Practice/Industry Group Overview
Following the demise of the Soviet Union in 1991, Cuba gradually has been opening up to the world following three decades of isolation. The island's 12 million people represent the largest potential consumer market in the Caribbean. Cubans are not only aware of most American brand names, but demand for American products is great.
Since the U.S. embargo against bilateral trade with Cuba was imposed in 1960, American businesses have been left waiting in growing frustration while other countries have entered what the Economist Intelligence Unit describes as an emerging market having as much long-term growth potential as any of the Asian tiger nations. However, a federal law that became effective in 2001 created certain exceptions from U.S. sanctions: for agricultural, food product and medical exports, including medical devices and pharmaceutical products. Thus, there presently exist remarkable opportunities to do business with Cuba even under the embargo, and Duane Morris has the capability to advise U.S. companies on related legal and practical issues. We also can assist with strategic planning and positioning for success when U.S.-Cuba relations are normalized. Many foreign policy experts predict that the embargo will be lifted within three to five years.
Duane Morris is a member of the prestigious U.S. Cuba Trade Association, and our attorneys are familiar with the applicable laws and processes relating to the U.S. export exceptions, as well as the Cuban marketplace. We can advise clients regarding obtaining U.S. Treasury and Commerce Department licenses, negotiating contracts and facilitating complex transactions. Duane Morris attorneys also can assist companies to position themselves to enter the full Cuban market at the moment the trade embargo is lifted.
Cuba currently is focused on diversifying its economy by developing the tourism, agriculture, information technology, biotech and energy (oil/ethanol) industries. We can advise clients in all areas related to legally compliant trade with Cuba, including mergers and acquisitions, private equity, pharmaceuticals, bio-fuels (ethanol), labor and employment, technology, biotechnology, the insurance industry, energy, retail, finance/banking and tourism. Our attorneys can work with the U.S. and Cuban governments to obtain a determination about whether a certain product will be exempt from the embargo, as well as assist with finding markets for the products.
Duane Morris' bilingual attorneys and paralegals enable our efficient provision of effective service. Our seasoned attorneys have served in management positions with U.S. governmental agencies (including a senior trade official responsible for Cuban policies), and as leaders in the Hispanic Bar.
Exports of U.S. food, agricultural and medical products to Cuba are permitted by the Trade Sanctions Reform and Export Enhancement Act (TSRA), which relaxed the trade embargo. The law allowing exports to Cuba represents a significant opportunity for U.S. businesses. In fact, due to the TSRA requirement that Cuba's purchases be made with cash, Cuba has become one of the most attractive new markets in the world for U.S. exports of pharmaceutical, medical and agricultural products.
The agricultural and food industries were quick to take advantage of TSRA. Cuba's purchases of food and agricultural products from U.S. enterprises grew significantly each year since exporting began in 2001. By the beginning of 2006, annual sales increased to nearly $500 million, making Cuba the 25th-largest export market for American food and agricultural products. Since U.S. exports resumed, Cuba has purchased more than 280 products from 38 states, with a total value of almost $1.5 billion. Further changes in U.S.-Cuba trade policy also could create lucrative business opportunities for U.S. companies in the form of joint ventures or other contract arrangements with Cuban entities. Free trade with Cuba could generate $50 billion and 900,000 jobs for the U.S. over a 20-year period, according to some estimates.
Lifting the embargo could mean hundreds of potential business opportunities for U.S. interests, including tourism, bars and hotels, American-style restaurants and fast food, supermarkets, sporting goods and computer stores, and more. American professionals may find the commute between Miami and Havana among the shortest between any two markets in which they work. With only 90 miles of water separating the U.S. from Cuba, day trips may become common.
Duane Morris can work with U.S. companies to try to avail themselves of these business opportunities now, while the exception to the embargo applies, and later, when Cuba and the U.S. have normalized commercial relations.
Strategic Business Planning
American businesses can ready themselves now to move beyond the limited scope of existing legal exports promptly once the embargo is lifted. We are skilled and able to assist businesses and investors in positioning themselves to get in on the ground floor of a largely undeveloped, though primed, marketplace.
Duane Morris attorneys are familiar with the operations and procedures of trade-regulating entities in both Cuba and the U.S. This, combined with our international legal experience, enables us to guide clients through complex transactions to quick resolution, from goal identification, through strategy formulation to execution of signed agreements. We can help now by assisting clients in obtaining licenses for exporting to and visiting Cuba to discuss future business deals, facilitating discussions with key Cuban trade and purchasing officials and negotiating commercial transactions and letters of intent.