Nestle SA (2016 revenues approximately US$94 billion) owns California-based Dreyer’s Grand Ice Cream Holdings, Inc., and Oakland, California-based Edy’s Grand Ice Cream; and distributes Oakland, California-based Haagen-Dazs.
London, United Kingdom-based Unilver Plc (2016 revenues approximately US$65 billion) owns South Burlington, Vermont-based Ben & Jerry’s and Englewood Cliffs, New Jersey-based Breyers.
Nestle SA And Cuba
Nestle SA is positioning itself to be an importer to the United States of confections, coffee, ice cream, beverages, and other consumables sourced in the Republic of Cuba.
Nestle SA has a multi-decade interest in the Republic of Cuba. The company has a representative office in the city of Havana. Since the 1990's, Nestle S.A. has been involved with Republic of Cuba government-operated companies to develop the confection industry (a twenty-year joint venture producing ice cream); has investments in bottled water production (Ciego Montero) and beverage production; and imports products for sale at retail stores. In 2014, Nestle Nespresso released “Limited Edition Cubanía; Inspired by the passion and intensity of Cuban coffee ritual” that did not contain coffee from the Republic of Cuba. The 2016 Cuban Nespresso Grand Cru Cafecito de Cuba capsule was to be available outside of the United States, but with the 22 April 2016 changes in United States regulations, an opportunity was created to add the United States to the global distribution channels.
In 2017, Nestle SA reported the company would invest approximately US$55 million to create a joint venture (of which it will own 51%) potentially employing 300 Republic of Cuba nationals to source ingredients for and to produce coffee, biscuits and cooking products. Completion date is by 2019. Other Nestle SA production facilities are being considered for expansion.
In 2016, New York, New York-based Nestle Nespresso USA, Inc., a subsidiary of Nestle SA, purchased a container of approximately eighteen (18) tons of green coffee beans through London, United Kingdom-based Cubana Coffee & Roastery (www.cubana.co.uk), the established bar-restaurant and coffee roasting group, and London, United Kingdom-based The Cuba Mountain Coffee Company Ltd (www.almacuba.com).
The green coffee beans were sourced from the 2015-2016 harvest in the Republic of Cuba; the value was approximately US$5,000.00 per metric ton, or approximately US$90,000.00. The beans were roasted at Nestle Nespresso facilities in Avenches and nearby Orbe, Switzerland. With approximately 20% lost during the roasting process, the result was approximately 180,000 capsules per ton- 3,240,000 limited edition Cafecito de Cuba capsules (approximately 5 to 6 grams each or .17 to .21 ounces). The price for a limited-edition capsule was approximately US$1.10, so potential total revenue could be approximately US$3,564,000.00. Nestle Nespresso USA, Inc., has obtained additional green coffee beans from the 2016-2017 harvest in the Republic of Cuba and continues to produce capsules for distribution throughout the world, including in the United States.
Unilever Plc And Cuba
In November 2016, Unilver Plc commenced construction on a joint venture (of which it will own 60%) facility valued at US$35 million in the Republic of Cuba to produce soap, detergent, deodorant and toothpaste. Production is scheduled to commence in 2018. Unilever had a joint venture in the Republic of Cuba from the mid-1990's until 2012 when it ended due to operational disagreements. The company continued to export products to the Republic of Cuba.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
May 30, 2017
PRESS BRIEFING BY PRESS SECRETARY SEAN SPICER
James S. Brady Press Briefing Room
2:11 P.M. EDT
And my second question, I did want to mention that before he left to go abroad, the President praised Philippine President Duterte for his action against drug dealers and dealing with them. Various human rights groups have condemned President Duterte, saying that a lot of the executions of drug dealers have been done without trial. Does the President stand by his words of praise for the Philippine President?
MR. SPICER: I think the President recognizes the need to combat drugs, but he also believes in human rights. It's something that he’s worked with several countries -- it's one of the reasons that he’s reviewing the Cuba policy, et cetera. He wants -- human rights is something that’s very strong to him. It's something that he’s discussed in private with several countries.
Statements From The White House About Cuba.... Chronology
http://www.cubatrade.org/blog/2017/3/12/6rhpts5hb63h4xirou3am6ycrexpbk
THE WHITE HOUSE
Office of the Press Secretary
19 March 2017
Readout of the President’s Day
.... He spoke to President Michelle Bachelet of Chile to discuss our bilateral relationship, including our close cooperation on trade and security issues. President Trump expressed concern over the situation in Venezuela, and the leaders agreed on the importance of advancing democratic principles throughout the Western Hemisphere.
EFE
Washington, DC
8 March 2017
Excerpts from interview with Ms. Helen Aguirre Ferre, Special Assistant to the President and Director of Media Affairs at The White House....
"The president has been very clear that they are going to evaluate all the agreements that the prior administration (of Barack Obama) made with Cuba," said Aguirre Ferre, who is of Nicaraguan heritage.
...in Trump's judgment, "Cuba did not offer any concessions, with all that it was given in what has been the normalization and reestablishment of agreements and diplomatic behavior."
Cuba is hosting "fugitives from US justice, it has to turn over those people and also talk about the importance of free elections and free political prisoners," Aguirre Ferre said.
Trump's adviser avoided commenting on whether there has been any contact as yet between the Trump administration and Cuba, saying that that it a question for the State Department.
The White House
Office of the Press Secretary
For Immediate Release
16 February 2017
Remarks by President Trump in Press Conference
East Room
12:55 P.M. EST
THE PRESIDENT: ... We had dinner with Senator [Marco] Rubio [R-Florida] and his wife, who is, by the way, lovely. And we had a really good discussion about Cuba because we have very similar views on Cuba. And Cuba was very good to me in the Florida election as you know, the Cuban people, Americans.
The White House
Office of the Press Secretary
3 February 2017
Press Briefing
12:37 P.M. EST
Mr. Spicer: With that, I’m going to go my first Skype question seat. Jackie Nespral from NBC 6 in South Florida. Jackie.
Question: Good afternoon. On behalf of the viewers of South Florida, thanks so much for this opportunity. You know, a lot of focus on foreign affairs this week, a new sanctions announced today against Iran, and of course Miami, as you know, is home to the largest Cuban-American community in the country. And during the campaign, President Trump talked about his discontent with the warming of U.S.-Cuba relations implemented by President Obama. And in the last days of his administration, he ended the "wet foot, dry foot" policy, leaving thousands of Cubans in limbo.
So my question is twofold. A, has there been any contact between your administration and the Cuban government? And B, are there any plans to change the current policy right now?
Mr. Spicer: Thanks, Jackie. We are in the midst of a full review of all U.S. policies towards Cuba. The President is committed to an agenda of ensuring human rights for all citizens throughout the world. And as we review those policies in Cuba, that will be forefront in their policy discussions, but there is nothing that we have on that front at this point.
The White House
Office of the Press Secretary
Washington, DC
24 January 2017
Press Briefing
36:18 of 45:26
Question: Does the President have any plans to change US policy towards Cuba there are a lot of changes that took place during the last Administration and the Executive Orders as it relates to US-Cuba relations?
Mr. Spicer: I have to follow-up with you we've got nothing that we're ready to announce at this point.
Committee on Foreign Relations
United States Senate
Washington, DC
21 January 2017
Written answers by Mr. Rex Tillerson, nominee to be United States Secretary of State, as published by the Committee on Foreign Relations.
Question: Despite the Obama Administration’s controversial and misguided decision to normalize relations with Cuba and its hope that this could lead to improved governance and human rights, Cuban officials continue to arrest dissidents and violate the rights of citizens, and tourism revenues benefit only government officials and a small minority of the population. How do you plan to approach the United States’ relationship with Cuba? How will you support human rights defenders and democracy activists in Cuba? What bilateral and/or multilateral pressure will you exert to lessen authoritarian rule in Cuba?
Tillerson: If confirmed, I will engage with Cuba but continue to press for reform of its oppressive regime. I will support human rights defenders and democracy activists in Cuba, empower civil society, defend freedom of expression, and promote improved Internet access and I will ask our allies to do the same.
Will you continue to support programs that promote democratic voices and initiatives in Cuba like Radio and TV Marti?
Yes, if I am confirmed.
What steps will you take to pressure the Castro regime to return American political fugitives like New Jersey cop-killer Joanne Chesimard?
If confirmed, I will engage bilaterally and multilaterally to bring these fugitives to justice.
Will you work with the Treasury Department to ensure that no revenue from American businesses goes directly toward supporting the Cuban military and the regime?
