New import rules for Cuba represent historic change
For the first time in more than a half-century, a U.S. company will be allowed to hire private Cuban workers to provide services and to import some products from independent Cuban entrepreneurs.
As part of its evolving Cuba policy, the United States released rules Friday on the types of goods and services that may be imported from Cuba’s selft-employed sector. The new rules went into effect immediately.
“This is another measure intended to support the ability of the Cuban people to gain greater control over their own lives and determine their country’s future,” the State Department said.
As part of the move by the United States and Cuba to renew diplomatic ties, the Obama administration announced new trade and travel rules last month to make it easier to do business with Cuba. The release of the import regulations by the State Department was the latest step in that direction.
But forget the artisanal cigars, home brew or even refurbished vintage cars. Tobacco, spirits and machinery are among the exceptions not eligible for import under the new rules.
Prepared food and beverages, textile and textile articles and animal products also aren’t eligible for import, cutting out important potential sales opportunities for Cuba’s cuentapropistas, the self-employed. For the record, imports of live animals, vegetables, chemical and mineral products, electrical equipment, telecom parts, articles made from nickel, zinc, copper and other non-precious metals and mechanical appliances aren’t permitted either.
Items that aren’t on the list of exceptions may be imported.
“I was a lot underwhelmed by the new rules for goods,” said Ted Henken, a professor at Baruch College who is co-author of the book “Entrepreneurial Cuba: The Changing Policy Landscape.”
“But services have more potential — especially services provided by translators and computer programers,” he said. “I could see Cuban-Americans in Miami farming out certain services and having Cubans on the island do them.”
While the goods eligible for importation are “disappointing,” Augusto Maxwell, who heads the Cuban practice at the Akerman law firm, said the change was still historic.
And he is much more enthusiastic about the services provisions, which he called “the highlight” of the new rules. Essentially, the United States imposes no restrictions on the type of services that independent Cuban entrepreneurs may provide — although the Cuban government may.
“There are now opportunities for Cubans to work for U.S. companies,” Maxwell said. “The beauty of this is that it signifies to the Cuban people that it is no longer the United States that is standing in their way of being employed by U.S. companies.”
He said he foresees a day when young, tech-savvy Cubans might be able to provide their services to Google or Microsoft.
Americans who import goods or services from Cuba, however, must get proof that shows a Cuban entrepreneur or a worker-run cooperative is truly independent. That could be a Cuban-government-issued self-employment license or in the case of a private entity, proof that it is not controlled or owned by the Cuban government.
In the future, the State Department said, third party verification by an independent organization may be sufficient to prove an entrepreneur or cooperative is private.
Some three years ago, the government began turning some state-owned businesses over to workers who run them as cooperatives. But so far, Cuba has approved only around 500 such cooperatives.
The Cuban government allows self-employment in around 200 categories and now more than 383,000 Cubans are in business for themselves, but at this point almost all professional activities aren’t eligible for self-employment licenses.
Many of the self-employment service categories are low-tech and aren’t necessarily of interest to American companies. Jobs that fall into that category are entrepreneurs who repair household goods, watches, eyeglasses, jewelry and shoes as well as workers who make pushcart deliveries, sharpen knives and fill or repair cigarette lighters.
But Cuban entrepreneurs are also allowed to program computers, translate documents, provide sports training (with the exception of martial arts), teach languages, book private bed and breakfasts, and provide bookkeeping — but not accounting services. Such service jobs might pique the interest of U.S. companies.
Although Cuba’s cuentapropistas offer all manner of homemade food from candy and jams to wine, those items will not be allowed in under the new rules.
While cloth and clothes made of textiles are excluded, it appears clothing or shoes made from non-textile products might be allowed. Items made from wood aren’t excluded, either.
That sends a message to Cuban entrepreneurs that they should use their imaginations and be creative, said Henken. “You know how entrepreneurial Cubans are. You give them an inch and they take a mile.”
But he said they’ll have to ask themselves whether their products can compete in the United States and whether there is a market for them.
“While important in making a crack in the wall of the embargo and facilitating some trade with Cuba’s private sector, this is still quite a small step that will have little impact on the ground in Cuba,” Henken said.
U.S. importers also will have to pay duties on imports valued at more than $400, or more than $800 if they bring in $400 worth of Cuban merchandise as accompanied baggage and more than $400 as imports from private entrepreneurs.
Limits on Cuban goods that American travelers can bring back in their luggage were announced last month: $400 worth of merchandise, which may include up to $100 worth of tobacco and alcohol products, for personal use only.
As part of the Obama administration’s new Cuba policy, the door also has been opened to American investment in private Cuban enterprises and that also could create new opportunities. Remittances for development of private businesses and projects that “directly benefit the Cuban people” no longer have limits.
The State Department also has indicated that it plans to expand eligible imports over time as it gets feedback from Cuba’s budding entrepreneurial class.
Cuba has gradually added new categories of permissible self-employment activities and that, too, could spur more imports.
“I’m sure Cubans will start finding the items they can sell [under the new rules],” Maxwell said. “The bigger thing is that now the United States has established the architecture for imports.”