Texas Sees Red

Texas is poised to become the nation’s leading trade partner with communist Cuba after the Port of Houston Authority gained permission for its container vessels to sail to the island nation.

Trade experts are confident that Texas will be now able to carve out for itself a larger slice of the United States’ total trade with Cuba, which was estimated at $521 million in 2009, down from $710 million in 2008. Last year, $85 million in goods was sent to Cuba from Texas, a distant second to Louisiana’s $241 million. Parr Rosson, the director of Texas A&M’s Center for North American Studies, says that a previous policy prohibited container cargo making its way to Cuba from any state other than Florida — and trekking container-sized cargo to Florida for shipment, he says, was not cost-effective.

But the recent policy change, approved weeks ago by the U.S. Commerce Department, the Bureau of Industry and Security and Cuba’s state-run Alimport import agency, means that TEU (20-foot equivalent) containers and FEU (40-foot equivalent) loaded with food staples and other approved products can move through the port.

“We are thrilled. This is the first time in a very long time that we have been able to move cargo directly from Texas,” says Ricky W. Kunz, the vice president of the Port of Houston Authority’s Origination Division. “This will allow those exporters who have licensed commodities … to be more competitive with states that are east and northeast of here.”

The policy change came to light after French shipping company CMA-CGM, which has a U.S. office in Norfolk, Va., made the agreement with Alimport and was granted a two-year license. The news was announced to a group of trade representatives who congregated in Houston on April 21 for the Texas-Cuba Trade Alliance’s workshop on trade with the island. It came as a surprise to many, underscoring the fact that the United States’ easing of trade restrictions with Cuba has unfolded quietly.

The Trade Sanction Reform and Export Enhancement Act of 2000 opened restrictive trade with Cuba for the first time since the U.S. enacted an embargo against the communist regime of former Cuban President Fidel Castro. In January 2002, 30 metric tons of U.S. wheat were shipped to Cuba in the aftermath of Hurricane Michelle — the first shipment since the embargo, says Jeff Moseley, the president and CEO of the Greater Houston Partnership. Since then, the U.S. has become Cuba’s fifth-leading trade partner.

The Houston port’s new development should only bolster U.S. and Texas trade. “We would just very respectfully say that, as Houston goes, so goes the state of Texas. … The port of Houston is ranked first in the U.S. in foreign-waterborne tonnage and second in the U.S. in total tonnage,” Moseley says. “And Texas has been No. 1 in foreign trade in the United States since 2002.”

The future of Cuba

The U.S. House of Representatives is currently considering H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, which would open up travel to Cuba and loosen financial restrictions on trade. Current policy mandates that Cuba pre-pay for its goods via a third nation’s banking system —  a retaliatory measure imposed by the U.S. in 2005 after Cuba jailed dissidents and blocked anti-government propaganda, Rosson explains, The bill, which awaits action by the House Committee on Agriculture, would save businesses money by allowing them to circumvent foreign banks that currently charge to transfer the money.

"The potential economic impact on our nation and region is really too great not to proactively explore restoration of trade with Cuba,” Moseley says.

Proponents of easing trade restrictions argue that expanded tourism would bolster the Cuban economy, allowing the nation to improve its famously deteriorated infrastructure. The money could be funneled to fix buildings, pave roads, fix plumbing and rehabilitate farmlands whose soil is too unhealthy to produce crops. Rosson estimates that tourism to Cuba produces $2.2 billion for the country annually, second only to its main export, nickel, which hauls in $2.7 billion. But he cautions that the Cuban people will have their say.

“So far, their response to [the proposed loosening of travel and trade restrictions] has been a little bit lukewarm,” he says. “I bet deep down they would like to see this happen, but at the same time, they’ve seen a lot of these things move through Congress before, but with no action. They are also a little bit disenchanted with the current administration. I think they were expecting bigger changes.”

The Cubans aren’t necessarily waiting on the U.S. Moseley says Cuba is now listed on the Virtuoso Luxe report’s list of top emerging destinations for travel, and Rosson describes fierce competition in agriculture sales to Cuba from Canada, Brazil, Venezuela and China. In an ironic twist, the U.S. also faces a challenge in its latest capitalist venture in the Caribbean from a country it fought for nearly a decade over communism: the Socialist Republic of Vietnam. The country, an emerging model of socialism and capitalism blended together, is a main exporter of rice to Cuba.

After Castro

Jonathan Brown, a professor in the University of Texas’ Latin American Studies program, urges prudence and patience when envisioning a post-Castro Cuba. For more than two years, Fidel’s younger brother Raul Castro has served as president. Brown described the younger Castro as a figure struggling to emerge from his older brother’s shadow — a second-in-command who, perhaps symbolically, proved incapable of even growing a beard in the age of the mighty barbudos (bearded ones) at the height of the Cuban revolution. But Raul is still a capable — if brutal — leader, Brown says. Raul Castro ordered executions during the Castro regime’s military tribunals after the revolution and still effectively guards the Cuban Communist Party’s doctrine. Even if he dies or loses or power, Cuban exiles likely won’t be able to take back their country. Instead, Brown surmises, the military branch of Cuba, the Revolutionary Armed Forces (FAR), will keep the country as close to its current state as long as possible.

“I think that what the FAR would do is preserve the revolutionary ‘achievements’ and not turn back the clock to 1959,” he says. “I think that they will also stand as a bulwark against any Cuban Americans who wish to go back to Cuba, the land of their birth, and reclaim their property. They will probably welcome back Cuban Americans with their dollars, but they won’t expect them and they won’t allow them to take back their properties.”

The FAR is not only trained in military operations, Brown adds, but is educated in Europe on business practices and “partners with foreign investors and various industries.”

Until more headway is made, the Port of Houston will continue in its mission of what Moseley calls achieving peace through commerce. “We would argue that you find peace through free trade,” he says, “and that’s the best way to promote trade relations.”