Monday, November 30, 2015

Texas sees business potential in trade with Cuba

Texas sees business potential in trade with Cuba
Staff Writer
Published: 29 November 2015 10:52 PM

In true cowboy spirit, many Texans see Cuba as a new frontier.

Businesses in the state stand to generate jobs and millions of dollars
in trade with Cuba as the United States takes steps to open relations
with the communist country for the first time since 1961.

Texas could see $43 billion in total economic impact and 214 new jobs
from increased exports and other trade with Cuba, according to a new
report from Texas A&M University.

To jump-start efforts, Gov. Greg Abbott is leading a large state
delegation to Cuba on Monday, less than one year after President Barack
Obama re-established diplomatic relations with the island nation.

"With a new era of eased trade and travel restrictions between the U.S.
and Cuba … Texas has an opportunity to capitalize and expand its
economic footprint at home and abroad," Abbott said in a statement.
Joining him in Cuba will be state agriculture and port representatives
and business people.

The Texas visitors will spend three days in Havana, the capital, meeting
with officials from Cuba's Ministry of Foreign Trade and Investment, the
Port of Mariel, the Cuba Chamber of Commerce and two Cuban state
companies, Alimport and Cimex. TexasOne, the state's economic
development corporation, is paying for Abbot's trip.

Cuba is only about 90 miles southeast of the United States, yet the two
nations have been far apart ideologically, economically and
technologically for more than 50 years. Some of that is about to change.

Last December, Obama took steps to start normalizing relations with
Cuba. The U.S. government aims to increase travel, commerce and the flow
of information to and from Cuba, but it still has an economic embargo
against the island for now.

Since Obama's announcement, "the response in Texas for trade with Cuba
is really quite overwhelming," said Plano consultant Cynthia Thomas, who
was hired by TexasOne to coordinate Abbott's trip.

"I can't even describe the amount of calls I get from around the state
from all kinds of businesses with all kinds of ideas wanting to get into
the Cuban market," said Thomas, who helps companies export. "That's
Texas — they're very entrepreneurial."

Thomas, who has visited Cuba 39 times since 2000, estimates that she has
helped Texas companies sell $85 million in goods — mostly powdered milk
and some cotton — to Cuba in the last decade.

'The potential is there'

Texas exports to Cuba have plummeted since 2008 as Cuba has aimed to end
the U.S. embargo that has existed since 1962, said Parr Rosson, head of
the agricultural economics department at Texas A&M University. Other
factors have included a Cuban ban on U.S. poultry, better credit terms
from other countries and Cuba's own weak economy, he said.

Texas exported $131,327 in goods to Cuba in 2014, down from $96.2
million in 2008, according to the International Trade Administration.
U.S. exports to Cuba totaled $299 million in 2014, down from $711.5
million in 2008.

Today, Texas companies mostly export frozen chicken legs and thighs,
corn and soybean products to Cuba, Rosson said. The U.S. allows
medicine, food and agricultural products to flow to Cuba under a
humanitarian exemption to the embargo.

Rosson estimates that Texas exports to Cuba could rise to about $19
million a year through the addition of wheat, dairy products, rice,
animal feed, dry beans and beef.

"The potential is there because the market has been growing, but
unfortunately our products haven't been competitive," Rosson said.
"There's been an incursion of other countries, such as Brazil, China and
Canada, into the market. Anything we can do on a trade mission about the
benefits, the quality and the proximity of the supply chain will go a
long way to strengthening the market."

In all, Cuba imports between $1.4 billion and $1.9 billion in
agricultural and food products a year, mostly from Europe, Brazil,
Argentina and Canada.

Lawler Foods in Humble, near Houston, is interested in selling its
frozen cakes and pies in Cuba but probably will stay on the sidelines
for a while.

"I would love to go to Cuba, but it's just not a big priority," said Wes
Stasny, vice president of sales for the family-owned company, who went
to Cuba on a state-sponsored trade mission in 2008. "There's bigger fish
to fry. Asia is huge. Cuba is just a little island.

'In the crawl stage'

It's not just food companies that are interested in Cuba.

American Airlines, the world's largest air carrier, flies to more than
50 countries and hopes to add Cuba next year.

The Fort Worth-based carrier, which has operated charter flights between
the United States and Cuba for 24 years, has said it's ready to start
scheduled service as soon as the two governments allow it.

American flies an average of 22 charter flights a week to Cuba from
Miami and Tampa. It plans to launch charter service from Los Angeles
next month.

Monday's trip will be Abbott's second international trade mission since
he took office in January. In September, he and Texas Secretary of State
Carlos Cascos visited Mexico on Abbott's first official international
trip, the first by a Texas governor since 2007.

Mexico is Texas' largest trade partner, accounting for $102.6 million in
exports from the state last year. In comparison, Cuba is Texas'
203rd-largest trade partner, out of 237 countries.

"We truly are in the crawl stage of this evolution," said Stephen
Colliers, a spokesman for the International Trade Administration.
"There's a lot of excitement around the possibilities of exporting to
Cuba. It's still pretty restricted, and for the foreseeable future it's
still going to be that way."

Twitter: @SJeanDallas

Source: Texas sees business potential in trade with Cuba | Dallas
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