Yes, if I am confirmed.
NOTE: On 9 June 2016, The Honorable Paul Ryan (R-WI), Speaker of the United States House of Representatives, issued a statement entitled, "Achieving U.S. Security Through Leadership & Liberty" The second paragraph of the document included this sentence: "A first step should be to ban financial transactions with the Cuban military." http://www.cubatrade.org/blog/2016/6/11/speaker-of-the-house-paul-ryan-wants-to-rescind-starwood-hotel-management-agreement?rq=Paul%20Ryan
What steps will you take to encourage the government of Cuba to release political prisoners, artists, journalists, and other Cubans being detained for politically-motivated reasons?
If confirmed, I will press Cuba to meet its pledge to become more democratic and consider placing conditions on trade or travel policies to motivate the release of political prisoners.
What steps will you take to promote judicial reform in Cuba?
I will work bilaterally and multilaterally to identify training and technical assistance opportunities to assist with judicial reform, if I am confirmed.
On October 12, 2016, PEOTUS Donald Trump stated, “The people of Cuba have struggled too long. Will reverse Obama’s Executive Orders and concessions towards Cuba until freedoms are restored.” Do you stand by PEOTUS Trump’s commitment to reverse the Obama Administration’s Cuba regulations until freedoms are restored on the island?
Yes. There will be a comprehensive review of current policies and executive orders regarding Cuba to determine how best to pressure Cuba to respect human rights and promote democratic changes.
On October 14, 2016, VPEOTUS Mike Pence reiterated this commitment by stating, “When Donald Trump and I take to the White House, we will reverse Barack Obama’s executive orders on Cuba.” Do you stand by VPEOTUS Pence’s commitment to reverse the Obama Administration’s Cuba regulations?
Yes, if I am confirmed.
United States Secretary of State Designate Rex Tillerson
United States Senate Committee on Foreign Relations
Confirmation Hearing Opening Statement
11 January 2017
Excerpts…..
Good morning.
I am honored to have the backing of Senator Cornyn and Senator Cruz from my home state of Texas. I also want to thank Senator Nunn for his commitment to nuclear non-proliferation, and Secretary Gates for his service to eight presidents and his own leadership as President of the Boy Scouts of America.
Chairman Corker, Ranking Member Cardin, and Members of the Committee, it is an honor to appear before you today as President-elect Trump’s nominee for Secretary of State and to seek the approval of this Committee and the full Senate for my confirmation.
But our leadership demands action specifically focused on improving the conditions of people the world over, utilizing both aid and economic sanctions as instruments of foreign policy when appropriate.
And we must adhere to standards of accountability. Our recent engagement with the government of Cuba was not accompanied by any significant concessions on human rights. We have not held them accountable for their conduct. Their leaders received much, while their people received little. That serves neither the interest of Cubans or Americans.
Abraham Lincoln declared that America is “the last best hope of Earth.” Our moral light must not go out if we are to remain an agent of freedom.
When A Politician Negotiates A Business Deal
Unintended (For One Side) Consequences To Find “A Proper Path Forward”
Not A Poison Pill- A Poison Fee
How To Define An “Elegant Solution”
133 Years to 1,723 Years For Repayment
The Hurry To Lose? Repeating The Mistake Of 6,000 Days Ago
A proposal by The Honorable Rick Crawford (R- 1st District, Arkansas) to require by statute a 2% transaction fee for agricultural commodity and food product exports from the United States to the Republic of Cuba under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 in return for statutorily authorizing private-sector payment terms for those exports is not a solution to a problem- it is an affront to the 5,913 companies and individuals who have waited nearing fifty-seven (57) years for an equitable resolution to the expropriation of assets (29 June 1960).
Representative Crawford is not solving a problem; he is making the existing problem worse and creating additional problems. He may believe that his efforts at bipartisan engagement are creating a space for bipartisan dialogue with a goal of closure. He is not. He is solidifying delay and distraction. Rice from Arkansas will not be flooding the Republic of Cuba marketplace because of his efforts.
United States agricultural commodity and food product exports are approximately US$5.3 billion since the first deliveries in December 2001 under provisions of the TSREEA.
If the proposed 2% had been collected since the first TSREEA-related exports to the Republic of Cuba, the total thus far would be approximately US$106 million- which equates to approximately 6% of the initial value of the certified claims and approximately 1% of the current value of the certified claims.
United States citizens, owners of privately-held companies, and shareholders of publicly-held companies should not be required to make (reimburse) payments for actions by the government of the Republic of Cuba.
Why would the Trump Administration, which extols the role of exporters in the United States economy, support creating an additional impediment to the one statutorily-permitted category with the greatest history and greatest potential?
Will imports from the Republic of Cuba, for example currently authorized coffee and charcoal, be subject to financial penalties? Will there be a Nespresso-tax?
The “long-term solution” advocated by grass-roots activists/lobbyists in July 2016 (see below) is not accomplished through the creation of an onerous new statute. This new statute would only serve as a platform for individuals and organizations to seek additional funds to lobby for the repeal of a previous statute. And, that helps companies in what way?
For the privilege of exporting agricultural commodities and food products to the Republic of Cuba, United States companies will be required to earn less for their efforts. This is foolish logic. Through courage of ignorance, the result is a further delegitimization of the bilateral commercial process.
To remind: When Members of Congress and their advocates and their lobbyists had an occupant of the Oval Office from 20 January 2009 to 20 January 2017; and who in 2014 (December), 2015, 2016 and 2017 (January) had a focus upon the Republic of Cuba, and could have, by directive, increased the efficiency (by lessening costs) of transactions by authorizing direct correspondent banking- nothing was done.
United States companies which may not have a certified claim will be making payments to those who have certified claims. This is fair?
Representative Crawford is advocating absolution for the government of the Republic of Cuba of responsibility for its expropriations. He is advocating for a transfer of responsibility from the government of the Republic of Cuba to a new class of creditors- the 325 million population of the United States who without recourse would indirectly reimburse the government of the Republic of Cuba for expropriating the assets of 5,913 companies and individuals. This is right?
There were 8,821 claims of which 5,913 awards certified by the United States Foreign Claims Settlement Commission (USFCSC) were valued at US$1,902,202,284.95. Of these certified claims, thirty (30) United States-based companies hold 56.85% of the total value. The USFCSC permitted interest to be accrued in the amount of 6% per annum; the current value is approximately US$8 billion.
As reported in on 27 May 2017 in The Miami Herald: “Every transaction will have a two percent excise fee that would be collected and administered to certified claimants through the Treasury Department,” he said. “The 2% user fee functions like an excise tax on the total sale, and it is paid by the seller of the agricultural product,” added a staffer from Crawford’s office…. “an end thanks to an “elegant” solution that is part of proposed legislation: a 2 percent user fee on agricultural products sold to the island that would be used to compensate those who have certified claims of properties confiscated by the Cuban government.”
In an eagerness to “accomplish” something, the result may be the creation of a statutory template and judicial precedent impacting United States bilateral and multilateral relationships, as well as, complicate the commercial, economic and political landscape from which to resolve other United States-Republic of Cuba issues. Representative Crawford would be best advised to await 24 February 2018, the inauguration of the next president of the Republic of Cuba, when the bilateral dynamic may well be more… dynamic. Change for the sake of change is not always productive- and can be harmful.
What is unknown- thus far, is if the legislation would define “certified claimants” as those among the 5,913 or those whose claims are not among the 5,913.
The definition is critical to determining the value (and legitimacy) of the legislation- and to whom it has value. The 5,913 certified claimants have endured previous occupants (Democrat and Republican) of The White House negating the value and importance of the certified claims and redirecting funds reserved for repayment of the certified claims to satisfy civil judgments unrelated to the certified claims; and the invasion of those funds was supported by those with whom Representative Crawford is negotiating his legislation. He has been “rolled” in the political context of the term.
How does creating another statutory requirement; impediment to a “normalized” bilateral commercial environment positively impact the existing commercial environment?
What is the mechanism for removing the 2% transaction fee from the statute? Until the value of the “certified claims” have been repaid? Which value- the original US$1.9 billion or the current US$8 billion?
Let’s examine the data:
In 2016, the value of TSREEA-related exports was US$232,064,645.00; and 2% is US$4,641,292.90. If the highest value TSREEA-related export year is used, US$710,086,323.00 in 2008; then 2% is US$14,201,726.46.
