Cuba Trade & Investment News A service of NORTH AMERICAN PARTNERS, Tampa, FL, USA, a marketing management firm connecting business to new markets. Vol. VI, No. 3 March 2004 Embargo Updatet Economyt RUM CASE: FROM COURTS TO POLITICS POLITBURO PICKS NEW TOURISM BOSS In a ruling that moves a nearly decade-long battle from the Continuing a wave of change in the nation’s top economic courts back to the political arena, the U.S. Patent and team over the past 12 months, and following an industrywide Trademark Office’s Trademark Trial and Appeal Board (TTAB) purge in tourism companies, the Politburo of the Communist decided in favor of French liquor giant Party on Feb. 11 let go Tourism Minister Ibrahim Ferradaz Groupe Pernod Ricard SA’s rights to García, 54. Ferradaz, who had been in office since 1999, was the Havana Club rum trademark in replaced by Manuel Marrero Cruz, 40, an architect and most the United States. The Patent Office recently president of Grupo de Turismo Gaviota S.A. rejected a motion by Pernod rival Gaviota, which owns 15 percent of Cuba’s hotel rooms, is Bacardi-USA seeking to cancel the under the control of the label’s registration, and recognized armed forces; Marrero is the validity of its 1998 renewal by actually an army colonel. Havana Club Holdings, a joint venture by Pernod Richard and The government said Cuban rum producers. that Ferradaz would be However, the TTAB didn’t specify who owns the U.S. rights “assigned to other to the trademark. duties,” without saying Bacardi had based its motion on Section 211, a five-year what they are. old law that rejects the recognition of many Cuban trademarks The change at the top in the U.S. The Patent Office’s decision indirectly questions comes at a moment when the necessity of Section 211, which triggered the wrath of close the Cuban tourism U.S. allies and a 2002 ruling by the World Trade Organization industry is in full against the United States. recovery from the 9-11 A Cuban delegate used the opportunity to accuse the United effect, with a 16-percent States before a dispute rise of tourism revenues in Gone: Ferradaz resolution panel of the 2003 over the previous organization in Geneva of year. At the same time, top executives of leading tourism ignoring the WTO ruling. company Cubanacán S.A. were fired in December, due to The Patent Office ruling “grave errors,” including “lack of expectations and control.” puts the spotlight on The Tourism Ministry and Ferradaz temporarily took over Congressional efforts to control of Cubanacán. Officials denied that the executives were repeal Section 211. A bi- accused of corruption. The government appointed another cameral bill, under the name U.S.-Cuba Trademark Protection Gaviota executive, Manuel Vila, as new president of Act (H.R. 2494/S. 2002), is pending. An impressive coalition Cubanacán, according to Marc Frank’s Cuba Review of U.S. corporations supporting the bill consider Section 211 newsletter. The Revolutionary Armed Forces control an not only a threat for more than 5,000 U.S. trademarks registered estimated 60 percent of Cuba’s economy. in Cuba, but for all international trademark agreements. I N S I D E T H I S I S S U E CUBAN FAIR VISITS BECOMING ROUTINE Cuban trade fairs are becoming increasingly popular among Phil Peters: U.S. agribusiness and food companies. Next on the circuit is Sugar in Cuba’s Future Page 3 the Alimexpo food fair April 20-28 in Havana, which will be attended by at least a dozen American companies. Idaho Sen. Cuba formally seeks Mercosur entry............................. 2 Larry Craig and Rep. Butch Otter, which took an Idaho trade OFAC strips two travel firms’ licenses ........................ 2 mission to Cuba in February, said they’ll visit Alimexpo. Festival Cruises survives, Caribe continues.................. 8 More embargo news on page 2 M o r e E m b a r g o N e w s M o r e o n C u b a’ s E c o n o m y TREASURY CONSIDERING LOWER CASH LIMITS CUBA FORMALLY SEEKS MERCOSUR ENTRY During a visit to Miami, U.S. Treasury Secretay John W. Foreign Minister Felipe Pérez Roque said Cuba would Snow announced his agency is “taking a hard look” at the “soon” file a formal request to hold negotiations with Mercosur possibility of reducing the $1,200 it allows Cuban Americans and sign an agreement to become an associate member of the to transfer to the island. Cash remittances from the U.S. are trade bloc. Argentina, which currently holds the Mercosur probably the second-largest source of hard currency for Cuba. presidency, committed to consult with members Brazil, Uru- Snow also said Treasury is considering to revoke a regulation guay and Paraguay regarding a “4+1” agreement with Cuba. that allows travelers to bring back $100 worth of Cuban goods. Argentina, Brazil and Paraguay are backing such an agree- The announcements, likely