WASHINGTON — Fans of cigars, rum, Caribbean travel and more than a few Major League Baseball managers celebrated at the White House announcement of plans to normalize relations with Cuba after nearly 55 years of embargo. But the manufacturing sector, including the plastics industry, isn't toasting with authentic Havana Club just yet.
There are still plenty of obstacles for anyone hoping to do business with or in Cuba.
The White House announcement came as a surprise, even for those keeping a close eye on U.S. foreign policy.
“No one that I know of had been brewing up a Cuban market entry plan and now it's just a matter of dusting it off,” said Michael Taylor, senior director for international affairs and trade at the Society of the Plastics Industry Inc. in Washington.
“It's just way too early to get too excited,” he said. “The buying power of the average Cuban, we have no feel for it. It's probably not a huge market.”
Any segment of the plastics industry will have to start from scratch, making a business case for a move into a market about which very little is known to any U.S. businesses. Materials suppliers are unlikely to go in and try to put in capacity, Taylor said, though the lure of a new market may draw in processors, if a business case can be made — and if Congress allows it.
“The embargo that's been imposed for decades is now codified in legislation,” President Obama said in his Dec. 17 address. “As these changes unfold, I look forward to engaging Congress in an honest and serious debate about lifting the embargo.”
The 1996 law known as the Helms-Burton Act, and five other existing laws, severely restrict any U.S. commerce with Cuba that is not related to humanitarian relief. There is also still ample animosity on Capitol Hill toward President Raúl Castro and his brother, Cuban revolutionary and longtime leader Fidel Castro, particularly among Cuban-Americans in the Republican party, which will control both chambers of Congress in 2015.
And just because the United States has not done business with Cuba in more than five decades does not mean the rest of the world has been shut out of the Castro regime. Cuba has been a member of the World Trade Organization since 1995. Cuba does have its own plastics industry, though little is known of it in the U.S. market.
In January 2014, Brazil's Groupo Odebrecht signed on to build a plastics conversion plant in the Mariel Special Development Zone, where the global infrastructure and construction giant is already building a $957 million container port.
And last April, the Cuban government said it was moving forward on a $1.4 billion natural gas regasification project and a $1.2 billion urea and ammonia plant with help from Petrolos de Venezuela SA (PDVSA). Though no construction timeline is available, the anticipated 400,000 metric tons per year of urea and 370,000 metric tons per year of ammonia to be produced are meant to benefit Cuba's plastics, agriculture and chemical industries, according to a PDVSA release at the time, with the Venezuelan company exporting the excess to other Caribbean and Central American countries.
Perhaps the biggest area where improvement in U.S.-Cuba relations could help and influence plastics is the island nation's recycling industry. While governments like Cuba's are not known for being particularly green, tourism is already a large government-controlled business there. Helping keep beaches and waterways plastic-free with recycling and clean-up programs could be a way to build goodwill and ties between U.S. and Cuban industries and trade groups, and even individuals.
“If the society opens up more, it might become a consideration,” SPI's Taylor said. “We'd love to have Cuba sign on to Operation Clean Sweep.”
