Businesses Welcome Shift on Cuba

Source from:  Chicago Tribune 12/30/2014

Since Phil Ledbetter started working at Up Down Cigar some 14 years ago, he's regularly asked the same questions: Where are the Cuban cigars? In the back?

"We don't do that," Ledbetter, now the store's general manager, said he tells the hopeful buyers.

His phone started ringing immediately after President Barack Obama on Wednesday said the U.S. would begin normalizing relations with Cuba, a move that could affect the agricultural, travel, auto and many other industries as restrictions are lifted. While an outright end to the long-standing trade embargo isn't happening, investors and companies nevertheless raced to assess the new dynamic and emerging opportunities between the two nations.

Callers to Up Down Cigar on Wednesday wanted to know when they could buy Cuban cigars.

"A lot of it is still up in the air," Ledbetter said, adding that American visitors won't be able to bring home more than $100 worth of Cubans for personal use. For his suppliers to import cigars, the embargo would have to be lifted.

Cuban cigars are typically strong with a sweet spice that manufacturers can't reproduce anywhere, Ledbetter said. The island's soil gives the tobacco plant that unique taste.

"The mystique behind them is that we can't have them and we want them," he said.

The announcement Wednesday also did not open leisure travel to Cuba from the United States, although the White House said the move was aimed at expanded travel.

If there was a full lifting of travel restrictions in 2015, at least two million additional Americans would visit Cuba by 2017, estimates the American Society of Travel Agents, which supports lifting restrictions. About 1 million would be leisure travelers going by air, 521,400 would be leisure travelers arriving by cruise ship, and another 550,000 Americans would travel to Cuba to visit family members, the group said.

Online travel-booking company Orbitz Worldwide of Chicago has been a champion of normalizing relations with Cuba and applauded the move Wednesday.

"We look forward to the day - hopefully soon - when all Americans have the opportunity to travel to Cuba," Orbitz CEO Barney Harford said in a statement. "There are numerous economic, social and cultural benefits that will flow from free and open access, and our customers are eager to visit Cuba."

Chicago-based United Airlines also was in favor.

"We applaud the Obama administration's move to continue reducing barriers to travel for the benefit of our customers. We look forward to reviewing the changes in the travel policy," the airline said in a statement.

If there was a full lifting of travel restrictions in 2015, at least 2 million additional Americans would visit Cuba by 2017, estimates the American Society of Travel Agents, which supports lifting restrictions. About 1 million would be leisure travelers going by air, 521,400 would be leisure travelers arriving by cruise ship, and another 550,000 Americans would travel to Cuba to visit family members, the group said.

The changes should help spur the agricultural markets, said Agriculture Secretary Tom Vilsack, in Chicago for a U.S.-China trade meeting, noting that existing trade barriers made such transactions with Cuba more difficult, although still possible.

"It required cash in advance and also required that the money be funneled through a third party so that Cuban banks and American banks weren't working together directly," he said. Now agricultural transactions will be treated like any other direct commercial transaction.

"These transactions will be cheaper, less expensive to do and far more efficient to do," he said.

The announcement also may be good for the U.S. automobile industry.

"There's no doubt Cubans would like access to many American products, including our fleet of cars built after 1959," said Karl Brauer, senior analyst for Kelley Blue Book. "But the country is still ruled by a communist regime, and access doesn't mean economic capability."

Michelle Krebs, senior analyst for AutoTrader.com, also sees pent-up demand for modern vehicles.

"Anyone who has been to Cuba can attest that in terms of cars, time stood still," she said. "Beat-up classics from the '50s and '60s are on the streets. But Cubans can't afford today's cars until their economy is revived."

"This is a first small step," Krebs said. Enditem