Cuba opens to world at Havana trade fair but few U.S. companies are present

Rodrigo Malmierca, Cuba’s minister of foreign trade and investment, makes the opening speech for the 34th Trade Fair in Havana, Cuba.
Rodrigo Malmierca, Cuba’s minister of foreign trade and investment, makes the opening speech for the 34th Trade Fair in Havana, Cuba. AP

Despite the Obama administration's efforts to build a new business relationship with Cuba, U.S. companies were far from center stage at the 34th Havana International Fair.

The fair, which began Monday and runs through Friday, is an international extravaganza of buying and selling that has brought together more than 3,500 exhibitors from 73 countries at the sprawling ExpoCuba complex outside Havana.

Cuba with 125 exhibitors representing 325 enterprises was naturally the largest participant and occupied the central pavilion trying to sell everything from its biopharmaceutical products to Coppelia ice cream and its famed cigars and rum.

Cuba will probably finish the year with less than 1 percent growth.

The fair in one of the last Communist countries in the world comes at a time when the Cuban economy is struggling. In the ceremony opening the fair, Rodrigo Malmierca, Cuba's minister of foreign trade and investment, said the country will probably finish the year with less than 1 percent growth.

There were some two dozen exhibitors from the United States, including JetBlue, California wine producers, Napa Auto Parts, Cummins engines and the USA Poultry and Egg Council.

Their numbers were also bolstered by the arrival Tuesday of a business delegation led by the U.S. Chamber of Commerce's U.S.-Cuba Business Council.

Former U.S. Secretary of Commerce Carlos Gutierrez led the delegation, which also included executives from American Airlines, GE, and Fifth Street Asset Management.

But the U.S. numbers paled in comparison with some of the European countries. Spain had more than 100 exhibitors, Italy registered 93 and Germany had 65.

They even eclipsed exhibitors from some of Cuba's closest trading partners. China, which introduced a new Yutong electric bus at the fair, had exhibitors signed up for 48 booths; there were 31 exhibitors from Venezuela and just 15 from Russia.

Prominent banners marked the pavilions of these nations, but the United States had to share space in a pavilon with the Caribbean countries, Puerto Rico and Pakistan.

Despite wider latitude for U.S. business to now operate in Cuba -- even with the embargo still in effect -- the Cuban government has been slow to strike deals with many American companies.

They've made it very clear the embargo needs to be lifted before there is the unfettered participation other countries have.

Saul Cimbler, business consultant

“They've made it very clear the embargo needs to be lifted before there is the unfettered participation other countries have,” said Saul Cimbler, president of Cuba Business Advisory, a Miami consulting firm on the hunt for joint ventures in Cuba.

“Whether U.S. companies figure out how to participate with Cuba or not [under new Obama administration rules], the Cubans are moving forward with other countries,” said Cimbler, who attended the fair.

In fact, the Cuban government has intensified its campaign for an end to the embargo in recent months.

Malmierca not only complained that some of Cuba's current economic woes were due to a “stiffening of the blockade” -- the Cuban term for the embargo -- but also to its “extraterritoriality,” which makes it more difficult for Cuba to do business with third companies.

Still, the U.S. exhibitors at the fair were upbeat.

Cummins, which makes a variety of motors for trucks, boats and mining equipment, was making its first appearance at the fair. To promote its brands, it was doing a brisk business handing out pens, baseball caps and straw hats emblazoned with its company name.

“I've been assigned to develop business here,” said Jaime Teixeira de Queiroz, the company's Miramar-based executive director for business in the Caribbean and Cuba.

The company is exploring which of its products may be eligible for sales to Cuba under exceptions to the embargo and thinks the telecom, transportation and renewal energy sectors offer the best opportunities.

He said Cummins “wants to move quickly” and hopes to have a distributor in Cuba within a year or year and a half.

Rust-Oleum can't currently sell its paint and maintenance products in the Cuban market, but the company figured it was important to get exposure at the fair, said Oscar Rubio, a Miami-based consultant for Rust-Oleum Sales Co.

But he said the company is hopeful that could change soon. “We are expecting some changes [in U.S. regulations] in the next 60 days -- at least that is what our consultant on regulations tells us. He is very positive and thinks we can be selling in Cuba by March 1. We certainly want to be,” Rubio said.

A recent U.S. rule change allows American companies to negotiate future contracts or a memorandum of understanding with Cuban entities, contingent on getting future approval from the U.S. Office of Foreign Assets Control or when the embargo is lifted.

During the Havana fair, Cuba is looking to not only boost its trade but also to increase foreign investment -- an area that is still largely off limits to American companies.

On Tuesday, it hosted an investment forum in conjunction with the fair, and Malmierca made it clear that Cuba is ready to open to the world.

“Foreign investment isn't a necessary evil. We want it for the development of the country,” he said. “It's sovereign decision of Cuba that no one is imposing.”

Foreign investment isn't a necessary evil. We want it for the development of the country.

Rodrigo Malmierca, Cuba's minister of foreign trade and investment

To meet its development goals, Cuba has said it needs to attract $2.5 billion in foreign investment annually.

Since it introduced a new foreign investment law in 2014, Malmierca said Cuba has attracted 14 investments in existing businesses, 15 new investments at the Mariel Special Economic Development Zone and 54 investments outside the zone. They add up to $1.3 billion, far from Cuba's goal, conceded Malmierca.

At the forum, he unveiled Cuba's third investment portfolio -- projects that have been studied in detail and are ready to receive capital from foreign investors. The latest portfolio includes 395 projects -- 69 more than in 2015.

They represent a potential investment of $9.5 billion.

Among the high priority areas for investment are tourism, renewable energy, infrastructure improvement and projects related to agriculture and food production. Investment can be direct or through an associate company, said Malmierca.

“What struck me, generally speaking, is that the Cubans continue to expand regulations regarding foreign investment,” said Gutierrez. “I know people think the process is moving slowly, but it is moving.”

Each year there have been more indications that Cuba is becoming more welcoming to foreign investment, he said.

Over the course of the two-day investment forum, he said more than 200 appointments had been scheduled with business executives.

U.S. Cava Exports, which represents several wineries in California's Napa and Sonoma valleys, also hopes to see sales to Cuba develop in the near future. It considers both state enterprises and private restaurants as its potential customers.

“We're almost there. We hope to have our first container of California wines in Cuba by January 2017,” said Marisol Lopez, vice president of U.S Cava Exports. “It's exciting times.”

Wine is considered an agricultural export and is therefore eligible for sales to Cuba, Lopez said.

It was U.S. Cava's second year at the fair and Lopez said that some companies she saw last year had not returned.

“I think they thought they would be able to sign quick contracts,” she said. “You need to establish relationships. It takes a lot of patience.”