First Ones to Move Get the Lobster: On Opening Up Trade with Cuba

When it as announced in 2014 that, thanks to the Obama administration, America would finally restore diplomatic ties with Cuba after 50+ years, the optimism over individual movement between the two countries and a less adversarial political relationship between their respective governments going forward was tempered by the recognition that trade between the two was still a good ways off. That area is indeed where the hardest work lay in store, and as of today it is still an ongoing process, with American businesses and supply chain managers waiting excitedly, if somewhat hesitantly, for it to finally happen.

Open trade between the two nations should be a no-brainer, as it is mutually beneficial. President Raul Castro has been looking to ease Cuba’s struggling economy while maintaining the ideals and preserving the legacy that his brother, Fidel Castro, established over half a century ago. Easing into a society with more private ownership and wealth while holding onto power is a difficult line for the government to walk, and it can’t be done without outside business investment.

American shippers, meanwhile, would love to make use of Cuba’s Special Development Zone, where imports are duty-free and businesses aren’t required to pay taxes for 10 years upon establishing themselves within. Supply chain managers also note that Cuba could serve as a shipping hub for trade throughout the rest of the Caribbean.

American businesses are also keen to see trade open up, for obvious reasons. More than just an unexplored region for them to capitalize on, Cuba is particularly attractive to various vertical markets. Caterpillar Inc., one of the largest machinery manufacturers in America, has long been calling for an end to the embargo, as well as providing humanitarian aid to the island nation’s struggling farm community. Under special agricultural dispensations allowed by the Obama administration, they’ve been able to do some business with Cuba, but they are looking to do much more, as Cuba’s growing agrarian sector can provide a huge potential customer base.

Likewise, retailers in the home improvement sector, including industry giant Home Depot, see a great business opportunity in Cuba, thanks to the dilapidation of its infrastructure, particularly in regards to residential homes, 90% of which are owned by their inhabitants. Grants by the Cuban government have made it so these home owners are seeking to make the necessary improvements to their buildings on their own, which is where a large retailer such as Home Depot could find itself incredibly welcomed.

Recent delegations to Cuba by American officials and state representatives from across both sides of the isle, businesses such as Caterpillar, Home Depot, Boeing, Sprint and others, and even the U.S. Chamber of Commerce have made it clear that, on the American side, there is a big push to get the ball rolling on trade. However, there are still several large obstacles standing in the way of that ball.

Although there is a good amount of bi-partisan support in favor of open trade, there are still those who are opposed to any further stabilization of relations between the U.S. and Cuba, particularly on the Republican side, over what they see as a record of human rights violations by the Castro regime. This opposition includes recent former Republican Presidential candidates Marco Rubio and Ted Cruz, both of whom have used their high profiles to speak out against the lifting of the embargo.

More important is the reluctance on behalf of American businesses—including those who do want to establish a market in Cuba—thanks in part to uncertainty over regulatory policy changes that could tie them up when they finally try do business. This is particularly true of financial regulations imposed by the United States, which would put businesses in a confusing position in regards to the legality of their operations. This skepticism is supplemented by the infamous slowness of Cuba’s bureaucracy. Together, this is enough to keep American businesses from pushing as hard on this issue as they otherwise might.

President Obama has used his authority to make exceptions to the embargo, mostly having to do with agricultural trade (in the name of humanitarian efforts), and can (and likely will) make more, in order to continue to lay the groundwork towards a full stabilization of relations between America and Cuba. But the only real way to facilitate the type of trade that would be mutually beneficial to all involved is to lift the embargo entirely.

This certainly won’t happen before the election, and likely won’t happen—if it happens—until the next president is firmly established in office. If Republicans maintain control of Congress the chances of seeing the embargo lifted become slimmer, since it is up to Congress to do it, and there is significantly more opposition on the Republican’s side. If things change in that regard, either thanks to a shift in the balance of power within Congress, or due to pro-Cuban-trade Republicans convincing their counterparts to change their minds, compromises will still have to be made by all parties involved. America will have to ease, or at least simplify, some of the financial regulations currently in place, and Cuban bureaucracy will have to operate faster and with more efficiency than they are used to. Neither side can afford to let ideological purity stand in the way of true progress.

As one Caterpillar executive recently told Cuban scholar and Huffington Post contributor William LeGrande, “The first movers in Cuba get the lobster.’ That could end up being China, Canada, or Europe. Or it could be the United States.

America wants the lobster, but to get it, it has to do the hard work of catching it for itself.