What Obama's Cuba Deal Means for the Future of Cuban Cigars

[madandana]

Yes that's correct. And as a guide to our American brothers and sisters on the forum, $100 doesn't buy you much after a trip to Cuba. But don't feel bad, Australians are only allowed to bring in 50 grams of cigars per person duty-free since the law changed in 2012 (it used to be 250 grams).

But the good news is we can bring back some amount of cigars.I know on my next trip I will return with an aweful lot of "peso cigars"

I can get alot of those for $100.

[DrunkenMonkey]

... again, what is left out of this equation is the absolute control over the flow of Cuban tobacco as a monopolized commodity. Like I said in a different post, I believe that anti-competitive trade law suits will be precipitated from the legalization of Cuban tobacco the day it happens. Even the Cubans claim that their tobacco is unique (and most of us agree here) and that will be used against them in court. It is my guess that Tabacuba will be forced to sell tobacco openly to other companies in order for them to sell finished cigars in the USA.

-Piggy

Why? Would the courts force French wineries to sell grapes to California wineries? I'm not following the logic here, Piggy.

[PigFish]

The logic is money, revenge and hatred. Some will call it justice. Most of you know what camp I sit in, but for the sake of this discussion I am not going to go there. This is an academic discussion and I am not going to take it down the road of my hatred for communism.

French grapes are not a monopoly and Cuban tobacco is! There is not one company producing and selling French grapes. While there may be controls on exports, French wine is not wholly an owned entity of the French government. The French government did not steal all the French wineries and boot the French off the land. Hitler tried it and look at what eventually happened to him.

The logic lies in the worlds oldest motivations.

For 50 years now the cigar community, including those growing tobacco and those using it have been attempting to match the quality (of taste) of Cuban tobacco. I do believe that a sound argument can and will be made that it is singularly unique! Those who lost it, will claim that it was stolen from them and want some rights to it back! Every cigar compares itself to a Cuban cigar! If you don't think that those that lost their rights to Cuban tobacco are going to use every court process to get it back, you are (IMHO) mistaken.

The Chinese will allow companies off shore to partake in their inexpensive labor, they encourage it. There is certainly more than one French wine maker. There is in fact only one Cuban cigar maker. The owner of a Dominican cigar company does not own the entire Dominican Republic.

Coffee, wheat, oil, gold, silver... and tobacco of all sorts are all freely traded. So ask yourself, if your were an expatriated Cuban making cigars, having what you consider your rights and land stolen from you, would you do anything under the sun to get it back? Would that include using the laws of the land that you now reside? Is unfair business practices not made to order? Tobacco of all sorts can be bought worldwide but Cuban tobacco cannot. Many non-Cuban cigar makers are going to want it back and if they cannot get their land back, they are going to want some rights to the tobacco, even if it means buying it. Beyond that they are going to want blood, sweat and tears from the Cuban government...

I am not going to argue the Cuban revolution. However, what the Cuban communists did at the point of a gun is going to be replayed again! Except this time the revolution will be started by expatriated capitalists and guns won't be used, the courts will. Whether it sticks or not is not a prediction that I will make. Rest assured, it is going to be tried! Settlements and concessions will be made even if they are behind closed doors. That is my belief. I do believe that suits to stop the sale of Cuban cigars in the states will be initiated the minute that Cuban tobacco is decriminalized.

Hopefully a better cigar will come from it, but I cannot make that prediction.

Please note, I am not making a value judgement here by this statement. I am not looking to start another meaningless argument about the Cuban revolution, Che or Batista! I am making a prediction based on my knowledge of savvy businessmen and a determined group of pissed off people, and what they will do to get their way, right or wrong, morality and ethics notwithstanding.

Frankly this has little to do with cigars at all! It is about money and making it and/or losing it, pride, hatred and revenge. When money is to be made and lost the lawyers come out of the woodwork. It is as predictable as death and taxes. When your client is motivated more than by money alone but also by anger and hatred, the lawyers will double down. That is the point that I am making.

This is going to make the world worst divorce look like a Shriners meeting!

-Piggy

[PigFish]

You'd think if this did become true, Cuba would give serious consideration to simply not selling cigars officially to the US? To just let the gray market supply demand there as the product would not be illegal to buy from abroad if the embargo ended?

From the little I know about Cuba, the last thing they would ever do would be give raw tobacco too their competition, right?

I think that we will see the money weighed on both sides and there may be more logic in supplying cigars via the gray market to Tabacuba, while Imperial Tobacco will want to pursue their rights to distribute. In this way Imperial may pay up for the grievances against Tabacuba and the Cuban government. They have the money!

Frankly the Cuban government clearly does not care if their distributors get screwed! Why do I say that? Because Tabacuba is an active partner with each distributor. Tabacuba runs a true monopoly and they make and sell the cigars regardless which distributor books the sales. It is my guess, an educated one, that there are favorites in distributors as well. Some of it may even be political kindredness.

