Starbucks? OK. Lattes? No! Cuba business rules still complex after U.S. changes

Starbucks? OK. Lattes? No! Cuba business rules still complex after U.S.
changes
By Nathan Layne and Lisa Baertlein

(Reuters) - Starbucks Corp can move to Cuba, but it still cannot sell
lattes there.

The Obama administration on Friday tore down barriers to U.S. companies
doing business on the Communist-ruled island just south of Miami, 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 new rules approved by President Barack 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 like 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 of engagement 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
remaining U.S. law tightly restricts what can be sold to the former Cold
War foe.

And then there is the biggest wild card of all: 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 spokeswoman 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 on Thursday and
Friday said they planned to offer cell phone roaming in Cuba.

But other companies showed a more cautious tone. 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. Kurt
Jetta, head of the TABS Group, which provides consulting for some of the
top consumer and retail firms, said: "we have over 50 clients, and no
one is talking about Cuba."

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 Kavulich of the U.S.-Cuba Trade and
Economic Council. "No one should be fuelling up their corporate jet and
filing a flight plan for Havana today."

CREDIT CONCERNS

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 soon will be
traveling to Cuba with Arkansas Governor Asa Hutchinson and
representatives from businesses such as farmer-owned cooperative
Riceland Foods.

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

Just getting there remains a hurdle, with a prohibition on regular
scheduled flights still in place. The new regulations allow U.S.
airlines to set up local offices, and to hire Cuban nationals as gate
agents, airline sources said.

Some former Cuban companies want a lot more.

On the heels of the 1959 revolution, communist leader Fidel Castro's
government seized privately owned homes and businesses and nationalized
all foreign businesses with little in the way of compensation or
restitution for Americans.

Bacardi, the largest privately held spirits maker in the world, was
among the most successful companies in Cuba before its Cuban assets were
seized by the government and its founders exiled in the 1960s. In a
statement, the company said it was too early to comment about a possible
return to the island nation.

"We believe that the issue of properties expropriated from U.S. citizens
and Cuban Americans will need to addressed," a Bacardi spokeswoman said
in a emailed statement.

(Reporting by Nathan Layne in Chicago and Lisa Baertlein in Los Angeles;
Additional reporting by Jeffrey Dastin in New York, Nick Carey and Karl
Plume in Chicago, Daniel Trotta in Havana, Yasmeen Abutaleb in San
Francisco, Abhirup Roy and Sweta Singh in Bengaluru; Editing by Peter
Henderson and Lisa Shumaker)

Source: Starbucks? OK. Lattes? No! Cuba business rules still complex
after U.S. changes - Yahoo News -
http://news.yahoo.com/starbucks-ok-lattes-no-cuba-business-rules-still-021108735--finance.html