At this rate, repayment of the original value of the certified claims, US$1,902,202,284.95, would take approximately 400 years based upon the 2016 value and approximately 133 years based upon the 2008 value.
If the approximate US$8 billion current value of the certified claims is used, the repayment schedule ranges from approximately 563 years (2008) to 1,723 years (2016).
There are credible individuals, organizations and other entities who estimate unfettered TSREEA-related (meaning no restrictions) exports to the Republic of Cuba could be US$2 billion annually (equating to approximately 100% of current and 70% of potential agricultural commodity and food product imports by the Republic of Cuba). Using that valuation, the 2% fee would be US$40 million; and certified claimants could be repaid in approximately 47 years to 200 years depending upon which certified claim total value is used in the calculation.
NOTE: Each of the previous analyses do not account for a continuation of the 6% per annum interest permitted by the FSFCSC.
Those members of the United States Congress with whom Representative Crawford has “negotiated” thus far succeeded in creating the same type of unrelated trade-off as those who negotiated the TSREEA…. a statutory codification of twelve (12) categories of authorized travel to the Republic of Cuba and a specific prohibition on travel related to tourism. Representative Crawford is making the same poorly-thought-out agreement as did his Republican colleagues more than 6,000 days ago.
With agricultural commodity and food product exports a low-profit margin exercise, often with margins in the low single digits, how does adding 2% to the pricing of an export assist with increasing the quantity and value of exports? And, there would be additional transaction costs to the exporter to transfer the funds to the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury; and there would be costs to the OFAC to manage and audit the statutory requirement. Meaning an increased budget and increased cost to the United States taxpayer.
Representative Crawford may be seeking to create a socialist (collective) solution to what was considering by many to be a communist-inspired problem from 1960: He wants those who had nothing to do with the problem to pay for its resolution. Person A steals from Person B and then Person A requires Persons C, D, E, F, etc., to repay Person B; and those persons had nothing to do with the original transgression.
There Are Other Ways
United States companies have identified reasonable options for resolving the 5,913 certified claims, including the retention of an outside specialist:
http://www.cubatrade.org/blog/2016/12/1/zigs56x0gme3a9rqg7aecx9vf2gqgk?rq=feinberg
Background- U.S. Food Product/Agricultural Commodity Exports To Cuba
Since December 2001, more than US$5.3 billion in agricultural commodities and food products have been exported directly from the United States to the Republic of Cuba on a cash-in-advance basis as required by the TSREEA.
No United States company which has exported product(s) to the Republic of Cuba since 2001 has publicly stated what payment terms it would currently provide if authorized by statute. No United States financial institution has publicly stated that it would provide financing for those exports.
The government of the Republic of Cuba prefers to purchase food products and agricultural commodities from government-operated exporters where either the exporter or the government of the Republic of Cuba accesses government export-payment guarantee programs. Requesting payment terms of one-year to three-years is not uncommon.
Government of Vietnam-operated Vinafood (1 & 2) have provided payment terms to Republic of Cuba government-operated Alimport of two (2) years to pay for rice (25% to 30% broken). The Republic of Cuba annually imports approximately 200,000 metric tons to 400,000 metric tons of rice, primarily from Vietnam and People's Republic of China. Republic of Cuba annual domestic requirements are approximately 700,000 metric tons. The Republic of Cuba does grow a small quantity of rice. United States producers can provide this product; however, payment terms, if statutorily permitted, without the use of United States government guarantee programs, would be cash-on-delivery to 30 days; and for credit-worthy customers, generally not exceed sixty (60) days to ninety (90) days according to United States exporters.
12 July 2016 (Blog Post)
"There is real momentum," said The Honorable Mark Sanford (R- South Carolina), a member of the United States House of Representatives, last week. He then had no mention of the events of last week on his www.house.gov page as of 9 July 2016.
“…a proper path forward and we agreed to find a solution that does a number of things,” said The Honorable Rick Crawford (R- Arkansas), a member of the United States House of Representatives, last week. He also shared “a long-term solution,” “thorough examination,” and “deliberative process across each relevant committee of jurisdiction.” Representative Crawford then had no mention of the events of last week on his www.house.gov page as of 9 July 2016.
“… a historic compromise” and “major step forward,” said Washington, DC-based EngageCuba, adding “reached an agreement to find a long-term solution to provide credit for the export of agricultural commodities to Cuba.” And, the organization’s president offered this to those who have opposed his efforts, “their position is no longer tenable.” Is this a winning-votes strategy by a grass-roots organizer or a self-professed effective advocate/consultant/lobbyist?
“…redouble its efforts with this Congress,” said the Washington, DC-based U.S. Agriculture Coalition for Cuba. Would this be the 114th Congress about to recess for the upcoming elections, with few remaining legislative days before formally adjourning in December 2016?
The government of the Republic of Cuba could not have been enthusiastic when their advocates engineered not one, but two, legislative failures within twenty-four (24) hours.
The result all but assures no legislation in the 114th Congress and simultaneously harms the foundations for advocacy in the 115th Congress- during which issues relating to the Republic of Cuba will again not be a priority for the leadership in either the United States House of Representatives or the United States Senate; or probably the next president.
Why are advocates focusing upon legislation when regulation and policy change are more efficient mechanisms by which to expand the commercial, economic and political relationship between the United States the Republic of Cuba during the remaining 192 days of the Obama Administration?
One reason, jobs- their own that is. Did the Members of Congress coordinate their efforts with the self-appointed Republic of Cuba policy advocates? If so, how should responsibility for the failures be apportioned?
Links To Relevant Blog Posts
http://www.cubatrade.org/blog/2016/12/1/zigs56x0gme3a9rqg7aecx9vf2gqgk?rq=certified%20claims
http://www.cubatrade.org/blog/2017/3/23/bs7tttl7jsf0bkyle6b4kitf69whwj?rq=crawford
As Of 27 May 2017, The Three Largest United States Cruise Lines Could In 2017/2018/2019:
Deliver 372,000 Passengers During 222 Sailings To Cuba
US$450 Million In Gross Revenues To The Companies
US$52 Million Spent In Cuba By Passengers
US$14 Million In Port Fees To Cuba
And, transporting, housing, and feeding those potential passengers could mean an additional US$110+ Million to United States airlines and US$45+ million to hotels and restaurants located in South Florida. Gross United States airline revenues for 2017, excluding the cruise-related revenues, are projected to be US$172 million for United States-Republic of Cuba routes.
The three (3) largest United States-based cruise lines have announced more than 222 itineraries amongst their brands for the 2017, 2018 and 2019 sailing seasons which include the Republic of Cuba. Additional itineraries are expected to be announced. And, smaller cruise lines are also operating in the Republic of Cuba marketplace.
Are the three CEO’s: Mr. Frank J. Del Rio (Miami, Florida-based Norwegian Cruise Lines Holdings Ltd), Mr. Arnold W. Donald (Miami, Florida-based Carnival Corporation & plc) and Mr. Richard D. Fain (Miami, Florida-based Royal Caribbean Cruises Ltd) presenting a dare to the President of the United States or enticing the President’s corporate salivary gland?
In 2016, the three cruise lines combined operated a fleet of approximately 144 vessels, managed approximately 14 brands, earned approximately US$28.8 billion in gross revenues, and employed approximately 218,000 men and women.
If each vessel sails at capacity, a total of more than 372,000 passengers will visit the Republic of Cuba from 2017 through 2019.
The gross revenues to the cruise lines from the 222 Republic of Cuba sailings would be projected to exceed US$450 million from 2017 through 2019.
The 372,000 passengers would be projected to spend approximately US$52 million while in the Republic of Cuba [approximately US$140.00 per person in expenditures and organized/non-organized excursions including cost(s) for tour(s), meals (government-operated and privately-operated), ground transportation (privately-operated classic car tours), sundries and souvenirs (including spirits, coffee, tobacco, artwork and crafts)]. Some passengers could spend considerably more (cigars for example) given the United States duty-free personal exemption of US$800 per person.
Vessel port charges in the Republic of Cuba may exceed US$14 million, ranging up to approximately US$79,000.00 for the largest vessels (684-passenger to 2,052-passenger).
United States-based airlines may benefit from gross revenues of more than US$110 million from transporting passengers to/from Florida in conjunction with the cruise schedules. Hotels and restaurants in South Florida could benefit from an additional US$45 million in gross revenues from guests arriving for and/or departing from cruises.