There have been some pretty big stinks over where certain vendors get their cigars since H SA has come into existence. These sources (I am not going to bring examples, so don't ask) are getting cigars somewhere and I have long since speculated that a certain distributor is that place. I don't think that the Cuban care which distributor sells what to whom (behind closed doors) as long as they are selling the cigars and they are partners with all the distributors.

Cuban cigars will make it to US shores... eventually! I am simply stating my belief that it is not a matter of executive order and the deed is done. I could be wrong, but i don't think it is gonna' happen.

The expat Cuban cigar makers will be out for blood and these folks have a reputation for tenacity.

You guys might not remember the legislation used to protect Harley Davidson from the Japanese motorcycle makers. As a result of that, non-US made motorcycles over 700cc's were tariffed. I know, I worked for Yamaha at the time. The motorcycles themselves were not even comparable in design or performance, or market segment interest. It did not matter. What mattered was who was in bed with whom and what was determined as fair.

The point that I am making is that a determination of 'fairness' is going to have to come from the courts because I do believe it will be called upon by the non-Cuban makers. I am not a lawyer, but I have been involved with enough of them to know what they do for a living!

In the short term I do think that decriminalization of Cuban tobacco will result in a boon for offshore retailers when it happens. But that will be seen as a end run and the courts will look to put tariffs on the cigars possibly. It will be a court process, and that is the extent of my prediction!

Cheers! -Piggy

[ethernomad]

I was excited to hear credit cards will be allowed there, but it states for people approved and on license. Not sure I would want to risk using my card there on the off chance someone is actually monitoring usage or more likely, credit card companies have to report Cuban transactions.

I've wondered if there is a similar risk associated with purchasing Cuban goods abroad. I have not yet taken the plunge, but don't all of your trusted vendors show up loud and clear on your credit card statement?

Responding to the OP, my concern over the rekindled politico relations and the ever-so-slight slackening of the embargo is how the potential introduction of free(er) trade and capitalism will impact the Cuban labels; especially if rumors of certain deaths are acknowledged or confirmed. The U.S. will at least maintain an agenda of introducing democracy and regime change. In my limited understanding, the Cuban gov basically owns all the brands. It doesn't seem beyond the realm of possibility that a push toward industry privatization could occur down the road. While privatization might be good for the Cuban people, it might also be bad for business. Foreign mergers and acquisitions would be a tidy way to handle the Cuban vs. U.S. market brand disputes.

Now I'm probably over emphasizing the potential percentage of U.S. consumption compared to global market of CCs as a whole. And I'm also taking a gloomy position on American-style capitalism, but it sure would be a shame to walk into my local B&M and see the shelves lined with Cuban Gurkhas someday...

[DrunkenMonkey]

The logic is money, revenge and hatred. Some will call it justice. Most of you know what camp I sit in, but for the sake of this discussion I am not going to go there. This is an academic discussion and I am not going to take it down the road of my hatred for communism.

French grapes are not a monopoly and Cuban tobacco is! There is not one company producing and selling French grapes. While there may be controls on exports, French wine is not wholly an owned entity of the French government. The French government did not steal all the French wineries and boot the French off the land. Hitler tried it and look at what eventually happened to him.

The logic lies in the worlds oldest motivations.

For 50 years now the cigar community, including those growing tobacco and those using it have been attempting to match the quality (of taste) of Cuban tobacco. I do believe that a sound argument can and will be made that it is singularly unique! Those who lost it, will claim that it was stolen from them and want some rights to it back! Every cigar compares itself to a Cuban cigar! If you don't think that those that lost their rights to Cuban tobacco are going to use every court process to get it back, you are (IMHO) mistaken.

The Chinese will allow companies off shore to partake in their inexpensive labor, they encourage it. There is certainly more than one French wine maker. There is in fact only one Cuban cigar maker. The owner of a Dominican cigar company does not own the entire Dominican Republic.

Coffee, wheat, oil, gold, silver... and tobacco of all sorts are all freely traded. So ask yourself, if your were an expatriated Cuban making cigars, having what you consider your rights and land stolen from you, would you do anything under the sun to get it back? Would that include using the laws of the land that you now reside? Is unfair business practices not made to order? Tobacco of all sorts can be bought worldwide but Cuban tobacco cannot. Many non-Cuban cigar makers are going to want it back and if they cannot get their land back, they are going to want some rights to the tobacco, even if it means buying it. Beyond that they are going to want blood, sweat and tears from the Cuban government...

I am not going to argue the Cuban revolution. However, what the Cuban communists did at the point of a gun is going to be replayed again! Except this time the revolution will be started by expatriated capitalists and guns won't be used, the courts will. Whether it sticks or not is not a prediction that I will make. Rest assured, it is going to be tried! Settlements and concessions will be made even if they are behind closed doors. That is my belief. I do believe that suits to stop the sale of Cuban cigars in the states will be initiated the minute that Cuban tobacco is decriminalized.

Hopefully a better cigar will come from it, but I cannot make that prediction.

