Virginia and Cuba discuss expanding trade beyond agriculture
A top Cuban trade official recently spent three days in Virginia meeting with business and government leaders eager to capitalize on normalizing relations between the United States and the island nation just off its shores.
The meetings wrapped up a week ago, just as the Obama administration rolled out regulatory changes aimed at liberalizing trade, banking and travel policies.
The trade talks went beyond the agricultural products that Virginia has sold to Cuba for more than a decade under rules loosened to allow exports of food and medicine for humanitarian reasons.
Tourism and hospitality, university-level education, health care and information technology were part of the recent discussions, according to Todd Haymore, Virginia’s secretary of agriculture and forestry, who took part.
Details of the meetings remain under wraps. Haymore confirmed that they took place in locations around the commonwealth, at the Port of Virginia, in Northern Virginia and in the central part of the state.
But he said he was not at liberty to disclose the names of businesses trying to establish a foothold in Cuba. He also declined to identify the Cuban trade official, saying that should come from the Cuban Embassy in Washington. The embassy did not respond to messages seeking comment.
The goal of the talks was to build on the trade that Virginia has established through sales of soybeans, apples, poultry and pork going back a dozen years, Haymore said. Those sales have already made Virginia Cuba’s third-largest U.S. trading partner, behind Louisiana and Georgia. State business and government leaders have said that they are poised to capitalize on expanded trade opportunities if the Cuban trade embargo falls further by the wayside.
“We’re finally starting to see a move toward normalization after decades of strained relations, and Virginia’s standing right at the front of the line, or very close to the front of the line, to take advantage of the new opportunities,’’ Haymore said.
Gov. Terry McAuliffe (D), who has made economic development the centerpiece of his governorship, started pushing to expand trade in Cuba even before the recent diplomatic thaw between the two countries. The governor and Haymore traveled to Washington late last year to visit with José R. Cabañas, then chief of the Cuban Interests Section.
McAuliffe invited him to visit Richmond, and Cabañas took McAuliffe up on the offer in January. It marked the first time that the diplomat had been the guest of an American governor. About a month before the meeting took place, Obama announced plans to reset the country’s relationship with Cuba
Even so, relations between Cuba and the United States remained so far from normal that when Cabañas made his visit, he had to get the State Department’s permission to travel outside the Beltway.
Since then, Cabañas’s title has changed to ambassador because both countries have reopened their embassies. The trade official who visited a week ago did not need the State Department’s permission to venture beyond the Beltway, but he still needed to inform U.S. officials of his travel plans.
When Cabañas returned to Richmond in March for an agricultural trade conference, McAuliffe announced that he would lead a trade mission to Cuba. The mission has yet to take place. Haymore said it remains in the works for late this year or early in 2016.
Virginia governors have been trying to get a piece of the Cuban market since Mark R. Warner (D) became governor in 2002. Warner, now a U.S. senator, dispatched his commerce and trade secretary to the island, taking advantage of liberalization allowed when President Bill Clinton signed the Trade Sanctions Reform and Export Enhancement Act.
Warner’s move helped Virginia farmers sell about $800,000 in apples and soybeans to Cuba in 2003 — the first exports from Virginia to Cuba since President John F. Kennedy imposed a Cold War trade embargo in 1962. Annual trade missions and other outreach continued under governors Timothy M. Kaine (D), Robert F. McDonnell (R) and McAuliffe, with sales peaking at $66 million a year in 2011 before Cuba’s souring economy forced cutbacks.
Banking restrictions have compounded those economic problems, and the value of Virginia’s agricultural trade with Cuba has dropped substantially since then — to $40 million in 2013, and $25 million in 2014.
Obama’s recent regulatory changes could help by allowing certain U.S. businesses to open bank accounts in Cuba. But it remained unclear whether Cuba will change its policies to allow the looser U.S. policies to take effect. It is also uncertain whether Obama’s actions will withstand possible challenges from the members of Congress who have questioned his authority to make them.
“Normalization has created many new ways for Virginia companies to engage in authorized commercial activities in Cuba,” said Matthew Aho, a New York-based consultant on Cuba matters at the law firm Akerman.
“The commonwealth’s long history as a trade partner in agricultural goods should give Virginian businesses an edge; the question now is how aggressively companies will work to take advantage of the recent U.S. policy changes.”