Related Links:
http://www.cubatrade.org/blog/2017/5/11/51crppkum1ulnb9icv89r9b4y6ewjx
In February 2017, data published by the United States Census Bureau of the United States Department of Commerce included from the Houston/Galveston, Texas, District (Ports) a shipment of rice valued at US$252,000.00 to the Republic of Cuba.
However, data from Newark, New Jersey-based PIERS (Port Import/Export Reporting Service) did not report rice exported from the Houston/Galveston, Texas District (Port) to the Republic of Cuba.
As reported by the United States Census Bureau, the shipment (independently calculated as 157.8 metric tons) contained US$126,000.00 of semi/wholly milled, parboiled, inc mixs and US$126,000.00 of semi/wholly milled, mixtures of grains.
This would be the first commercial (non-donated) export of rice from the United States to the Republic of Cuba since 2008.
From 2002 through 2008, rice exports from the United States to the Republic of Cuba were US$190,737,079.00. The primary rice-growing states are Arkansas, California, Louisiana, Mississippi, Missouri, South Carolina and Texas.
In May 2016, Bernie, Missouri-based Martin Rice Company donated 20 metric tons (one container valued approximately US$18.000.00) of long grain enriched rice sourced from the State of Missouri to Republic of Cuba government-operated Empresa Cubana Importadora Alimentos (Alimport), under the auspice of the Ministry of Foreign Trade of Cuba (MINCEX), for distribution to charities within the Republic of Cuba.
For the February 2017 export of rice, the United States exporter neither publicized the transaction nor informed Arlington, Virginia-based USA Rice (www.usarice.com), an organization which was the leader in advocacy for the enactment of the Trade Sanctions Reform and Export Enhancement Act of 2000. USA Rice is “the global advocate for all segments of the U.S. rice industry with a mission to promote and protect the interests of producers, millers, merchants and allied businesses.”
While there is no requirement for an exporter to inform any entity (other than the United States government) of an export from the United States to the Republic of Cuba, there has generally been, during the last sixteen years (the first TSREEA exports were in December 2001), an effort by United States-based agricultural interests to publicize transactions to increase United States-based political advocacy.
Due to sustained efforts by the United States Census Bureau, PIERS and third parties, there is confirmation that an export of rice from the United States to the Republic of Cuba did transpire, as reported, in February 2017.
However, the following information has not been confirmed: 1) the identity of the exporter- although representatives of the United States Census Bureau did directly communicate with the exporter to obtain confirmation 2) the routing of the rice from the United States to the Republic of Cuba; PIERS reported rice exported to Caribbean Sea-area countries in February 2017, but not to the Republic of Cuba- thus, a conclusion is the rice may have been transshipped through a third country and 3) whether the export was commercial (paid) or a donation; the export was likely a donation. The government of the Republic of Cuba has not reported (publicized) the rice shipment.
Background- U.S. Food Product/Agricultural Commodity Exports To Cuba
Since December 2001, more than US$5.3 billion in agricultural commodities and food products have been exported directly from the United States to the Republic of Cuba on a cash-in-advance basis as required by the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000.
No United States company which has exported product(s) to the Republic of Cuba since 2001 has publicly stated what payment terms it would currently provide if authorized by statute.
The government of the Republic of Cuba prefers to purchase food products and agricultural commodities from government-operated exporters where either the exporter or the government of the Republic of Cuba accesses government export-payment guarantee programs.
Government of Vietnam-operated Vinafood (1 & 2) have provided payment terms to Alimport of two (2) years to pay for rice (25% to 30% broken). The Republic of Cuba annually imports approximately 200,000 metric tons to 400,000 metric tons of rice, primarily from Vietnam and People's Republic of China. Republic of Cuba annual domestic requirements are approximately 700,000 metric tons. The Republic of Cuba does grow a small quantity of rice.
United States producers can provide this product; however, payment terms, if statutorily permitted, without the use of United States government guarantee programs, would be cash-on-delivery to 30 days; and for credit-worthy customers, generally not exceed sixty (60) days to ninety (90) days according to United States exporters.
RELATED BLOG POST LINKS:
http://www.cubatrade.org/blog/2017/3/19/i7zxic4x9yweb1q0u1fqn6idmstyko
http://www.cubatrade.org/blog/2017/3/8/naqwf4sownekzbxahs76oysizs5p20
http://www.cubatrade.org/blog/2017/3/1/u4m9xhe3bc9iurkasacffinm2pc12m
On 25 May 2017, The Honorable Amy Klobuchar (D- Minnesota), a member of the United States Senate, introduced S. 1286 ("A bill to lift the trade embargo on Cuba"). The legislation has thirteen (13) co-sponsors. The text is not yet available. Co-Sponsors:
Sen. Enzi, Michael B. [R-WY]*
Sen. Leahy, Patrick J. [D-VT]*
Sen. Flake, Jeff [R-AZ]*
Sen. Durbin, Richard J. [D-IL]*
Sen. Gillibrand, Kirsten E. [D-NY]*
Sen. Warren, Elizabeth [D-MA]*
Sen. Whitehouse, Sheldon [D-RI]*
Sen. Shaheen, Jeanne [D-NH]*
Sen. Stabenow, Debbie [D-MI]*
Sen. Bennet, Michael F. [D-CO]*
Sen. Murphy, Christopher [D-CT]*
Sen. Paul, Rand [R-KY]*
Sen. King, Angus S., Jr. [I-ME]*
Link To Analysis As To Why Legislation Of This Type Has Failed During Previous Efforts
On 25 May 2017, The Honorable Jeff Flake (R- Arizona) and The Honorable Patrick J. Leahy (D- Vermont), members of the United States Senate, introduced S. 1287 ("Freedom for Americans to Travel to Cuba Act of 2017"). The legislation has fifty-five (55) co-sponsors. Link To Text of Legislation In PDF Format. Co-Sponsors:
Sen. Moran, Jerry [R-KS]*
Sen. Durbin, Richard J. [D-IL]*
Sen. Enzi, Michael B. [R-WY]*
Sen. Udall, Tom [D-NM]*
Sen. Boozman, John [R-AR]*
Sen. Whitehouse, Sheldon [D-RI]*
Sen. Collins, Susan M. [R-ME]*
Sen. Klobuchar, Amy [D-MN]*
Sen. Merkley, Jeff [D-OR]*
Sen. Reed, Jack [D-RI]*
Sen. Stabenow, Debbie [D-MI]*
Sen. Murphy, Christopher [D-CT]*
Sen. Coons, Christopher A. [D-DE]*
Sen. Cardin, Benjamin L. [D-MD]*
Sen. Feinstein, Dianne [D-CA]*
Sen. Shaheen, Jeanne [D-NH]*
Sen. Heitkamp, Heidi [D-ND]*
Sen. Brown, Sherrod [D-OH]*
Sen. Baldwin, Tammy [D-WI]*
Sen. Hirono, Mazie K. [D-HI]*
Sen. Schatz, Brian [D-HI]*
Sen. Markey, Edward J. [D-MA]*
Sen. McCaskill, Claire [D-MO]*
Sen. Paul, Rand [R-KY]*
Sen. Wyden, Ron [D-OR]*
Sen. Kaine, Tim [D-VA]*
Sen. King, Angus S., Jr. [I-ME]*
Sen. Franken, Al [D-MN]*
Sen. Warren, Elizabeth [D-MA]*
Sen. Bennet, Michael F. [D-CO]*
Sen. Heinrich, Martin [D-NM]*
Sen. Sanders, Bernard [I-VT]*
Sen. Tester, Jon [D-MT]*
Sen. Warner, Mark R. [D-VA]*
Sen. Cantwell, Maria [D-WA]*
Sen. Blumenthal, Richard [D-CT]*
Sen. Murray, Patty [D-WA]*
Sen. Schumer, Charles E. [D-NY]*
Sen. Gillibrand, Kirsten E. [D-NY]*
Sen. Nelson, Bill [D-FL]*
Sen. Donnelly, Joe [D-IN]*
Sen. Cassidy, Bill [R-LA]*
Sen. Peters, Gary C. [D-MI]*
Sen. Carper, Thomas R. [D-DE]*
Sen. Manchin, Joe, III [D-WV]*
Sen. Van Hollen, Chris [D-MD]*
Sen. Harris, Kamala D. [D-CA]*
Sen. Casey, Robert P., Jr. [D-PA]*
Sen. Crapo, Mike [R-ID]*
Sen. Duckworth, Tammy [D-IL]*
Sen. Daines, Steve [R-MT]*
Sen. Hassan, Margaret Wood [D-NH]*
Sen. Heller, Dean [R-NV]*
Seattle, Washington-based Holland America Line (a subsidiary of Miami, Florida-based Carnival Corporation & plc; 2016 revenues exceeded US$16 billion), has announced sailings from the United States to the Republic of Cuba commencing in December 2017.
