New U.S.-Cuba Relations Present Opportunities for Small Business

Looking to grow your business by breaking into a new market? Recent moves from the White House may have provided the opportunity your small business is looking for. Small businesses interested in expanding their footprint to Cuba or selling Cuban-made goods in the United States will soon be able to do that, thanks to new rules championed by President Obama allowing trade and travel between the United States and Cuba to become more accessible.

The new policies, which move to undo the 54-year-old U.S. embargo against its communist-led island neighbor, allow for more American travel to Cuba, people-to-people exchanges, and let U.S. citizens bring home small amounts of Cuban cigars and other goods. This could be great news for many U.S. businesses. While the renewed relationship between the two countries is still unfolding, experts believe the growth potential and opportunities for small business are likely to rise.

Export and Import Opportunities

For now, Cuba and U.S. legislators have focused on cooperation on anti-narcotics efforts, emergency responses in the Caribbean, telecommunications infrastructure, and public health. Exports are still tightly controlled. According to the Miami Herald, restrictions on exports remain in place, “with limited exceptions to sales of construction material, agricultural tools and machinery that will be allowed for the private sector, apparently via Cuban enterprises.” In the short term, there may be opportunities for small businesses to export approved commodities.

However, exporting to Cuba may be tricky. “One obstacle is that, in general, the Cuban government has a monopoly on imports and exports,” says Amaury Cruz, vice president of the Foundation for Normalization of US-Cuba Relations in Miami. “It will be interesting to see how the two governments get around that obstacle. One possibility that has been discussed is the creation of an import agency in Cuba that will guarantee the ultimate distribution of imported products to qualifying enterprises.”

For companies that want to import Cuban goods, the U.S. State Department is crafting a list of allowable items, Cruz says. “If the Cuban government follows through and the listed items are truly comprehensive, some of Cuba’s current top export products, as well as new products, could provide opportunities to small importers in the United States,” he says.

This could include tobacco products, alcoholic beverages, semi-finished iron, crustaceans, citrus fruits, fruit juices, handicrafts, restored cars and motorcycles, and specialty foods.

Providing or Outsourcing Services

In addition to importing and exporting products with Cuban partners, U.S. businesses may have the opportunity to swap services with Cuban companies. Some services that could benefit U.S. businesses might include computer programming, web design and professional translations, Cruz says.

“Another area of possible interest to small and large businesses alike would be collaborative ventures with Cuba’s biotechnology enterprises, if any emerge that are considered private,” he says. “Among other things, Cuba produces vaccines and other medicines that could find acceptance in the U.S. if clinical trials were allowed to proceed.”

In addition, U.S. companies will be able to offer their services to Cuban buyers or U.S. travelers going to Cuba. Tour operators and travel companies will be able to book more travel to Cuba, as the destination is now open for U.S. educational travel, as well as for entertainment companies, shipping and ferrying companies, and law firms providing legal analyses and international arbitration.

Taking Advantage

Interested in launching trade activities with Cuba under the new regulations? To get started, Cruz suggests working to learn more about Cuban culture and business regulations.

“Seek legal advice from attorneys or firms specializing in dealing with Cuba and the U.S. embargo,” Cruz says. “Prepare to make the necessary investments. Make a business plan. And travel to Cuba to get a feel for the terrain.”

Perhaps, most importantly, continue to watch for policy developments. While the initial opening is a milestone, most experts say it’s just the beginning. “For these regulatory changes to be truly meaningful, it is incumbent on the Cuban government to make important changes as well,” U.S. Chamber’s Myron Brilliant said in a statement.

But the outlook is promising: After an exploratory trip to Havana last year, U.S. Chamber of Commerce President and CEO Thomas J. Donohue said in a statement that “Cuba has changed some of its economic policies to lessen government control or ownership of Cuban businesses and, subsequently, their private sector is growing.”

While there’s still more work to be done, the opening of trade with Cuba could bring a wealth of opportunities to American small businesses. As positive steps continue to occur in both the U.S. and Cuba, a whole new import, export and services market for American small businesses could be one that has been close by all along.

By Nancy Mann Jackson
February 5, 2015

Capital One does not provide, endorse, nor guarantee any third-party product, service, information or recommendation listed above. The third parties listed are not affiliated with Capital One and are solely responsible for their products and services. All trademarks are the property of their respective owners.

Powered by Spark Business