trading with cuba

[Ken Gargett]

article from cnn.

HAVANA, Cuba (AP) -- The golden arches are nowhere to be found. There's not a single Starbucks or Wal-Mart, and no way to buy a Budweiser, a Corvette or a Dell.

1.But even in Cuba, you can get a Coke.

Despite the U.S. Trading With the Enemy Act, which governs Washington's 45-year-old embargo, sales on Fidel Castro's island are lining the pockets of corporate America.

Nikes, Colgate and Marlboros, Gillette Series shaving cream and Jordache jeans -- all are easy to find. Cubans who wear contact lenses can buy Bausch & Lomb. Parents can surprise the kids with a Mickey Mouse fire truck.

Dozens of American brands are on sale here -- and not in some black-market back alley. They're in the lobbies of gleaming government-run hotels and in crowded supermarkets and pharmacies that answer to the communist government.

The companies say they have no direct knowledge of sales in Cuba, and that the amounts involved are small and would be impractical to stop. But it's hard to deny that a portion of the transactions wind up back in the United States.

"We try and do what we can to police ... but in a globalized economy, it's impossible to catch everything," said Vada Manager, director of global issues management for Nike Inc.

Trade sanctions bar American tourists from visiting Cuba and allow exports only of U.S. food and farm products, medical supplies and some telecommunications equipment. But wholesalers and distributors in Europe, Asia, Latin America and Canada routinely sell some of America's most recognizable brands to Cuban importers.

Cuba has for years sought out American goods as a way of thumbing its nose at the embargo. Officials at three foreign-owned import companies operating in Havana, who refused to have their names published for fear of economic repercussions, said the communist government itself still imports the vast majority of American goods.

Christopher Padilla, U.S. assistant secretary of commerce for export administration, said from Washington that Cuba even sends delegations on "buying missions," hunting for specific American products in third countries for resale back home. Cuban press authorities did not make relevant officials available to discuss the practice.

In a country where tourism is the leading revenue source, stocking American brands helps reassure visitors, according to Daniel Erikson, a Cuban economy expert at the Inter-American Dialogue in Washington.

"People, average Cubans included, would rather have Coca-Cola than a no-name generic soda they're not familiar with. That means the government can charge more," Erikson said. "And obviously for the tourist industry it's important for the foreigners who visit Cuba to see products that they know and trust."

All American products are sold in Cuban convertible pesos, considered foreign currency and worth US$1.08 apiece -- about 25 times the island's regular peso. Although government salaries have increased in recent years, the average monthly pay is still around US$15, meaning few Cubans can afford U.S. goods.

But last month, Economy Minister Jose Luis Rodriguez said 57 percent of the population has access to hard currency -- dollars or convertible pesos -- either through jobs in tourism or money from relatives abroad. A 2004 report by the U.S. Commission for Assistance to a Free Cuba estimated that remittances from the United States alone total US$1 billion a year.

'That's Nike'

The influx of American brands began in earnest in 1993, when Cuba scrapped laws that had made it illegal for its citizens to possess dollars. Cubans know the products, despite an almost complete lack of advertising on the island. Angel Hernandez, a 62-year-old retiree, didn't hesitate when presented with a pair of "Air Jordans."

"That swoosh. That's Nike," he said. Like most Cubans, he pronounces the company name with a silent "e" as in "Mike."

Made in China, brick-red Nike Air Max 90 sneakers sell for 129.40 convertible Cuban pesos -- about US$140 -- at a store off Havana's Central Park. High-priced fakes also abound. Several stores, including one inside the Havana Libre Hotel -- the Havana Hilton before Castro's 1959 revolution -- offer authentic-looking Max Air 80s, but Nike makes no such product.

At the Comodoro Hotel, a boutique wants US$40 for assorted small gym bags with pastel or silver swooshes. Their tags read "Made in Indonesia" in Spanish and "Nike de Mexico," providing a hint of their route to Cuba.

Manager said all Nike products for sale in Cuba are probably knockoffs. He conceded, however, that legitimate distributors outside the U.S. could be selling products to Cuban importers -- and that Nike could make money off such sales.

"But what you're talking about is such a small volume there," he said. "And if we are able to detect where ... the products came from, that distributor or retailer runs the risk of having their account discontinued with us."

John Kavulich, senior policy adviser for the U.S.-Cuba Trade and Economic Council Inc. in New York, said "in no way should it be said that this is an end run by U.S. business around U.S. restrictions, because it's not."

"It's almost impossible for American companies to stop," Kavulich said. "Of course, at some point in the transaction, at the very beginning when the legitimate distributor bought the product from Nike, or any company, money went to the U.S."

Kavulich estimated the value of U.S. brands sold in Cuba as "probably US$20 million or less on an annual basis." But he noted that less than 5 percent of that amount likely represents combined profit for American companies, given all the layers of transactions the products go through to get to the island.

Disney, Snoopy and Jordache

Decades-old Walt Disney cartoons air on state television every afternoon and stores have Mickey Mouse toys and wrapping paper and Snoopy products.

At least two Havana clothing stores call themselves Jordache, one even using the company's horse head logo on its marquee. The shelves inside are crammed with jeans, shirts and blouses with Jordache labels.

Steven Nakash, director of licensing for Jordache Enterprises in New York, said the company heard about unauthorized use of its brand in Cuba several years ago but took no action because "an American company dealing with a foreign territory and battling it out on foreign soil is very, very hard."

Nakash, a member of Jordache's founding family, said the company has international distributors but also licenses its brand to manufacturers, including one in Mexico. He said he was unsure where the products in Cuba came from.