Holland America Line to Sail to Cuba on Roundtrip Fort Lauderdale Itineraries Aboard ms Veendam Beginning in December 2017
Premium cruise leader to offer an extended call at Havana and visit to Cienfuegos on seven-, 11- and 12-day Caribbean itineraries
Demand expected to be high when Cuba cruises open for booking on May 26, 2017
SEATTLE, May 24, 2017 /PRNewswire/ -- Holland America Line has received approval to begin sailing to Cuba from Fort Lauderdale, Florida, starting with the Dec. 22, 2017, 12-day holiday cruise aboard ms Veendam. Holland America Line becomes Carnival Corporation's third cruise line to be approved to sail to Cuba following the company's historic inaugural sailings to the island last year.
The addition of Veendam itineraries will help meet the growing demand for premium cruise experiences to Cuba. Nine seven-day itineraries will feature the capital city Havana, and three of these will add another Cuba call at Cienfuegos, known as the model of early 19th century urban planning in Cuba. The 12-day holiday cruise showcases both Cuban ports. Depending on the departure day, cruises include the Cuba ports, as well as a combination of Caribbean ports, including Amber Cove, Dominican Republic; Belize City, Belize; Costa Maya and Cozumel, Mexico; George Town, Grand Cayman; Grand Turk, Turks and Caicos; Key West, Florida; and Montego Bay, Jamaica.
"For many, travel is about seeking new places to explore and discovering meaningful new cultural opportunities, and Cuba is one of the most sought-after new destinations for many of our guests," said Orlando Ashford, president of Holland America Line. "We are excited to finally be able to include Cuba in our itineraries, and our guests and travel partners have been anxiously awaiting a premium cruise experience to this relatively undiscovered Caribbean treasure."
As leaders in destination immersion and experiential travel, Holland America Line adds Cuba to its itineraries in order to provide guests with a thoughtful cultural exchange experience. Most itineraries include an extended call at Havana, allowing guests the time to explore the UNESCO World Heritage Site and immerse themselves in a wide array of historical and cultural adventures. Additionally, a stop at Cienfuegos presents the opportunity for a special visit to Trinidad, a UNESCO World Heritage Site in Cuba's province of Sancti Spíritus.
The series of Cuban cruises will debut with the Dec. 22, 2017, 12-day holiday sailing roundtrip from Fort Lauderdale. In addition to the seven-day cruises, an 11-day spring cruise sails March 17, 2018, and also features the Cuban ports of Havana and Cienfuegos, as well as Key West, Cozumel, Montego Bay and Georgetown. The final seven-day Cuba sailing departs on April 18, 2018.
On board, the Cuba experience will be enhanced through the line's Explorations Central, or EXC, program, featuring EXC Guides who will bring the destination to life through presentations and EXC Talks that will enable guests to deepen their understanding of the Caribbean's largest island. Also enriching the Cuba experience for guests are EXC Port Maps created for the Cuban calls, EXC Encounters that will showcase the culture and history of Cuba to guests before they visit the ports, and much more. In addition, educational and cultural EXC Tours are being developed in and near Havana and Cienfuegos with a highlight being Trinidad, one of the best-preserved historic towns in the Caribbean.
Bookings for Holland America Line's cruises to Cuba will open May 26, 2017. Guests booked on Veendam's previous deployment will be given a full refund and opportunity to book on another Holland America Line voyage. Fares for Cuba cruises begin at $899 per person, double occupancy. Taxes, fees and port expenses are additional.
The visits to Havana and Cienfuegos comply with regulations of the U.S. Department of Treasury that permit travel operators to transport approved travelers to Cuba to engage in activities as defined by the U.S. Department of Commerce, Office of Foreign Assets Control. All information about special requirements for travel to Cuba is available at hollandamerica.com.
The deployment of the 1,350-guest Veendam to Cuba adds Holland America Line to the historic launch of cruises to the island nation from the U.S. by Carnival Corporation sister brands Fathom and, more recently, Carnival Cruise Line.
For more information about Holland America Line, consult a travel professional, call 1-877-SAIL HAL (1-877-724-5425) or visit hollandamerica.com.
Editor's note: Photos are available at https://www.cruiseimagelibrary.com/c/xdesj1ku.
Find Holland America Line on Twitter, Facebook and the Holland America Blog. Access all social media outlets via the Online Communities quick link on the home page at hollandamerica.com.
About Holland America Line [a division of Carnival Corporation and plc (NYSE: CCL and CUK)]
Holland America Line's fleet of 14 ships offers more than 500 cruises to more than 400 ports in 98 countries, territories or dependencies around the world. From shorter getaways to 113-day itineraries, the company's cruises visit all seven continents with highlights including Antarctica explorations, South America circumnavigations and exotic Australia/New Zealand and Asia voyages; four annual Grand Voyages; and popular sailings to the Caribbean, Alaska, Mexico, Canada/New England, Bermuda, Europe and the Panama Canal. The line welcomed ms Koningsdam in 2016 and has a as second Pinnacle Class ship, ms Nieuw Statendam, to be delivered in December 2018. A third Pinnacle-class ship, due for delivery in 2021, recently was announced.
The company is undergoing $300 million in brand enhancements to secure its position as the leader in premium cruising. Fleetwide, the ships feature innovative initiatives and a diverse range of enriching experiences focused on destination immersion and personalized travel. Guests can expand their knowledge through an exclusive partnership with O, The Oprah Magazine; during an America's Test Kitchen show; at Explorations Café presented by The New York Times; and by taking a Digital Workshop powered by Windows. Outstanding entertainment fills each evening at venues including Lincoln Center Stage, Billboard Onboard and B.B. King's Blues Club. The dining experience can be savored at a variety of restaurants with menus that feature selections from Holland America Line's esteemed Culinary Council that comprises world-famous chefs who design dishes exclusively for our guests.
SEATTLE, WA – May 23, 2017 – Expedia, Inc., the world’s largest online travel company, announced today that travelers can now book hotels in Cuba on its global points of sale, including Expedia.com®, Hotels.com®, Travelocity®, Orbitz®, and CheapTickets®. Cuba continues to generate interest as a hot destination among travelers; its Ministry of Tourism reported more than four million foreign visitors in 2016, with the biggest increase in visitor numbers from the U.S.[i]
From the colorful and historic streets of Havana and Hemmingway’s homestead in San Francisco de Paula, to the cobbled colonial town of Trinidad and beyond, travelers from around the world can today leverage Expedia sites to research and book properties throughout Cuba. With hotel options spanning from the east to the west side of the island, there will be no shortage of accomodations for consumers to choose from, including Pinar Del Rio, Camaguey, and Santiago de Cuba. Expedia has been closely working with local Cuban partners to bring travelers to this widely-anticipated market, and make the hotel booking process as easy as possible.
“We’ve been working around the clock with our partners to be able to offer this iconic, culture-rich destination to our global customers, with the added convenience of online booking through a trusted travel partner,” said Mario Ribera, vice president of market management for Latin America. “As one of the first U.S. companies to offer hotel bookings in Cuba for individual travelers, we’re well-poised to bring new consumers into the market, further strengthening the value proposition with our partners.”
“We are excited to make Barceló properties in Cuba accessible to travelers on Expedia platforms around the world,” said, Josep Brichs, Corporate Commercial Director for Barceló Hotel Group Latin America. “We are very proud Barcelo Solymar and Barceló Arenas Blancas in Varadero have been one of the first bookings made on Expedia upon the opening of the destination. Expedia is a key partner and our priority is to develop new opportunities on the international travel industry together."
Both U.S. and non-U.S. travelers can research and book their Cuba accommodations in compliance with OFAC regulations on Expedia points-of-sale globally with U.S. travelers certifying thattheir travel falls under one of 12 categories of authorized travel, including family visits, travel for government work, journalism, professional research, humanitarian work and educational activities, and “people-to-people” educational travel, among others and with non-U.S travelers confirming that they are not subject to U.S. jurisdiction.
About Expedia, Inc.
