Hurdles still high to U.S. firms mulling sales in Cuba

Hurdles still high to U.S. firms mulling sales in Cuba
Starbucks, other businesses may find rules bitter
REUTERS

Starbucks Corp. can move to Cuba, but it still cannot sell lattes there.

The Obama Administration has removed barriers to U.S. companies doing
business on the Communist-ruled island, but plenty of regulatory and
legal roadblocks remain on both sides of the Florida Straits.

Airlines and cruise ships will see less meddling with their schedules,
although the rules approved by President Obama will not lead to a
significant boost in visitors, as U.S. law still prohibits most
Americans from traveling there.

But Starbucks can still not sell prepared drinks such as a latte or a
cappuccino, only packaged coffee, said John Kavulich, president of the
U.S.-Cuba Trade and Economic Council Inc.

The new rules have opened the door for Internet companies, but a Cuba
government-owned company has the local monopoly on Web services. The
prospects for retailers and restaurants are murky. Cuba's mostly poor
population of 11 million has limited spending power and U.S. law
restricts what can be sold to its old Cold War foe.

The biggest wild card of all is the Cuban government, which will have
the final say on who is licensed to do what.

"You don't just go down to Cuba and hang up your shingles. That's not
how it operates," said Kirby Jones, head of Alamar Associates, which has
advised companies on business in Cuba since the 1970s. Starbucks, for
one, said it had no plans to enter Cuba.

To be sure, executives described the relaxing of U.S. rules as an
important step toward opening up the Cuban economy to U.S. investment in
a wide range of industries.

United Parcel Service Inc. said it "welcomes the opportunity to provide
logistics services in and out of Cuba as regulations are changed." A
spokesman for Archer Daniels Midland Co., which has exported goods to
Cuba under existing regulations, said the agribusiness group "will be
ready to adapt to new opportunities as they arise."

U.S. telecoms Verizon Communications Inc. and Sprint Corp. said they
planned to offer cell-phone roaming in Cuba.

But other companies seemed more cautious. Both Wal-Mart Stores Inc., the
world's biggest retailer, and home improvement chain Home Depot Inc.,
said they were focused on growing in their existing markets.

While the new regulations would allow U.S. companies to open retail
outlets, there are limits on what can be sold based on U.S. trade law
enacted in 2000.

It is these restrictions, along with uncertainty over what the Cuba
government will allow, that should keep U.S. executives cautious about
the potential for business in Cuba. The new rules started a process that
would take time, he added.

"Obama took a sledgehammer to U.S. regulations today, but he's 50
percent of the equation," said Mr. Kavulich of the U.S.-Cuba Trade and
Economic Council. "No one should be fueling up their corporate jet and
filing a flight plan for Havana today."

The new rules do not allow U.S. companies to extend credit to Cuba, nor
do they permit Cuba to use dollars in international transactions.

Even if such rules were eased, non-U.S. companies that do business in
Cuba right now are working with credit terms of anywhere from nine
months to two years, said Gary Heathcott, a special consultant to CJRW,
an advertising and public relations firm in Arkansas, who will travel to
Cuba with Arkansas Gov. Asa Hutchinson and representatives from
businesses such as farmer-owned cooperative Riceland Foods.

"They are a cash-poor country," Mr. Heathcott said.

Source: Hurdles still high to U.S. firms mulling sales in Cuba - Toledo
Blade -
http://www.toledoblade.com/Nation/2015/09/27/Hurdles-still-high-to-U-S-firms-mulling-sales-in-Cuba.html