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Link to Complete 3-Page Analysis in Pdf Format U.S.-Cuba Trade and Economic Council, Inc. New York, New York Telephone (917) 453-6726 • E-mail: [email protected] Internet: http://www.cubatrade.org • Twitter: @CubaCouncil Facebook: www.facebook.com/uscubatradeandeconomiccouncil LinkedIn: www.linkedin.com/company/u-s--cuba-trade-and-economic-council-inc- Biden-Harris Administration Wants To Deny Cuba’s Government (Military) With Earnings From Remittances And Product Sales In Cuba Resumption Of Airline Flights To Airports Throughout Cuba May Be Component Of Solution Flights Carry Passengers, Passengers Carry Products Cuba Has Eliminated Duties And Fees On Imported Goods Through 31 December 2021 Three Options Have Support From Some Members Of Congress As President Biden Says, “Here’s The Deal” (Agui esta el trato) The Biden-Harris Administration continues to evaluate re-authorization of regularly-scheduled commercial airline flights where service is no longer limited to Jose Marti International Airport (HAV) in Havana. The United States Department of Transportation (DOT) would authorize airlines to again self-determine commercial schedules from existing authorized United States gateways and daily flight frequencies (per the 16 February 2016 Arrangement with the Republic of Cuba) to airports in the Republic of Cuba. The 2016 Arrangement: “For scheduled combination or all-cargo services to and from Havana, under the terms of the MOU, U.S. carriers may operate up to twenty (20) daily round-trip frequencies. For scheduled combination or all-cargo services to and from each of the other nine (9) international airports in Cuba, U.S. carriers may operate up to ten (10) daily round-trip frequencies, for a total of ninety (90) daily non-Havana U.S.-Cuba round- trip frequencies. The MOU also allows for unlimited charter services to and from any point in Cuba, in accordance with the regulations of each country.” The airports included in the MOU: HAV; Ignacio Agramonte International Airport in Camagüey (CMW); Jardines del Rey Airport in Cayo Coco (CCC); the Vilo Acuña Airport in Cayo Largo (CYO); Jaime González Airport in Cienfuegos (CFG); the Frank País Airport in Holguín (HOG); Sierra Maestra Airport in Manzanillo (MZO); Juan Gualberto Gómez Airport in Matanzas (VRA); Abel Santamaría Airport in Santa Clara (SNU); and Antonio Maceo Airport in Santiago de Cuba (SCU). In December 2019, the Trump-Pence Administration (2017-2021) prohibited regularly-scheduled commercial airline services to airports other than HAV. At the time, there were services from the United States to the cities of Havana, Holguin, Santa Clara, and Santiago de Cuba (the second-largest city in the Republic of Cuba and located 472 miles from the city of Havana). United States Department of State December 2019: “In line with the President’s foreign policy toward Cuba, this action prevents revenue from reaching the Cuban regime that has been used to finance its ongoing repression of the Cuban people and its support for Nicolás Maduro in Venezuela.” The DOT issued its directive “at the request of the Secretary of State.” Airlines servicing the Republic of Cuba included Fort Worth, Texas-based American Airlines (2019 revenues approximately US$46 billion); Atlanta, Georgia-based Delta Air Lines (2019 revenue approximately US$47 billion); Long Island City, New York-based JetBlue Airways (2019 revenues approximately US$8 billion); Dallas, Texas-based Southwest Airlines (2019 revenues approximately US$22 billion); and Chicago, Illinois- based United Airlines (2019 revenues approximately US$43 billion). A decision by the Biden-Harris Administration to resurrect regularly-scheduled commercial airline flights to airports throughout the Republic of Cuba would arrive with a third-party impediment: The impact of COVID-19 U.S.