News Column

Ban Considered on Companies Doing Business in Cuba

July 11, 2012

Doreen Hemlock, Sun Sentinel

South Florida companies active in Cuba are worried about a measure in Congress that would ban them from U.S. Defense Department contracts if they keep up business with the island.

Anti-communist hard-liner Rep. David Rivera, R-Miami, inserted that tiny provision into a massive defense spending bill that passed the House in May. The ban would apply to anyone doing business with countries that Washington deems state sponsors of terrorism, which includes Syria, Sudan and Iran.

A Senate version of the bill does not contain the provision, but Rivera said he's talking with several senators to convince them to add it as "a question of national security." It is unclear whether the measure could pass the Senate or survive a conference committee.

Businesses active in Cuba -- foreign firms and U.S. companies licensed by U.S. Treasury to sell food and medicine or offer travel services -- worry that if the measure becomes law, they'll be forced to choose among their customers at a time of slow growth in the global economy.

Because many big companies do more business with theU.S. militarythan they do to Cuba, the measure could effectively end their budding sales to the Caribbean's largest island nation -- unless defense officials offer a waiver, according to lawyers and consultants specializing in Cuba business.

Those affected could include U.S. companies licensed to sell in Cuba such as food giants ADM, Cargill, Perdue and Tyson; U.S. shipper Crowley; plus foreign giants including Brazil'sconstruction leader Odebrecht. Crowley operates shipping routes to Cuba from Port Everglades in Fort Lauderdale. Odebrecht is building the $1 billion tunnel project at the Port of Miami.

Hard-liners in Florida recently pushed a similar law banning state and local contracts of $1 million or more to companies dealing with Cuba. But that law recently was blocked by a federal judge, who said U.S. foreign policy was the domain of the federal government, not the realm of a state.

Rivera said his U.S. measure would largely affect foreign firms seekingU.S. militarycontracts such as Odebrecht, now building an $800 million expansion of Cuba's Mariel port, and Spain's Repsol, which recently drilled for oil off Cuban shores.

Small U.S. businesses that sell food to Cuba or take Cuban-Americans to visit relatives on the island won't be hurt, if they don't seek Defense work, he said.

"The practical impact would be that we'd create more opportunities for American companies and American jobs, because companies like Odebrecht and Repsol could not do business with the Department of Defense," if they do business with state sponsors of terrorism, said Rivera.

Odebrecht, which challenged the Florida law, said it is monitoring the provision in Congress.

Lawyers and consultants raised concerns: Where would the Defense Department get the resources to check if proposed contractors did business with Cuba, Iran or others? Does the measure clash with federal law authorizing U.S. companies to sell food and medicine to Cuba for humanitarian reasons? If U.S. companies pull out of Cuba, would that cut food and medicine for the Cuban people?

"The implications could be serious: misallocation of resources and penalization of U.S. farmers" and others licensed to do business with Cuba under an exemption to the 50-year-old U.S. embargo against the island, said Robert Muse, an attorney inWashington, D.C.active for decades on Cuba matters.

Some also wondered how broadly Defense officials might interpret a future law. For example, would an airline that leases planes for a Cuba charter be banned from Defense contracts if it pays a fee in Havana?, asked John Kavulich of the US-Cuba Trade and Economic Council, a nonprofit group in New York.

Licensed charter flights to Cuba operate from Fort Lauderdale, Miami, Tampa and other U.S. cities.

Some analysts linked Rivera's move to election-year politics to court Cuban hard-liners. "As a taxpayer, I'd be more appreciative of Mr. Rivera's efforts to engage in budget matters," said Kavulich.



Source: (c)2012 the Sun Sentinel (Fort Lauderdale, Fla.) Distributed by MCT Information Services


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