Caribbean Export OUTLOOK 2016 - 2017

TRADE & EXPORT HOT SPOTS

Cuba is the largest of the Caribbean islands, occupying an area of 109,884.01 km 2 , including nearby cays and islets. It has five major cities, Havana, Santiago de Cuba, Holguin, Cienfuegos, Camaguey and Santa Clara – Havana being the capital. 10 international airports including one in each of the major cities; 15 national airports, and one railway network to support inter-island travel gives some indication of its size. There is a dual currency monetary system in Cuba of the CUP (Cuban peso) and the CUC (Cuban convertible Peso). The official exchange rate is 1 CUC:1 USD within Cuba, and 1 CUC:26.5 CUP. The CUP is generally used internally by the local population while the CUC is for tourists and the business sector. Reportedly, supermarkets have begun only this year to list prices in both CUC and CUP values, indicative of the planned movement by government towards unification of its monetary system. A trending business and economic discussion in both regional and international circles is the question of Cuba as the current market of choice for investment and trade. Speculation has been heightened with the recent overtures by the governments of the USA and Cuba towards The political and economic ethos of Cuba has shaped the character of the market, presenting would-be exporters with the prospect of doing business essentially with the Cuban government as opposed to private sector enterprises. The business model is therefore non- traditional, as the government determines such things as wages, prices, the nature and quantity of imports, and the banking system– all with direct implications to private sector trade. The market must therefore be approached with tenacity to wade through certain levels of bureaucracy that attend monopolistic structures, as well as adaptability to assimilate the necessary strategies for success in the Cuban marketplace. Cuba has practiced as far as possible a policy of import-substitution. However, its major imports are fuel, oils and minerals, food and beverages, machinery and transportation, and other manufactured products. These are mainly sourced fromVenezuela, by far its largest trading détente, and business communities are seeking to understand how best and how quickly they can move to engage in trade or investment with this Caribbean island nation of 12 million inhabitants.

partner (43% of imports for 2013); followed distantly by Canada and the Netherlands, each supplying approximately 8% of imports, and China (6.5%). Cuba has begun to shift its trade focus somewhat from the EU to more South- South trade with countries such as Brazil, Mexico, and Argentina. When exporters consider the Cubanmarket they should importantly consider the significant size of Cuba’s tourist market and the priority of this sector to the economy. Between 2006 and 2010, 2.3million tourists travelled toCuba . This figure has no doubt increased significantly – in 2014 alone, 3 million tourists visited Cuba. Cuban tourists are largely from Canada, Europe, Latin America, China, and others, notably including the US. With the recent easing of travel restrictions by the US Government to allow travel of American citizens to Cuba, analysts are projecting a tripling of tourist arrivals from that country in the near future. According to several official agencies in the country, the burgeoning demand of vistors to Cuba cannot be satisfied by the current rate of domestic production nor levels of imports combined. The Caribbean is viewed as an important potential sourcemarket for these much-needed products and services. Consider that procurement for the tourism sector is the sole responsibility of Comercializatiodora ITH, a government import and distribution entity. To be a supplier to ITH of a particular product(s) or service to this sector can no doubt be quite lucrative. It is interesting to note that the approximate wage of a predominantly male working population is US$25permonth, depending of course on the area of employment. As the tourism sector continues to grow, the corollaries of increased employment and services to the sectorwill have implications for local spending and demand patterns for goods like food and beverages, recreation, clothing, housing and household goods. CARICOMhas beenplaced at a distinct advantage to export its offerings to the Cuban market with the establishment of the CARICOM-Cuba Free

Trade Agreement (FTA) which has been in place since 2000. Under this arrangement, five countries consist theMost Developed Countries (MDC’s) – Barbados, Guyana, Suriname, Jamaica, Trinidad and Tobago; while Belize and the OECS and make up the Less Developed Countries (LDC’s). Overall, the full benefits of this Agreement have not nearly beenharnessed todate, thoughTrinidad and Tobago has made significant inroads. Exports from Trinidad and Tobago to Cuba fluctuated on an overall upward trend to increase by 52% between 2000 and 2013 from US$30.8 million to US$46.8 million in 2013. In 2013, Trinidad represented 92% of CARICOM’s MDC exports toCuba. The remaining 8%of exports was divided among Jamaica, Guyana, and Barbados, averaging annual exports of US$3.5 million, US$420,825 andUS$41,573 for the period respectively. Exports from the (LDCs) have been negligible to non-existent over the 14-year period, with a smattering of exports by Belize in the early years of the Agreement andDominica in the latter. Trinidad and Tobago’s success to date in this market can partially be attributed to the establishment of a trade facilitation office – the only such CARICOM office in Cuba. They have used as their strategy, two flagship products/companies – Sacha Cosmetics and Angostura – to create significant impact and buy-in from the Cuban market, establishing themselves as providers of high-quality and desirable brands. They have made the way smooth for their exporters to penetrate and expand unrivalled throughout the Cuban marketplace, using the Trade Agreement as a platform. Angostura has gone on to make an important strategic alliance with the powerful Cuban Barmen Association which has national reach. Associated Brands Industries Ltd, another Trinidadian-based company, is also reaping success in the market with its variety of snacks and biscuits. The current opportunities for CARICOM exporters become apparent upon examination of the list of items presented in Annexes I and II of the CARICOM-Cuba Trade Agreement, where a range of goods are allowed duty free access once they meet the rules of origin requirements as set down in Annex VI of the Agreement. There are

The current opportunities for CARICOM exporters become apparent upon examination of the list of items presented in Annexes I and II of the CARICOM-Cuba Trade Agreement.

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