-Cuba Trade and Economic Council, Inc. restricts arrivals to the Republic of Cuba and restricts arrivals to the United States. Due to continuing uncertainties as to requirements for quarantine upon entering the Republic of Cuba, if a resumption of regularly-scheduled commercial airline flights were implemented there would not be a flood of airline flights from the United States to the Republic of Cuba; and most would continue to be to HAV. A 1948-1949 Berlin-like airlift humanitarian optic of thousands of passengers bearing currency and excess baggage will not inoculate the Biden-Harris Administration from the perception that it is singularly bailing-out the Diaz-Canel-Valdes Mesa Administration since those passengers will be carrying U.S. Dollars, which will need to be exchanged in the Republic of Cuba at an exchange rate which is not indicative of the true value of the Cuban Peso. Thus, the focus needs to be about the products accompanying those passengers. There may exist options to lessen the bail-out narrative. The Berlin Airlift transported approximately 2.3 million tons of cargo in one year. Option One that has support from members of the United States Congress is for the flights to resume provided the Diaz-Canel-Valdes Mesa Administration continues to implement its 14 July 2021 announcement to forgo import duties and fees for some products (hygiene, food, personal, cleaning products, etc.) in luggage and cargo on flights to the Republic of Cuba from 19 July 2021 through 31 December 2021. Option Two that has support from members of the United States Congress is to condition the resumption of regularly-scheduled commercial airline flights upon the Diaz-Canel-Valdes Mesa Administration removing all duties and fees for all items contained in luggage and cargo to all airports authorized by the 16 February 20216 MOU, not to selected airports. Option Three that has support from members of the United States Congress is for the DOT to authorize both Memphis, Tennessee-based FedEx Corporation (2019 revenues approximately US$79 billion) and Atlanta, Georgia-based United Parcel Service (2019 revenues approximately US$85 billion) to provide service from the United States to the Republic of Cuba. The Washington, DC-based United States Postal Service (2019 revenues approximately US$71 billion) does provide delivery services using commercial airline flights. The Biden-Harris Administration could make these cargo-only flights a condition of re-establishing regularly-scheduled commercial airline flights to the Republic of Cuba. The three options materially benefit cuentapropistas (self-employed), non-government-controlled cooperatives, and independent small and medium-sized enterprises (SME’s), who the Biden-Harris Administration publicly continues to maintain is a primary focus of the Cuba Policy Review. Of useful note: On 14 July 2021, H.E. Alejandro Gil, Minister of Economy and Planning of the Republic of Cuba, reported that during the coming weeks regulations will be announced for the operation of SME’s. The Biden-Harris Administration could await the issuance of the SME regulations, but make public now its preferences so the Diaz-Canel-Valdes Mesa Administration may include the preferences in its decision-making process. Supporting Small Businesses If the Biden-Harris Administration creates as expected a policy and regulatory framework whereby individuals subject to United States jurisdiction may deliver equity investments and provide loans to cuentapropistas and SME’s, then the existing financial transaction infrastructure throughout the Republic of Cuba will be woefully inadequate to manage what would likely be thousands of commercial checking and savings accounts with foreign exchange arriving (investments and loans), foreign exchange departing (investor dividends, loan repayments, input purchases) on a daily basis. U.S.-Cuba Trade and Economic Council, Inc. The Biden-Harris Administration will need to authorize direct correspondent banking so that electronic funds transfers could arrive efficiently, transparently, and cost-effectively. When using an electronic payment platform such as Denver, Colorado-based Western Union Company (2020 revenues approximately US$5 billion) and Dallas, Texas-based MoneyGram International (2020 revenues approximately US$1.2 billion) customers using checking accounts to send and receive funds is far less expensive than when using currency, credit card or debit card. LINK TO PREVIOUS ANALYSES Biden Administration Will Use Cuba's Authorization Of SMSE's As Means To Expand Support For Cuba Private Sector- U.S. Investments And Loans May Be Next June 02, 2021 The Word For Today Is "cuentapropistas" And It Is The Fulcrum Around Which Biden Administration Cuba Policy Revolves May 20, 2021 .
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