Expedia, Inc. (NASDAQ: EXPE) is the world’s largest online travel company, with an extensive brand portfolio that includes leading online travel brands, such as:
THE WHITE HOUSE
Office of the Press Secretary
FOR IMMEDIATE RELEASE
May 20, 2017
Statement from President Donald J. Trump on Cuban Independence Day
On Cuban Independence Day, I extend my warmest wishes to the Cuban American community and the people of Cuba as our whole Nation joins you in celebrating the anniversary of Cuban Independence.
Americans and Cubans share allegiance to the principles of self-governance, dignity, and freedom. Today, we remember patriots like José Martí, who devoted himself to making Cuba an economically competitive and politically autonomous nation.
He reminds us that cruel despotism cannot extinguish the flame of freedom in the hearts of Cubans, and that unjust persecution cannot tamper Cubans’ dreams for their children to live free from oppression.
The Cuban people deserve a government that peacefully upholds democratic values, economic liberties, religious freedoms, and human rights, and my Administration is committed to achieving that vision.
Today, we also honor the generations of Cuban Americans who have made outstanding contributions to our country by sharing their culture and talents. Cuban Americans have distinguished themselves in literature, the arts, business, sports, the courts, Congress, and within my Administration.
We are especially thankful to the Cuban Americans who serve in our military and who have sacrificed in defense of our freedom.
Melania and I send our best wishes on this important day in history for the Americas. God bless the people of Cuba and our Cuban American friends who call the United States home.
Tampa Bay Business Journal
Tampa, Florida
18 May 2017
By Frances McMorris
After several other airlines recently announced they were cutting back their flights to Cuba, Southwest Airlines, which began flights between Tampa and Havana late last year, is also watching how that new market is doing, said the airline’s chief executive.
“We’re very carefully monitoring our developing markets; Cuba is something we’ll have to continue to watch,” Southwest CEO Gary Kelly, said Wednesday at the carrier’s annual shareholder meeting being held in downtown Phoenix.
“Havana looks like a normal developing market, and the other two cities have very modest traffic demand at this point," he said. "So that’s something we’ll need to continue to watch. I don’t want to pull the plug yet, but the demand is going to have to pick up to sustain those flights.”
Including Havana, Dallas-based Southwest Airlines’ (NYSE: LUV) has three destinations to Cuba.
Southwest's new route between Tampa International Airport and Havana that began December 12 helped drive TIA's Cuba traffic in January up by approximately 10 percent. That traffic has been rising steadily ever since with a nearly 32 percent jump from February through April. In February, traffic for Cuba was 6,968 rising to 9,627 in March and 9,187 in April. Between 2012 and 2015, there has been a 65 percent increase in TIA-Cuba passenger traffic, reaching nearly 37,000 passengers last year.
Just as significant, TIA’s annual revenue from Cuban air traffic rose by 23 percent to $1.4 million for 2016; up from $1.13 million in 2015. In 2014, that revenue was $970,000.
Tampa Bay is home to the third largest Cuban-American population in the country with Cuban ancestry representing one-fifth of Tampa’s Hispanic population. With approximately 170,000 Cuban-American residents in the region, Tampa was one of only 10 U.S. cities to win direct commercial flights to Havana.
However, the pursuit of flights to Cuba by U.S. carriers has seen a dramatic turnaround in recent months.
Consider the decision of Spirit Airlines (Nasdaq: SAVE). In April, the Miramar-based ultra-low-cost carrier said it would end its service between Fort Lauderdale and Havana on May 31.
Then there is Denver-based Frontier Airlines and Fort Lauderdale-based Silver Airways. In March, the two carriers said they would be exiting the Cuba market. Both airlines attributed the change to lower-than-expected demand and over-capacity on routes between Florida and Cuba. Frontier, which also noted high costs, said it would end its daily Miami-Havana service on June 4.
Late last year, Fort Worth-based American Airlines (Nasdaq: AAL) said that starting in February it would reduce the amount of flights to Cuba by 25 percent. American was the second U.S. airline to announce its service to Cuba.
New York-based JetBlue Airways Corp. (Nasdaq: JBLU) was the first airline to announce that it was launching flights between the U.S. and Cuba. Last month, JetBlue filed an application to add more flights between Fort Lauderdale and Havana, and to launch what it says would be the first-ever nonstop service between Boston and Cuba’s capital city. Jetblue’s latest move comes after it said in February that it would be pulling back on its Cuba service.
Officials for the U.S. and Cuba signed a deal last year to restore commercial air service between the two countries for the first time in decades.
In 2014, former President Barack Obama first announced more lenient travel restrictions on traveling to Cuba. He had repeatedly called on the Congress to lift the Cuban embargo. His administration said that authorized travel to Cuba increased by more than 75 percent from 2014 to 2015.
Obama became the first sitting U.S. president to visit Cuba since 1928 when he went there last year. The Tampa Bay Rays also went on that trip, playing a game against the Cuban National baseball team.
Despite the death in December of former Cuban leader Fidel Castro and the easing of trade and travel restrictions under Obama, uncertainty surrounds the future of U.S.-Cuba relations in light of the hard-line campaign rhetoric about Cuba from President Donald Trump.
If the Trump Administration does not object to a request by Jet Blue Airways Corporation (with lesser significance for a United Airlines route request) for a BOS-HAV route, the conclusion by United States companies focusing upon Republic of Cuba travel-related activities will be the Trump Administration is likely to manage its policies and regulatory environment within the context of a commercially-centered holistic approach; unlikely to constrain commercial activities that are operational or those considered tangential to previously-authorized commercial activities while advancing decisions relating to post-24 February 2018 when a new president is inaugurated in the Republic of Cuba.
On 20 April 2017, Long Island City, New York-based JetBlue Airways Corporation (2016 revenues exceeding US$6.4 billion) for the second time requested the United States Department of Transportation (USDOT) to authorize “the first-ever non-stop service between Boston, Massachusetts [Logan International Airport- BOS], and Havana, Cuba [Jose Marti International Airport- HAV]” commencing on 1 November 2017.
Jet Blue Airways Corporation had first requested the route on 2 March 2016. The once-per-week flight, using a 162-seat Airbus A-320 aircraft, would operate on Saturdays with departure at 9:45 am and arrival at 1:45 pm. The request by Jet Blue Airways Corporation to the USDOT was to transport “persons, property and mail.”
If the once-per-week flight operated at capacity on an annual basis, the service would transport 8,424 passengers. Approximately 10,000 individuals of Cuban decent reside in the Commonwealth of Massachusetts.
If the USDOT grants the request by Jet Blue Airways Corporation, given the low number of potential passengers of Cuban descent, the service would be overwhelmingly focused upon “people-to-people” and “educational activities” given the large number of educational institutions located in Massachusetts, New Hampshire, Vermont, and northern Connecticut that would use BOS as a departure point to HAV.
NOTE: On 5 May 2017, Chicago, Illinois-based United Airlines, Inc. (2016 revenues exceeded US$36.6 billion) requested the USDOT to authorize a once-weekly flight from George Bush Intercontinental Airport (IAH) to HAV to daily service commencing on 28 October 2017 using aircraft with capacity of 70 seats to 160 seats; representing an annual at-capacity range of 25,550 to 58,400 passengers. IAH is a hub for United Airlines; there are approximately 50,000 individuals of Cuban descent residing in the state of Texas.
During the Obama Administration and continuing through the first months of the Trump Administration, Members of Congress, White House staff, employees at the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and U.S. Customs and Border Protection (CBP) of the Department of Homeland Security (DHS), determined that there was and remains considerable abuse of the “people-to-people” and “educational activities” provisions relating to authorized travel.
Airlines require authorization(s) from the USDOT to service new routes. Cruise lines do not require additional authorizations from the United States Department of State, USDOT, OFAC or United States Department of Commerce to change their schedules.
As of 10 May 2017, the three largest united states cruise lines could deliver 357,000 passengers during 211 sailings to the Republic of Cuba in 2017/2018/2019, earning gross revenues of US$422 million; with US$50 million spent by passengers in Cuba and approximately US$13 million in port fees to the Republic of Cuba. Additional itineraries are expected to be announced soon. And, smaller cruise lines are also operating in the Republic of Cuba marketplace.
However, while airlines and cruise lines are increasing or seeking to increase their United States-Republic of Cuba schedules, the second hotel in the Republic of Cuba to be managed by a United States-based company has delayed its transfer from December 2016 to December 2017 to December 2019.