Please note, I am not making a value judgement here by this statement. I am not looking to start another meaningless argument about the Cuban revolution, Che or Batista! I am making a prediction based on my knowledge of savvy businessmen and a determined group of pissed off people, and what they will do to get their way, right or wrong, morality and ethics notwithstanding.

Frankly this has little to do with cigars at all! It is about money and making it and/or losing it, pride, hatred and revenge. When money is to be made and lost the lawyers come out of the woodwork. It is as predictable as death and taxes. When your client is motivated more than by money alone but also by anger and hatred, the lawyers will double down. That is the point that I am making.

This is going to make the world worst divorce look like a Shriners meeting!

-Piggy

Thanks for the clarification, Piggy. My understanding is that when countries have have nationalized industries in the past, international law clearly views the state as legitimate owners. I'm not a lawyer, and there are others here on FOH who do know international law well and could comment. I don't doubt that the suits you describe would be filed, but I'd be surprised if they were successful.

[CaptainQuintero]

Lawyers are going to get rich regardless, they are probably fighting to represent parties as we speak!

[Bartolomeo]

Saw this today.....

1/15/15

U.S. easing trade, travel rules on Cuba

The U.S. Treasury and Commerce departments unveiled a new set of rules Thursday that will make it easier for Americans to travel to Cuba and sell directly to small businesses there.

One of the most notable changes under the new regulations, which go into effect Friday, is that Americans will no longer need to get approval from the U.S. Office of Foreign Assets Control before embarking on a trip to Cuba. As long as they are traveling through one of 12 approved categories — which include educational, religious and humanitarian trips — Americans can simply head to the island.

"Cuba has real potential for economic growth and by increasing travel, commerce, communications and private business development between the United States and Cuba, the United States can help the Cuban people determine their own future," Treasury Secretary Jacob Lew said in a statement Thursday.

President Obama announced the decision last month to normalize relations with the communist country after more than five decades of political and economic isolation.

Americans in Cuba had been restricted to spending $188 a day in Cuba for hotel, meals and other incidentals, but that limit will be lifted under the new rules. For the first time, Americans can also return to the U.S. with up to $100 in Cuban rum and cigars and a total of $400 in goods. In addition, U.S. residents will be able to use their credit and debit cards on the island, a move that is currently restricted and forces Americans to pay for their entire trips in cash.

U.S. companies will also be able to sell more resources directly to Cuba's small-business sector. More than 500,000 Cubans are now working outside the state-run system, and the new rules allow Americans to provide micro-financing to those businesses and sell them a wide variety of materials, equipment and tools.

The regulations also open the door for American firms to help build up the island's struggling telecommunications industry. U.S. businesses will be allowed to sell communications devices, software, hardware and services to improve Cuba's communications infrastructure, including Internet-based services.

Critics of the deal have blasted Obama for not guaranteeing changes to Cuba's dismal human rights record, citing the ongoing arrests of political protesters as proof that nothing will change on the island as a result of the new relationship. There's also concern Obama's new approach violates the economic embargo that still exists on the island, one that requires congressional action to overturn.

"This is a windfall for the Castro regime that will be used to fund its repression against Cubans, as well as its activities against U.S. national interests in Latin America and beyond," said Sen. Marco Rubio, R-Fla., a Cuban American who has been one of Obama's sharpest critics over the re-establishment of diplomatic relations with Cuba. "Given existing U.S. laws about our Cuba policy, this slew of regulations leave at least one major question President Obama and his administration have failed to answer so far: What legal authority does he have to enrich the Castro regime in these ways?"

As part of the deal to normalize relations, Cuba agreed to release an American aid worker and an American intelligence asset who had been jailed on the island for years. The nation also said it would release 53 political prisoners, a move the U.S. State Department said had been completed earlier this week. In return, the U.S. sent back three Cubans who had been convicted in U.S. courts of espionage charges.

In announcing the deal, Obama said an influx of Americans and their investments would better position Cubans to improve their lives and challenge their government to improve its human rights record.

[Fosgate]

So going to "educate" ourselves in cuban cigars and rum is now considered legal? Or I wonder if we have to show we are some how involved with academics to go.

[iahawk36]

For the people of Cuba, I sincerely hope this is a good thing...but anytime politicians are involved, that's generally not the case.

[DrunkenMonkey]

Cuba - Soon to be overrun with loud, obnoxious & arrogant Americans. SMH....

Some of us are nice. That wasn't.

[Puros Y Vino]

No need to generalize on Americans visiting Cuba. The two times I was in Havana there were plenty of Americans there and they were pretty cool. Many of them were there for the cigars. Others for various cultural and charitable endeavors. If anything, a lot of Canadian travelers to the resort areas tend to leave a negative impression.

[El Presidente]

If anything, a lot of Canadian travelers to the resort areas tend to leave a negative impression.

+ Aussies + Irish + Germans + Spanish+ French + Italian

Every village has it's idiot/s. Unfortunately they all appear to have passports

[iahawk36]

+ Aussies + Irish + Germans + Spanish+ French + Italian

Every village has it's idiot/s. Unfortunately they all appear to have passports

That is a great quote! I'm saving that one!!