Business Monday

Pritzker on Cuba: ‘I will lead a delegation there’

U.S. Secretary of Commerce Penny Pritzker is laser-focused on expanding U.S. exports and American competitiveness, but these days she’s also spending time on a market that purchased only $291.3 million worth of U.S. exports and ranked 49th among American trading partners last year.

That’s Cuba, where the White House is in the process of reestablishing diplomatic ties after more than a half century of isolation. The normalization process also includes a limited commercial opening toward the island that has been largely off limits to American businesses because of the U.S. trade embargo.

Pritzker was the keynote speaker in Tampa in late March at a forum organized by the Greater Tampa Chamber of Commerce and Tampa International Airport to discuss how Tampa Bay businesses might benefit from new opportunities in Cuba.

“What we’ve seen is enormous eagerness by the Cuban people as well as by the American people and American businesses to see more. But this is going to take time. This is not something we can get done overnight,” she said.

The opening includes expanded American travel to Cuba, and new regulations that would allow U.S. companies to participate in upgrading Cuba telecom infrastructure and sell Internet services and consumer communications devices. Commercial sales of construction materials and farm equipment are also permitted as long as they go to private hands and the sale of medicine and medical supplies was previously authorized.

Exports to support private business ventures on the island and limited imports of goods produced by Cuban private entrepreneurs also are allowed.

Since the White House announced its Cuba opening in December, it’s become clear that it takes two to tango and many of the new commercial initiatives will depend on the willingness and the capacity of the Cuban government to accept them.

“We’re hoping to see the responsiveness of the Cuban government be like its people,” Pritzker said.

She said she foresees the earliest opportunities in the sales of medicine and medical supplies, agricultural equipment and in the telecom and Internet sector.

“I think we have to remember that 5 percent of the Cuban population has access to the Internet and 2 million of 11.5 million Cubans have mobile phones,” she said. “So what’s the goal of the president’s change in policy? The goal has been the emergence of a democratic, prosperous and stable Cuba that empowers the Cuban people and helps promote bringing universal human rights and freedoms to the Cuban people. Along with that comes economic opportunity.”

Aside from gearing up for potential trade with Cuba, Pritzker has been crossing the country — and the globe — trying to drum up sales of U.S. exports, spreading the gospel of innovation and R&D, and promoting workforce education and training and investment in clean energy.

“These are not short-term fixes, but long-term investments to help us build an economic foundation that will keep our nation competitive in a rapidly changing world,” she told her Tampa audience.

After her speech, she sat down with the Miami Herald to discuss Cuba, her agenda and efforts to gain support for trade promotion authority, which would allow the administration to negotiate trade deals such as the Trans Pacific Partnership (TPP) and the TransAtlantic Trade and Investment Partnership (T-TIP) and then submit them to Congress for a yes or no vote without reopening negotiations.

Q. How is the Commerce Department going to support the White House opening toward more trade with Cuba? It’s a little tricky in terms of private entrepreneurs importing goods because this is something that has been handled by the Cuban government.

A. I think first of all we’ve had a change of regulations that allows telecommunications equipment and services and agricultural products and medicines and medical equipment to be sold in Cuba. We’ve also seen the allowance for remittances go up and there’s to be correspondent banking. But there are going to be more impediments to overcome to get distribution and things like that. It’s a process and that’s where the Commerce Department can play a very big role.

Our job is to facilitate trade. Our U.S. Export Assistance Centers will work with companies that are appropriate, that are allowed under the existing embargo and existing regulations. We will help them navigate.

I will go as soon as as we have normalized relations and have opened a U.S. embassy. I will lead a delegation there. In fact, I already have employees from the Commerce Department who have gone from some of our bureaus in order to work with the government to move toward more normalized relations.

Now, companies are already going. Google led a delegation. You’re seeing people going to visit. That’s because, as I said, there’s enormous excitement — excitement from the entrepreneurial community in Cuba and excitement here in the United States about that. I think they deserve our support.

Q. Do you have any insight in terms of the interest of U.S. companies in the telecom opening?

A. I’ve talked to a number of the major U.S. telecom providers and they are monitoring the situation to see what the opportunity is. Companies like Cisco and others were quite enthusiastic to move in. But I think everyone is trying to figure out, how does this work? You have to remember, the announcement only came just before Christmas. And we’re only a couple of months into the new year, but we’re seeing a lot of interest.

