Caribbean Export OUTLOOK 2016 - 2017

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Cuba is the largest of the Caribbean islands,
occupying an area of 109,884.01 km2, including
nearby cays and islets. It has five major cities,
Havana, Santiago de Cuba, Holguin, Cienfuegos,
Camaguey and Santa Clara – Havana being the
capital. 10 international airports including one
in each of the major cities; 15 national airports,
and one railway network to support inter-island
travel gives some indication of its size. There is
a dual currency monetary system in Cuba of
the CUP (Cuban peso) and the CUC (Cuban
convertible Peso). The official exchange rate is
1 CUC:1 USD within Cuba, and 1 CUC:26.5
CUP. The CUP is generally used internally
by the local population while the CUC is for
tourists and the business sector. Reportedly,
supermarkets have begun only this year to list
prices in both CUC and CUP values, indicative
of the planned movement by government
towards unification of its monetary system.
A trending business and economic discussion
in both regional and international circles is
the question of Cuba as the current market of
choice for investment and trade. Speculation has
been heightened with the recent overtures by
the governments of the USA and Cuba towards
détente, and business
communities are seeking
to understand how best
and how quickly they can
move to engage in trade
or investment with this
Caribbean island nation of
12 million inhabitants.
The political and economic
ethos of Cuba has shaped the character of the
market, presenting would-be exporters with the
prospect of doing business essentially with the
Cuban government as opposed to private sector
enterprises. The business model is therefore non-
traditional, as the government determines such
things as wages, prices, the nature and quantity of
imports, and the banking system– all with direct
implications to private sector trade. The market
must therefore be approached with tenacity
to wade through certain levels of bureaucracy
that attend monopolistic structures, as well as
adaptability to assimilate the necessary strategies
for success in the Cuban marketplace.
Cuba has practiced as far as possible a policy
of import-substitution. However, its major
imports are fuel, oils and minerals, food and
beverages, machinery and transportation, and
other manufactured products. These are mainly
sourced fromVenezuela, by far its largest trading
partner (43% of imports for 2013); followed
distantly by Canada and the Netherlands, each
supplying approximately 8% of imports, and
China (6.5%). Cuba has begun to shift its trade
focus somewhat from the EU to more South-
South trade with countries such as Brazil, Mexico,
and Argentina.
When exporters consider the Cubanmarket they
should importantly consider the significant size
of Cuba’s tourist market and the priority of this
sector to the economy. Between 2006 and 2010,
2.3million tourists travelled toCuba . This figure
has no doubt increased significantly – in 2014
alone, 3 million tourists visited Cuba. Cuban
tourists are largely from Canada, Europe, Latin
America, China, and others, notably including
the US. With the recent easing of travel
restrictions by the US Government to allow
travel of American citizens to Cuba, analysts are
projecting a tripling of tourist arrivals from that
country in the near future. According to several
official agencies in the country, the burgeoning
demand of vistors to Cuba cannot be satisfied by
the current rate of domestic production nor levels
of imports combined. The Caribbean is viewed
as an important potential sourcemarket for these
much-needed products and services. Consider
that procurement for the tourism sector is the
sole responsibility of Comercializatiodora ITH,
a government import and distribution entity. To
be a supplier to ITH of a particular product(s)
or service to this sector can no doubt be quite
lucrative.
It is interesting to note that the approximate wage
of a predominantly male working population is
US$25permonth, depending of course on the area
of employment. As the tourism sector continues
to grow, the corollaries of increased employment
and services to the sectorwill have implications for
local spending and demand patterns for goods like
food and beverages, recreation, clothing, housing
and household goods.
CARICOMhas beenplaced at a distinct advantage
to export its offerings to the Cuban market with
the establishment of the CARICOM-Cuba Free
Trade Agreement (FTA) which has been in
place since 2000. Under this arrangement, five
countries consist theMost Developed Countries
(MDC’s) – Barbados, Guyana, Suriname,
Jamaica, Trinidad and Tobago; while Belize and
the OECS and make up the Less Developed
Countries (LDC’s).
Overall, the full benefits of this Agreement have
not nearly beenharnessed todate, thoughTrinidad
and Tobago has made significant inroads. Exports
from Trinidad and Tobago to Cuba fluctuated
on an overall upward trend to increase by 52%
between 2000 and 2013 from US$30.8 million
to US$46.8 million in 2013. In 2013, Trinidad
represented 92% of CARICOM’s MDC exports
toCuba. The remaining 8%of exports was divided
among Jamaica, Guyana, and Barbados, averaging
annual exports of US$3.5 million, US$420,825
andUS$41,573 for the period respectively.
Exports from the (LDCs) have been negligible
to non-existent over the 14-year period, with a
smattering of exports by Belize in the early years of
the Agreement andDominica in the latter.
Trinidad and Tobago’s success to date in
this market can partially
be attributed to the
establishment of a trade
facilitation office – the only
such CARICOM office in
Cuba. They have used as
their strategy, two flagship
products/companies – Sacha
Cosmetics and Angostura – to
create significant impact and
buy-in from the Cuban market, establishing
themselves as providers of high-quality and
desirable brands. They have made the way
smooth for their exporters to penetrate and
expand unrivalled throughout the Cuban
marketplace, using the Trade Agreement as a
platform. Angostura has gone on to make an
important strategic alliance with the powerful
Cuban Barmen Association which has national
reach. Associated Brands Industries Ltd, another
Trinidadian-based company, is also reaping
success in the market with its variety of snacks
and biscuits.
The current opportunities for CARICOM
exporters become apparent upon examination
of the list of items presented in Annexes I and II
of the CARICOM-Cuba Trade Agreement, where
a range of goods are allowed duty free access once
they meet the rules of origin requirements as set
down in Annex VI of the Agreement. There are
The current opportunities for CARICOM
exporters become apparent upon examination
of the list of items presented in Annexes I and II
of the CARICOM-Cuba Trade Agreement.
TRADE & EXPORT HOT SPOTS
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