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The Shipping News

The prospect of unabashedly Republican Texas becoming communist Cuba's leading U.S. trade partner seemed almost too good to be true. And, indeed, the relationship between two very different kind of red states hasn’t quite lived up to expectations.

Barbour's Cut Container Terminal

When the global shipping giant CMA CGM announced in April that it had obtained a license to ship container vessels to Cuba via the Port of Houston, business executives and trade experts marveled: Unabashedly Republican Texas would soon become the Communist island nation’s leading U.S. trade partner.

Seven months later, the relationship between two very different kind of red states has not quite lived up to expectations.

As of September, fewer than 20 percent of the large containers that were expected to leave Houston for Cuba had set sail, said George Armaos, the director of strategic accounts at CMA CGM in Houston. Though the company planned to move 200 to 300 containers by October, so far it has been just 30 or 40 — the result, Armaos said, of Cuba’s insistence on engaging only with like-minded governments in a foundering global economy.

“Venezuela may be influencing the Cubans not to buy too much from the U.S. producers,” he said. “We spoke with some shippers here in the U.S., and they do have some orders, but finances are coming very, very slow.”

Countries like Venezuela, China, Brazil and Vietnam and others offer more trade incentives to the Cuban government than the private sector in the U.S. does, said John S. Kavulich, a senior policy adviser with the U.S.-Cuba Trade and Economic Council Inc., a Washington-based nonprofit that deals directly with the Cuban government. Cuba is “focusing on countries that will give them substantial government credits that they know they won’t have to pay back,” he said.

According to the economic council’s latest report, these countries provide more “favorable payment terms and less publicity when those payment terms are not honored,” which is expected given the lack of foreign investment.

“There is absolutely no incentive for the government of Raúl Castro to seek any re-engagement with the United States,” Kavulich said, “because any re-engagement with the United States has one guarantee, and that is uncertainty.”

Although Texas only recently got permission to ship large containers to Cuba, it has consistently traded in smaller shipments. In 2009 it trailed only Louisiana in terms of the value of cargo that left its ports bound for Cuba. But trade with the country at both the state and national level has slipped in the last year.

Parr Rosson, the director of Texas A&M University’s Center for North American Studies, said that in 2009, $85 million in goods left Texas bound for Havana, compared with $143 million in 2008. (These goods are not necessarily manufactured in Texas but depart from there, Rosson said, creating jobs and boosting the state’s economy.)

From January through September of this year, Texas ports shipped $18.2 million to Cuba, but Rosson estimates that only $354,000 of that left through large container shipments from Houston.

Meanwhile, the U.S. as a whole sent $528 million in goods to Cuba in 2009, a dip from the $710 million shipped in 2008. Should the trend hold for 2010, it would represent the third consecutive year in which the island nation’s trade with the U.S. has slipped. The Trade and Economic Council estimates total U.S. trade with Cuba this year through September is about $288 million — just slightly more than half of last year’s total.

Rosson said a contributing factor is the steady decline of the price of nickel, Cuba’s leading commodity, which makes the country less likely to engage in trade.

Despite the downward trend, Agriculture Commissioner Todd Staples said the state should continue to expand the dialogue — and trade opportunities — between the two nations.

“I support allowing Texas farmers and ranchers to engage in fair competition when selling their agricultural products to Cuba,” he said in a statement. “Texans will benefit through job growth and Cubans can see the success of democracy and a free-market society.”

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