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New Cuba rules could flood island with U.S.-made goods















Alan Gomez, USA TODAY



9:40 a.m. EST January 16, 2015








USA TODAY Reporter Alan Gomez discusses the new amendment President Obama issued on Thursday allowing U.S. citizens to visit Cuba and how people can apply. 








(Photo: Jose Goitia, AP)








MIAMI — As many Americans wonder how quickly they can travel to Cuba under new rules announced by the White House, business owners are more focused on how many products they could start shipping to the island.




One of the surprises in the rules that go into effect Friday allows U.S. companies to sell "tools, equipment, supplies and instruments for use by private-sector entrepreneurs" in Cuba.




Those who've done business with Cuba were surprised Thursday by the vague — and permissive — wording by the Commerce and Treasury Departments that seems to allow Americans to sell anything from scissors to private barber shops to tractors to private farmers.



"I don't think any of us expected something quite as wide as this," 
said Ron Oleynik, who heads the trade regulatory practice at the Holland & Knight law firm. 


"These are fairly careful people who drafted these (rules), so they didn't do it blindly. They did it with an eye to leaving them vague."


Despite the economic embargo that remains against Cuba, U.S. companies have long been able to export food, medicine and medical supplies there on humanitarian grounds. 





American businesses exported $273 million worth of goods to Cuba through the first 11 months of 2014 and have shipped as much as $712 million in goods there in 2008.






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Many expected the Obama administration to expand and facilitate those transactions, and it did. Under the new rules, American banks can handle transactions from Cuban banks, making it easier for Cubans to pay for their goods. Cubans can pay upon delivery of products, eliminating the burdensome practice in which payment had to be received by American companies before they shipped their products.




The new rules open the door to a broad group of U.S. companies that may not have even imagined their products could end up in Cuba.


"Cuba is a potential market for John Deere products and services,"
company spokesman Ken Golden said.



"We look forward to serving customers in Cuba as we do throughout Latin America and around the world."


The list of companies could include auto parts stores to supply mechanics, office supply chains to help start-up businesses and a "whole host of different industries," said Jake Colvin, vice president of global trade for the National Foreign Trade Council, a Washington-based business organization.





A barber works at his shop in Havana in December 2014. Such private businesses could benefit the most from new rules announced by the Obama administration that allow U.S. businesses to sell resources directly to small, emerging businesses.(Photo: Alejandro Ernesto, epa)








Still, there are several hurdles to overcome before exports can flow to the port of Havana and severe limitations when they do.




First is the legal question. Critics of Obama's changes, led by Cuban-American Sen. Marco Rubio, (R-Florida.), say the trade rules may violate the economic embargo on Cuba.



 Rubio plans to hold hearings on whether Obama overstepped his authority.



"Clearly the administration is skirting a line here between what is still legally restricted by statute and what is within the discretion of the president ... to loosen these restrictions," said David Levine, a partner at the McDermott, Will & Emery law firm and a former Commerce Department official under President Reagan.




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There are also questions about whether the everyday financial transactions needed to export items to Cuba can be resolved.



 The Cuban government must create its own rules to facilitate money transfers, and many worry Cuban officials will restrict or try to take large cuts of any large imports of money or materials.



"My experience is the Cubans want to control as much as they can," Colvin said. "They want a drip, not a flood of foreign trade and foreign investment, so they're going to do what they can to limit the process."




Because of uncertainty over the financial transactions and Cubans' ability to pay, Levine said, American business owners will be cautious about striking deals with Cuban entrepreneurs.




"A barber (in Cuba) is going to be able to call up and order something," Levine said. "But if I'm the supplier in the United States, I'm going to be reluctant to send a shipment to Joe Barber without some assurances that (I'm) going to be paid for it."





Workers landscape the area near a port under construction in Mariel, Cuba, in November 2013. That port could see more traffic from American businesses sending resources to Cuba's small, private businesses.(Photo: Franklin Reyes, AP)











The U.S. government will start doing outreach soon to American businesses to explain the new process and recruit their services, a senior administration official said Thursday. The official spoke on condition of anonymity, because he was not authorized to publicly discuss the plans.





Figuring out potential profits available in the Cuban economy is a factor. The list of possible customers is severely limited by the Cuban government. Though the government has started allowing private enterprises to operate outside the traditionally state-run economy, it has approved fewer than 200 jobs that can be performed privately, mostly in the basic service industries. More than 500,000 people have been given private licenses.







USA TODAY

Economic reforms changing life - and dreams - for Cubans







Some have money coming to them from relatives in the USA, but many do not, meaning they have little ability to pay for major equipment upgrades. 





Cuban state workers generally make less than $20 a month, forcing many to scramble for food and basic necessities and limiting their ability to invest in their businesses.



"Interest in Cuba has always exceeded its potential as a market," Colvin said.






That could be where other rule changes come in. American businesses can provide microfinancing for Cuban entrepreneurs. Americans with no relatives on the island can send up to $2,000 a quarter to Cubans, up from the current $500. Americans can send an unlimited amount of money to Cubans who fall under certain categories, including private businesses.










The U.S. cargo ship Ana Cecilia arrives in Havana Bay in 2012, carrying a shipment of humanitarian supplies from Miami. American companies will be able to sell more products to Cuba under new rules under President Obama.(Photo: Franklin Reyes, AP)










Under easier travel rules for Americans looking to explore business possibilities, the first big wave in Havana will probably be business owners trying to figure out how it all works.






"Americans can actually go down there on a business trip, market their products, research the market,"
Oleynik said. "And they're already asking about it. I've got clients climbing out of the woodwork asking questions. It's a hopping day."











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