Obama Administration Encourages U.S. Businesses to Forge Cuba Links

By Felicia Schwartz

Nearly a year into President Barack Obama’s thawing of relations with Cuba, the administration is urging American companies to move quickly into the island nation in the hope of making the shift irreversible.

Diplomatic relations have been restored and embassies reopened, but the U.S. embargo remains in place and American-Cuban business ties are still limited. Congress isn’t expected to pass legislation lifting the embargo before Mr. Obama leaves office.

The message from the administration during a trip by executives to Havana this week: Seize on the momentum of the past year to forge links with Cuba.

“President Obama and Secretary Kerry are working on lifting the embargo,” said David Thorne, a senior adviser to Secretary of State John Kerry, at a meeting with Cuban officials and American executives at the Cuban Ministry of Commerce and Trade in Havana this week. “But in the meantime, we have the opportunity to change the regulations…to be able to encourage the lifting of this embargo.”

Carlos Gutierrez, the former George W. Bush administration commerce secretary who this year dropped his longtime support of the embargo, is urging other Republicans to back the thaw, and was in Havana as part of a delegation led by the U.S. Chamber of Commerce.

“We need two or three or four or five important deals…to show that there’s momentum, to show that this is for real,” said Mr. Gutierrez, a Cuban-American who chairs Albright Stonebridge Group, a strategy firm.

Business executives are starting to take up the cause and are urging the administration to further loosen regulations.

“There’s genuine enthusiasm,” said Bill Lane, senior director of global government and corporate affairs at Caterpillar Inc. who is on the board of the U.S.-Cuba Business Council. “The baby boomers want to travel to Cuba, the business community wants to sell to Cuba and the agricultural community is exceedingly anxious to do more business. Now’s the time to open up markets, not to close markets.”

Many Republicans, however, oppose the warming relations, citing human rights concerns. Marco Rubio, a contender for the Republican presidential nomination, has threatened to end diplomatic relations with Cuba if elected.

Regulatory changes by the Obama administration this year allow U.S. firms to make some deals with the Cuban government, particularly in telecommunications and agriculture. But officials and executives say they fear the window will close if U.S. companies don’t act.

Jodi Bond, a vice president of the pro-normalization Chamber of Commerce and head of the U.S.-Cuba Business Council, said many businesses want the embargo lifted.

“Universally, business people in Miami and all across the United States want a renewed relationship with Cuba, and the economic relationship is the key to transforming that,” she said.

The Chamber of Commerce group included more than 60 representatives from 32 companies such as Boeing Co., Amway, Sprint Corp., American Airlines Group, Caterpillar, Morgan Stanleyand others. It was the largest U.S. business group to travel to the island at least since the 1959 revolution.

A main destination was the annual Havana International Fair, the first since last year’s normalization move and an event that Cuban organizers said was the biggest ever. Besides the Chamber group, dozens of other U.S. executives traveled to Havana.

In a sign of the changes under way, this year’s fair was seen as a must-attend event for the U.S. companies, said two longtime Cuba consultants. The mezzanine cafe of the upscale Hotel Saratoga in Old Havana, where many of the Americans in town stayed, was filled during the week with high-profile encounters and meetings over Cuban coffee or, at later hours, mojitos and cigars. The U.S. embassy hosted several events this week for the Americans in town trying to take stock of opportunities.

Despite the fanfare, challenges remain for U.S. companies because of the embargo and Cuba’s own laws.

Cuba has a dual-currency system, which officials here have pledged to unify. Foreign companies can’t hire their own staff and face steep taxes to import basic goods for their businesses, such as cars. All imports must go through the Cuban government. Additionally, some of the activities the new U.S. regulations allow U.S. companies to do aren’t yet permitted by the Cuban government, and making deals there can take several years.

Cuban officials here told business representatives this week that they welcome U.S. investment but cautioned against efforts to try to change Cuba’s economic system.

Besides the embargo, the U.S. and Cuba are opening talks on a variety of issues of varying complexity. They have prioritized reaching a civil aviation agreement, now expected in 2016.

“We are doing all that we can to enable a civil aviation agreement,” said Howard Kass, vice president of regulatory affairs at American Airlines, adding that to foster economic changes and spur business, “We need air service.” The airline company’s planes currently are used for 22 charter flights a week to Cuba.