An article published by The New York Times on 10 May 2017, "Cuba's New Luxury Hotels Look to Lure Waves of U.S. Tourists" referenced that the Hotel Inglaterra in the city of Havana, Republic of Cuba, will not transition to management by Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (a subsidiary of Bethesda, Maryland-based Marriott International) until December 2019. No reason(s) have been provided for the thirty-six (36) month delay. Starwood Hotels & Resorts International commenced management of the Sheraton Four Points Havana in June 2016.
OFAC Regulations
“OFAC has issued general licenses within the 12 categories of authorized travel for many travel-related transactions to, from, or within Cuba that previously required a specific license (i.e., an application and a case-by-case determination).
Travel-related transactions are permitted by general license for certain travel related to the following activities, subject to the criteria and conditions in each general license: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions.
“OFAC has issued a general license that incorporates prior specific licensing policy and authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to people-to-people educational activities in Cuba. Among other things, this general license authorizes, subject to conditions, persons subject to U.S. jurisdiction to engage in certain educational exchanges in Cuba either individually or under the auspices of an organization that is a person subject to U.S. jurisdiction and sponsors such exchanges to promote people-to-people contact. Travelers utilizing this general license must ensure they maintain a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba. The predominant portion of the activities must not be with a prohibited official of the Government of Cuba, as defined in 31 CFR § 515.337, or a prohibited member of the Cuban Communist Party, as defined in 31 CFR § 515.338.
For travel conducted under the auspices of an organization, an employee, paid consultant, or agent of the sponsoring organization must accompany each group traveling to Cuba to ensure that each traveler has a full-time schedule of educational exchange activities. In addition, persons relying upon this authorization must retain records related to the authorized travel transactions, including records demonstrating a full-time schedule of authorized activities. In the case of an individual traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, the individual may rely on the entity sponsoring the travel to satisfy his or her record-keeping obligations with respect to the requirements described above.
For UPDATED JANUARY 6, 2017 5 a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(b).
What is an “organization” in the people-to-people context? In the people-to-people context, an organization is an entity subject to U.S. jurisdiction that sponsors educational exchanges that do not involve academic study pursuant to a degree program and that promote people-to-people contact. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(b).”
Related Blog Post:
Parsippany-Troy Hills, New Jersey-based Super 8 Worldwide, a subsidiary of Parsippany, New Jersey-based Wyndham Worldwide was to replace Ile-de-France, France-based AccorHotels as the management contract holder for the Playa de Oro Hotel in Varadero, Republic of Cuba, owned by Republic of Cuba government-operated Grupo Hotelero Gran Caribe. Super 8 Worldwide was expected to commence operations in April 2017.
The management contract was reportedly through a Quebec, Canada-based consortium within which one of the members has a partnership with Wyndham Worldwide brands operating in Canada.
Wyndham Worldwide has not reported if the company obtained (or required) a license from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury to manage a property(s) in the Republic of Cuba. Licenses from the OFAC are generally valid for two (2) years.
For reasons that neither Wyndham Worldwide nor Grupo Hotelero Gran Caribe have disclosed, the companies reportedly terminated the management contract and/or discussions for a management contract and Grupo Hotelero Gran Caribe has decided to self-manage the property. Uncertain as to which party initiated the discussion relating to the termination.
If accurate, the only United States-based hotel brand with a presence in the Republic of Cuba is Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (a subsidiary of Bethesda, Maryland-based Marriott International) which manages The Hotel Quinta Avenida (re-branded as Four Points Sheraton Havana on 27 June 2016), expects to manage the Hotel Inglaterra (delayed from December 2016 to December 2019), and had reported a Letter of Intent to manage a third property, the Hotel Santa Isabel, but no information has been provided about that property since 2016.
If the OFAC issued a license to Starwood Hotels & Resorts/Marriott International in 2016, it would generally expire in two (2) years; thus, if OFAC issued a revised license on or before 20 January 2017, the license would generally expire prior to December 2019. There is a possibility that the OFAC provided a license of indefinite length.
The decision by Grupo Hotelero Gran Caribe may be a result of the company believing that whatever marketing and operational value Wyndham Worldwide would deliver was not worth the management fee(s) that would be paid to Wyndham Worldwide. More likely, however, is given the low demographic guest profile for the Playa de Oro Hotel, Grupo Hotelero Gran Caribe believes that guests will continue to be attracted to a low-cost vacation opportunity regardless of the increased guest experience (and personnel training opportunities) that would result from a management contract with Wyndham Worldwide.
In addition, with the government of the Republic of Cuba’s chronic shortage of foreign exchange, saving the management fee was enticing from a financial perspective. There is also a belief by Grupo Hotelero Gran Caribe that another non-Republic of Cuba-based hotel management will be attracted to the property whenever it becomes available for a management contract. Another issue for non-Republic of Cuba-based hotel management companies is the desire by the government of the Republic of Cuba for hotel management contracts to include a provision that the holder of the hotel management contract will provide financing for the property; a provision that most hotel management companies reject.
An anomaly to the Republic of Cuba hotel management marketplace is a requirement for those non-Republic of Cuba-based companies with a management contract to obtain their operating funds from the owner of the property, rather than directly from guests into an operating account controlled by the holder of the management contract. Due to the government of the Republic of Cuba's chronic shortage of foreign exchange, it desires immediate access to funds and then distributes payments, as required by a management contract, but often delayed, to the holder of the management contract. This is an unsustainable financial management modality.
From the company: "Super 8 ® Worldwide is the world's largest economy lodging chain with over 2,200 properties in the U.S., Canada and China. Super 8 has recently launched a brand refresh with a new logo and a fresh, new interior and exterior design program. Guests can depend on every Super 8 to deliver a complimentary SuperStart breakfast, free high-speed Internet access, upgraded bath amenities, free in-room coffee and free premium cable or Satellite TV. Kids under 17 stay free at Super 8."
In September 2016, Geoff Ballotti, President and Chief Executive Officer of Wyndham Worldwide:
“We are working on opportunities there,” Loewen said. “Our teams have been there. We have partners that we’re talking to. We’re looking to bring some more brands there. We’ve talked both to people who want the upscale side and some who really see the need for good solid economy hotels.” The biggest challenge, of course, is utilities and other infrastructure. “The government’s got a lot of work to do down there, I think. But it will be a great location.”
Mr. Robert Loewen, Executive Vice President And Chief Operating Officer of Wyndham Worldwide:
"We always look at every opportunity, and we think Cuba and the Caribbean in general are going to be big opportunities. I’m excited from a personal standpoint because 25 years ago I worked in the Caribbean doing yacht charters. And every year, it was a story of, 'Cuba’s going to open up, and we can finally take sailboats to Cuba.' It looks like it’s finally broken down and is opening up, and the infrastructure is not there."
In May 2016, Hollywood, Florida-based RCI (a subsidiary of Wyndham Worldwide), reported that it would offer travel options to the Republic of Cuba for its timeshare owners.
"RCI is the worldwide leader in vacation exchange with approximately 4,300 affiliated resorts in more than 100 countries. RCI pioneered the concept of vacation exchange in 1974, offering members increased flexibility and versatility with their vacation ownership experience. Today, through the RCI Weeks® program, the week-for-week exchange system, and the RCI Points® program, the industry’s first global points-based exchange system, RCI provides flexible vacation options to its 3.8 million RCI subscribing members each year. RCI’s luxury exchange program, The Registry Collection® program, is the world’s largest program of its kind with approximately 200 affiliated properties either accessible for exchange or under development on six continents. RCI is part of Wyndham Destination Network and the Wyndham Worldwide family of brands (NYSE: WYN)."
LINKS TO WYNDHAM-RELATED BLOG POSTS:
Could green coffee beans from the Republic of Cuba be imported directly to the United States and then roasted, processed and distributed to flavor ice cream for these brands (and potentially others- see images below)?
365 (owned by Texas-based Whole Foods)
Ben & Jerry's (Vermont-based; owned by United Kingdom-based Unilever)
Haagen-Dazs (owned by Minnesota-based General Mills; distributed by Nestle)
Breyers (New Jersey-based; owned by United Kingdom-based Unilever)
Starbucks (owned by Washington-based Starbucks Corporation)
Dreyer's (California-based; owned by Nestle)
Straus (owned by California-based Straus Family Creamery)
Blue Bell (owned by Texas-based Blue Bell Creameries)
Edy's (California-based; owned by Nestle)
Or, will the green coffee beans be transported 5,000 miles from the Republic of Cuba to Switzerland and roasted and/or transformed into extract for flavoring before another 5,000-mile (or more) return journey to the United States?
