Virginia ready to trade more with Cuba

Many Virginia businesses would welcome the U.S. dropping the embargo on trade with Cuba.

“There would be some tremendous opportunities,“ said Paul Grossman, director of the Virginia Economic Development Partnership’s international trade division, singling out Cuba’s long-neglected infrastructure and its need for basic consumer products.

“We could provide expertise and hardware for that market,“ said Hugh Keogh, president and CEO of the Virginia Chamber of Commerce.

Cuba presents needs for road and airport improvements, new hotels, and fiber-optic cable installation for communication systems, as well as for everyday products such as furnishings for resorts and credit-card services.

“Virginia’s so well diversified,“ Grossman said. “We have companies in all these sectors.“

And the state already is doing business with Cuba—in agricultural products.

This week, the Obama administration announced a softening of some sanctions, including the lifting of U.S. restrictions on telecommunications companies doing business in Cuba. The White House announced that Americans will now be able to make unlimited visits and transfers of money to relatives in Cuba.

Sen. Jim Webb, D-Va., who serves on the Senate Foreign Relations Committee, said during a stop in Richmond Wednesday that he favors easing trade and economic restrictions on Cuba.

“If you lift these restrictions, you increase the ability of the average person to interact with the outside world,“ he said. “Fifty years is long enough.“
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Not every business in Virginia would necessarily benefit from open trade with Cuba.
U.S. cigar companies could be seriously hurt if the domestic market ends up being flooded with cigars produced by

Cuba’s government-controlled industry, said Gerry Roerty, vice president and general counsel at Swedish Match North America.

Chesterfield County-based Swedish Match, which sells cigars from the Dominican Republic and Honduras, wants lawmakers to ensure a competitive market if the embargo is lifted, perhaps by limiting imports of Cuban cigars for a certain time until U.S. companies can access Cuban tobacco leaf.

“We have been talking actively to members of Congress about this,“ Roerty said. “If you are going to lift the embargo, then in connection with that you need to carefully study the dramatic negative impact that would have on the U.S. cigar industry.“

“For about 50 years now, people have been waiting for the day when they can legally get their hands on Cuban cigars again,“ Roerty said.

As many as 80 percent of cigar consumers would do exactly that, Roerty said.

He cited industry estimates that 85 million Cuban cigars could be shipped into the United States a year, putting a serious dent in sales for U.S. companies that now sell about 255 million premium cigars a year in this country.
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Cuba has become a strong market for Virginia’s soybean products and apples, said Todd P. Haymore, the state’s commissioner of agriculture and consumer services, who has led trade missions to Cuba.

“Trade with Cuba is important to Virginia agriculture,“ Haymore said.
Virginia’s agricultural exports to Cuba have increased dramatically, from $838,000 in 2003—the first year the state sold agricultural exports to Cuba since the 1961 trade embargo was imposed—to $40.7 million last year.

“Exports should increase substantially in 2008 and 2009,“ the state’s Department of Agriculture and Consumer Services said.

Of U.S. states, Virginia is Cuba’s third-largest U.S. supplier of agricultural products, ranking behind only Louisiana and Texas.

The tropical island presents opportunities for the sale of other Virginia products, Haymore said, including poultry and meat, wood and animal feeds.

“Anytime we can find a new marketplace, or open the door further to an existing one,“ the agriculture commissioner said, “it’s a good thing for Virginia’s farmers and agribusinesses.“

Since the U.S. relaxed its trade sanctions against communist Cuba in 2000 to allow the sale of agricultural commodities, and medicine and medical devices, the United States has become Cuba’s most important food provider, according to a statement from the Virginia agriculture department.

Despite the changes, many of the 1961 embargo’s restrictions continue, which makes taking advantage of trade opportunities in Cuba difficult for the state’s agricultural exporters, Haymore said. “You’re still not operating under normal business conditions.“

At the first U.S. Food and Agribusiness exhibition in Cuba in 2003, the first contract signed was for Virginia apples. Last year, Virginia sold $1.8 million worth of the fruit to the nation.

“This year’s sales easily could be 20 [percent] or even 30 percent higher,“ the state agriculture department said.
However, the state’s trade with Cuba—population 11.5 million—is still just a drop in Virginia’s international export bucket. Virginia’s total exports in 2008 were $18.9 billion, according to Christie Miller with the Virginia Economic Development Partnership.

“Virginia is uniquely positioned to take advantage of international markets,“ said the state chamber’s Keogh, pointing to Virginia’s gateways to the world at the port of Hampton Roads and at Washington Dulles International Airport, along with the state’s long involvement with foreign trade development.

On the other hand, Keogh said, “I don’t think we’re just going to start exporting” to Cuba.
“There’s a lot of groundwork to be done.“