aimed by the Bush administration ment, Uruguay, which broke diplomatic relations with Cuba at gaining Miami votes for the presidential election, seem to last year, will likely oppose it. Pérez Roque made the an- be a test balloon to probe reactions among emigres. Snow’s nouncement after a meeting with Argentinean President Néstor remarks met skepticism even among embargo supporters. Kirchner in Buenos Aires. Francisco ‘Pepe’ Hernandez, president of the Cuban American National Foundation, called the remittance proposal JOURNAL: CUBA RUNNING UP BIG OIL DEBT a “diversionary tactic” by the Bush The Wall Street Journal, citing sources close to Venezuela’s administration to avoid tackling state oil company PDVSA, said Cuba has run up a debt of tougher issues, such as the policy of $752 million for Venezuelan oil shipments and has sending back Cuban migrants renegotiated the arrears twice. Cuban and Venzuelan officials detained at sea. deny that Cuba has fallen behind with payments. If the amount Snow also announced Treasury is true, it would represent 80 percent of PDVSA’s outstanding would prosecute unlicensed U.S. amounts from clients. travel agancies and citizens who do business with 10 Cuban companies SUGAR HARVEST BEHIND SCHEDULE it specified in a list. The travel and Milling and yields of the current sugar harvest were behind retail companies are CIMEX in most provinces, Communist Party daily Granma reported. subsidiary Havanatur S.A. and its Snow on Cuba According to Reuters, Sugar Ministry officials now predict branches in Canada Argentina, the that the harvest will reach 2.4 million or 2.5 million metric Bahamas and Chile; and Cubanacán Group and its branches tons by May, a little bit below the 2.6 million-ton goal. The in the Netherlands and England as well as its Internet gift shop 2002-03 harvest was 2.2 million tons, the lowest since the Tiendas Universo S.A. Snow threatened unlicensed U.S. travel 1930s, down from 3.6 million tons in 2001-02. In January, agencies who do business with those companies with civil and Sugar Minister Ulises Rosales del Toro said that the 2004 criminal penalties and to freeze their bank accounts. harvest, if the yields are right, could reach 5 million tons. OFAC ‘KILLS’ TWO TRAVEL ORGANIZATIONS NICKEL OUTPUT EXPECTED TO RISE After a three-month period of intense charter flight Mining ministry officials said they believe nickel production inspections, the Office of Foreign Assets Control (OFAC) will increase by 5,000 metric tons to 76,000 tons this year, to suspended the licenses of two organizations engaged in Cuba reach again the output of 2002. Nickel production in 2003 travel. OFAC, the U.S. Treasury agency in charge of enforcing dropped by 4.7 percent, partly due to the overdue renovation the embargo, didn’t disclose the names. Four other licenses of aging nickel processing facilities in eastern Cuba. Most of are under review, OFAC said. those projects are now finished or in the final stages. More embargo news on page 5 More economy news on page 6 U.S. COMPANIES WANT MACHINERY SALES Cuba Trade & Investment News is a monthly publication of North American Partners (NAP), Tampa, FL, USA. CTIN is the official publication of the U.S.-Cuba Trade Association and is distributed to subscribers. Publisher Andrew Goddard P.O. Box 13752 Tampa, FL 33681-3752 USA Tel: 813 839 6988 Fax: 813 831 3811 E-mail: [email protected] Editor Johannes Werner E-mail: [email protected] SUBSCRIPTIONS Call 813 839 6988. One year $215. In Canada and Mexico, add $15 postage. COPYRIGHT NOTICE No part of this publication may be copied, photographed or duplicated without NAP’s consent. 2 Cuba Sugar industry Sugar in Cuba’s future on the Hill The sugar industry, one of the driving forces of Cuba’s economy, is going through a major crisis. In May 2002, the Sugar Ministry ordered a drastic downsizing that included closing half of all sugar mills on the island and conversion of massive tracts of sugarcane land to other crops. The first benefits of the measure can be felt. Although information on the current harvest indicates delays in milling, officials are optimistic about reaching a significantly higher harvest total than last year, at — more importantly — lower per-ton production costs. But there is a big question mark over the long-term effects of the downsizing.We are reprinting the outlook chapter of an analysis written by Phil Peters, vice president of the Lexington Institute. The full article, published in February by the Washington-based free-market think By Dan Waltz tank, can be found at http://www.lexingtoninstitute.org/cuba/research.htm It Must Be Election Time While the restructuring of the Cuban 1969 to return sugar to its central position To a casual observer, it might sugar sector is at an early stage, some in the economy.