Q. In terms of a role for U.S. exporters to tap into these new Cuban opportunities, how do you suggest they go about this?

A. At this conference today [March 30], we have Matt Borman [deputy assistant secretary for export administration] with us. He is really the person at Commerce who led the rewrite of the regulations. He is here talking with businesses and illuminating them about the specifics of the regulatory changes.

Our belief is the business side of the relationship can be a leader, an area that helps bring about greater prosperity for the Cuban people. It’s exciting to see the interest by U.S. citizens and companies in figuring out how to engage with Cuba and what’s even more exciting is the interest by Cuban entrepreneurs in working with us. That’s where we can really bring something to the table in terms of supporting entrepreneurship in Cuba.

Q. How are the efforts to get trade promotion authority proceeding in Washington?

A. [A Trade Promotion Authority bill was introduced in Congress April 16.] The White House has played an absolutely critical leadership role — the president himself, those of us in the administration — in terms of working with Congress to explain why these trade agreements are so important. The Trans Pacific Partnership is at a point where there has been a lot of progress and we are very close to the end. But in order to finalize these agreements, the 11 other countries are looking to see if the United States will pass trade promotion legislation. The reason they are doing that before they put some of their final offers on the table is because they want to know that this deal is really going to happen. Trade promotion legislation is the opportunity for our Congress to say here are the standards these agreements must meet, here are terms we want to see in these agreements before we give the trade agreements an up or down vote.

It is absolutely critical that we do these trade agreements. Something is happening in the world that hasn’t been appreciated in my view. We’ve all come to realize that 95 percent of our customers are outside the United States. Today the middle class in the United States is about 140 million people; the middle class in Asia is 570 million people and it’s expected to go to 2.7 billion people in the next 15 years. If our companies do not have fair access in terms of where our workers are on a level playing field , where there is a minimum wage requirement, where their environmental standards are not similar to ours, we’ll be at a competitive disadvantage to the companies that are selling into those markets in Asia. We don’t have big trade barriers in the United States so it’s essential that we get these agreements. The Fortune 50 can negotiate their own terms but these trade agreements are really about small and medium-sized businesses having reliable access to markets.

Q. When President Barack Obama took office, he announced a National Export Initiative to double U.S. exports over five years. That did not happen. Why not?

A. Remember we had record exports last year — $2.34 trillion and we’ve had record exports five years in a row. Why did the president set that objective? He set that objective because he realized that more and more American businesses need to recognize what’s going on and that they’ve got to serve the 95 percent of consumers outside the United States. Precisely how fast that market grows isn’t really something the U.S. controls. What the U.S. controls and what the president is trying to do and what my department is responsible for is making sure more companies are out exporting, not just to one or two markets but three or four markets. More companies, more markets. That’s what we’re trying to do with the U.S. Export Assistance Centers that help companies determine where their products are competitive. We also have foreign commercial service officers in over 70 countries whose job it is to help U.S. businesses to sell their products into those countries. The world has become globalized and interconnected and companies need to get into those countries and that’s why free trade agreements are so important.

Penny Pritzker

Career: Sworn in as the 38th Secretary of Commerce on June 26, 2013. In her first year, she traveled to 19 countries and led four trade missions, including the first by a U.S. Secretary of Commerce to the Middle East in 15 years. Last year, she launched NEI/Next, an updated program that built on the president’s National Export Initiative.

Spent 27 years in the private sector and ran five different businesses in real estate, hospitality, senior living and financial services. Founder and advisory board chairman of Skills for America’s Future, which works with employers to prepare workers for in-demand skills; helped launch Skills for Chicagoland’s Future. Past chair of the Chicago Public Education Fund and former member of the Chicago Board of Education.

Memberships: Served on the boards of major corporations such as Hyatt Hotels, La Salle Bank, and the William Wrigley Jr. Co. Executive chairman of Trans Union.

Education: Bachelor’s in economics from Harvard University and J.D. and M.B.A. degrees from Stanford.

Personal: Born May 2, 1959 in Chicago. She and her husband Dr. Bryan Traubert have two children. Member of the Pritzker family, an influential Chicago business family. Her father was one of the co-founders of Hyatt Hotels.

Sources: U.S. Department of Commerce and staff reports

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