Thus far, Republic of Cuba government-operated Cubaexport, which manages the export of some agricultural products (including coffee and charcoal- which was directly exported to the United States in 2017), has declined authorize a United States-based company to directly import green coffee beans, despite the bilateral commercial interest, bilateral commercial value and bilateral political benefit.
Not lost on management of United States-based companies is a preference by the government of the Republic of Cuba to permit a non-United States-based company to do first what in 2016 the Obama Administration authorized United States-based companies to do with respect to the direct importation of agricultural commodities from the Republic of Cuba.
One reason, perhaps the reason, is the role of Vevey, Switzerland-based Nestle SA (2016 revenues approximately US$94 billion) in the economy of the Republic of Cuba.
The likely first beneficiaries for Cuban coffee-infused ice creams are Oakland, California-based Dreyer’s Grand Ice Cream Holdings, Inc., and Oakland, California-based Edy’s Grand Ice Cream which are wholly-owned by Nestle SA; and Oakland, California-based Haagen-Dazs which is distributed by Nestle SA.
Nestle SA is positioning itself to be an importer to the United States of confections, coffee, ice cream, beverages, and other consumables sourced in the Republic of Cuba.
Nestle SA has a multi-decade interest in the Republic of Cuba. The company has a representative office in the city of Havana. Since the 1990's, Nestle S.A. has been involved with Republic of Cuba government-operated companies to develop the confection industry (a twenty-year joint venture producing ice cream); has investments in bottled water production (Ciego Montero) and beverage production; and imports products for sale at retail stores. In 2014, Nestle Nespresso released “Limited Edition Cubanía; Inspired by the passion and intensity of Cuban coffee ritual” that did not contain coffee from the Republic of Cuba. In 2016, "Cuban Nespresso Grand Cru Cafecito de Cuba" capsule (which would include coffee from the Republic of Cuba) was to be available outside of the United States, but with the 22 April 2016 changes in United States regulations, the opportunity was created to add the United States to global distribution channels.
In 2017, Nestle SA reported the company would invest approximately US$55 million to create a joint venture (of which it will own 51%) potentially employing 300 Republic of Cuba nationals to source ingredients for and to produce coffee, biscuits and cooking products. Completion date is by 2019. Other Nestle SA production facilities are being considered for expansion.
Expect the soon-to-open Gran Hotel Kempinski Manzana La Habana, managed by Geneva, Switzerland-based Kempinski Hotels SA, the first property in the Republic of Cuba to likely earn a four or five rating from AAA and/or Forbes Travel Guide, to serve guests products (nightly turn-down service including chocolates on pillows?) from Switzerland and, specifically from Nestle SA. It's first guests will check-in on 31 May 2017.
NOTE: In the 1990’s, Mr. Ian Delaney, then-Chairman of Toronto, Canada-based Sherritt International, which at the time was aggressively diversifying throughout the Republic of Cuba- mining, oil, natural gas, hospitality, agriculture, etc., as the largest source of Direct Foreign Investment (DFI) in the country, shared that the company would become the “Canadian Pacific” of the Republic of Cuba, referencing the transcontinental commercial, economic and political impact of the diversified conglomerate. The remark was negatively-interpreted by the government of the Republic of Cuba; as it represented ghosts of the pre-1959 presence in the Republic of Cuba by United States-based companies. Sherritt International has since relinquished some of its holdings; and no longer envisions (or is envisioned has having) the depth of influence its then-chairman had forecasted for the company. Nestle SA is unlikely to suffer from the “Canadian Pacific” comparative narrative.
Unilever Plc And Cuba
In November 2016, London, United Kingdom-based Unilver Plc (2016 revenues approximately US$65 billion) commenced construction on a joint venture (of which it will own 60%) facility valued at US$35 million in the Republic of Cuba to produce soap, detergent, deodorant and toothpaste. Production is scheduled to commence in 2018. Unilever had a joint venture in the Republic of Cuba from the mid-1990's until 2012 when it ended due to operational disagreements. The company continued to export products to the Republic of Cuba.
Nespresso
In 2016, the Obama Administration added coffee to the list of eligible imports from the Republic of Cuba. To be eligible for importation into the United States, a listed Cuban Assets Control Regulations (31 CFR Part 515) Section 515.582 product (in this case coffee) must be “produced by independent Cuban entrepreneurs, as demonstrated by documentary evidence.”
From the United States Department of State: “Persons subject to US jurisdiction engaging in import transactions involving goods produced by an independent Cuban entrepreneur pursuant to 515.582 must obtain documentary evidence that demonstrates the entrepreneur's independent status, such as a copy of a license to be self-employed issued by the Cuban government, or in the case of an entity, evidence that demonstrates that the entity is a private entity that is not owned or controlled by the Cuban government.”
In 2016, New York, New York-based Nestle Nespresso USA, Inc., a subsidiary of Nestle SA, purchased a container of approximately eighteen (18) tons of green coffee beans through London, United Kingdom-based Cubana Coffee & Roastery (www.cubana.co.uk), the established bar-restaurant and coffee roasting group, and London, United Kingdom-based The Cuba Mountain Coffee Company Ltd (www.almacuba.com).
The green coffee beans were sourced from the 2015-2016 harvest in the Republic of Cuba; the value was approximately US$5,000.00 per metric ton, or approximately US$90,000.00.
The beans were roasted at Nestle Nespresso facilities in Avenches and nearby Orbe, Switzerland. With approximately 20% lost during the roasting process, the result was approximately 180,000 capsules per ton- 3,240,000 limited edition Cafecito de Cuba capsules (approximately 5 to 6 grams each or .17 to .21 ounces). The price for a limited-edition capsule was approximately US$1.10, so potential total revenue could be approximately US$3,564,000.00.
Nestle Nespresso USA, Inc., has obtained additional green coffee beans from the 2016-2017 harvest in the Republic of Cuba and continues to produce capsules for distribution throughout the world, including in the United States.
As Of 10 May 2017, The Three Largest United States Cruise Lines Could Deliver 357,000 Passengers During 211 Sailings To Cuba In 2017/2018/2019; US$422 Million In Gross Revenues; US$50 Million Spent By Passengers In Cuba; Port Fees To Cuba US$13 Million. United States Airlines US$110 Million; South Florida Hotels & Restaurants US$45 Million
The three (3) largest United States-based cruise lines have announced more than 211 itineraries for the 2017, 2018 and 2019 sailing seasons which include the Republic of Cuba. Additional itineraries are expected to be announced soon. And, smaller cruise lines are also operating in the Republic of Cuba marketplace.
Do they know what others don’t know? Or, are they walking a proverbial plank? Are the three CEO’s: Mr. Frank J. Del Rio (Miami, Florida-based Norwegian Cruise Lines Holdings Ltd), Mr. Arnold W. Donald (Miami, Florida-based Carnival Corporation & plc) and Mr. Richard D. Fain (Miami, Florida-based Royal Caribbean Cruises Ltd) presenting a dare to the President of the United States or enticing the President’s corporate salivary gland?
In 2016, the three cruise lines combined operated a fleet of approximately 144 vessels, managed approximately 14 brands, earned approximately US$28.8 billion in gross revenues, and employed approximately 218,000 men and women.
If each vessel sails at capacity, a total of more than 357,000 passengers will visit the Republic of Cuba from 2017 through 2019.
The gross revenues to the cruise lines from the 211 Republic of Cuba sailings would be projected to exceed US$422 million from 2017 through 2019.
The 357,000 passengers would be projected to spend approximately US$50 million in the Republic of Cuba [approximately US$140.00 per person in expenditures and organized/non-organized excursions including cost(s) for tour(s), meals (government-operated and privately-operated), ground transportation (privately-operated classic car tours), sundries and souvenirs (including spirits, coffee, tobacco, artwork and crafts)].
Vessel port charges in the Republic of Cuba may exceed US$13 million, ranging up to approximately US$79,000.00 for the largest vessels (684-passenger to 2,052-passenger).
United States-based airlines may benefit from gross revenues of more than US$110 million from transporting passengers to/from Florida in conjunction with the cruise schedules. Hotels and restaurants in South Florida could benefit from an additional US$45 million in gross revenues from guests arriving for and/or departing from cruises.
Established in 1994, the U.S.-Cuba Trade and Economic Council provides an efficient and sustainable educational structure in which the United States business community may access accurate, consistent, and timely information and analysis on matters and issues of interest regarding United States-Republic of Cuba commercial, economic, and political relations.
Economic Eye On Cuba (EEOC)- posts are corrected and revised as new information becomes available