"Is any of the revenue from Cuba coming back to me? Certainly not," Nakash said.

Even after Castro took over, more than 100 U.S. corporations -- including Ford Motor Co. -- obtained licenses to operate here through foreign subsidiaries.

Legal maze

The U.S. Cuban Democracy Act of 1992 made such third-country transactions illegal, while also authorizing the export of U.S. medicines. Eight years later, the U.S. Congress allowed direct sales to Cuba of food and farm goods, everything from rice, ice cream and livestock to wood products, down feathers and cigarettes.

Since then, Heinz ketchup, Tabasco Sauce and Tyson's chicken have been sporadically available at Cuban government supermarkets, and the United States has become the island's leading supplier of food and farm products.

Prices can be about twice as much as in U.S. stories. Tubes of Colgate toothpaste start at US$4.85. You can also find products including shampoo, conditioner and anti-bacterial soap from New York-based Colgate-Palmolive Co. A shaving "mousse" from Gillette Series, distributed by Procter & Gamble Zurich, costs US$4.80 a bottle.

Could those items be considered medical supplies? Not likely, say U.S. officials.

But pinpointing whether any American product is in Cuba legally is difficult because the U.S. Treasury Department does not disclose who secures export licenses, citing trade secrets acts.

Coke, the ubiquitous brand

No American brand is more prevalent in Cuba than Coke, but the Atlanta, Georgia-based Coca-Cola Co. has not sought Cuban export licenses -- even though its product would qualify as food.

Bottled mostly in Mexico, Coke goes for US$1 at stores -- about the same price as at a U.S. convenience store -- and up to four times that at touristy restaurants.

Charles Sutlive, a Coca-Cola spokesman in Atlanta, said the company has not authorized any bottler to sell or distribute any of its finished products in Cuba. But he added that the company "does not have the authority to prevent these type of activities in countries where Cuban import-export companies are free to operate."

Indeed, distributors of American goods operating in other countries often insist they are doing nothing wrong -- and can even be fined by their own governments for refusing to export to Cuba.

The Commerce Department's Padilla said the U.S. sanctions have international reach, applying to American products anywhere in the world.

"If companies knowingly sold to a Cuban importer, they can be prosecuted," he said. "Willful blindness is not an excuse to violate the law in these matters."

Despite potential legal hot water, Nakash confessed a certain pride that his brand has cracked Havana.

"I can very much appreciate seeing a Jordache shop there," he said. "I, as an American, can't go to a country like Cuba. But our brand can."

[habanablue]

when in a Cuban restaurant some years ago, I asked the waiter how they got Coke on the menu....his reply 'Mexico"

[Smokin_Safari]

Thanks Ken,

More rubbish spewed out of CNN - do they bother to check any foundations for their stories?? We openly buy Dell computers here & in fact, more than 90% of government computers are Dell, with Dell service facilities in Havana & Santiago. There is no doubt that 95% of famous American brands are knock-offs. I could go into the market this afternoon & buy St Laurent trousers, Gucci bags & everything else you see around the world – all good quality, all with “correct” labeling, but all made in Latin America. Although there is some poor knock-offs such as the K Gargett “King of the World” t shirts. The remaining 5% of items such as sports shoes come from tourists donating such things – just think of our Las Salinas guides – where did they get their Columbia clothing? Most hygiene products (quoted as Gillette, etc) all come from Europe (Spain) & Colgate toothpaste is actually made here under licence. I don’t who these people interviewed, but we have imported Coke from Mexico for our people only to revert to the local product as it DOES taste better. As far as I know, only 2 resorts stock the stuff – the others are relying on local Tu Cola.

Tourism “the leading revenue source”? For a Cuban “economy expert”, I hope this clown knows where his arse is (tourism accounts for less than 10% of GNP, with nickel being 77%) as he might have been wiping his elbow after going to the toilet!

Do you have a new house yet?? Cheers,

[zuma]

Thanx 4 da collyrium

[Ken Gargett]

thanks marty.

doesn't that make you the most important person in cuba? i never doubted.

actually got a note from our mate, the minister, yesterday. has been in madrid and looking forward to catching us next year.

still to sort a new abode. living at hastings point - family beach shack - till i find something. love it here but very isolated.

still waiting on the pics with the supermodels.

say hi to any of the guys you see.

[El Presidente]

Good to hear from you Marty!

When I read articles on Cuba I am often stunned at the inaccuracies.

Looking forward to catching up with you in 2008. You up for a spot of fishing in Chile the week after the Havana Festival?

The mighty Qld Maroons beat the skanky NSW Blues last night 25/18 if you haven't caught up with it :-)

[Smokin_Safari]

» Good to hear from you Marty!

»

» When I read articles on Cuba I am often stunned at the inaccuracies.

»

» Looking forward to catching up with you in 2008. You up for a spot of

» fishing in Chile the week after the Havana Festival?

»

» The mighty Qld Maroons beat the skanky NSW Blues last night 25/18 if you

» haven't caught up with it :-)

Nice to hear from good news about a half decent sport - I have to "oblige" my new friends in North America when they start talking about *** sports like hockey & baseball.

I could be tempted, but will have to check my retirement fund balance - 5 weeks in France for RWC could put me back a few years.........

[Colt45]

» Nice to hear from good news about a half decent sport - I have to "oblige"

» my new friends in North America when they start talking about *** sports

» like hockey & baseball.

»

Yes, much better to gush on about kickball or cricket.......