EU-Cuba Trade Talks to Resume

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By Michael Scaturro

Sept. 4 -- Talks between the European Union and Cuba on a wide-ranging “political dialogue and cooperation agreement” are scheduled to continue Sept. 9–10 in Havana and are expected to further pressure U.S. policymakers to gain access to the Cuban market for U.S. corporations equal to that expected by European competitors.

Experts say the European Union's move closer to Cuba—evident in the talks aimed at political, economic and trade and development cooperation, according to an EU trade spokeswoman—could lead to deeper investments, particularly by the EU tourism industry in the face of surging numbers of U.S. tourists likely to head to the island since U.S.-Cuba relations have been normalized. And the American tourism industry is likely to reiterate that point to lawmakers in Washington.

“They are going to say to Congress, ‘American tourism dollars are not going to American companies,’ ” Stephen Wilkinson, chairman of the International Institute for the Study of Cuba and professor of Cuban studies at London Metropolitan University, told Bloomberg BNA on Sept. 4. “I predict the embargo [on travel] will likely be lifted in 12–18 months. And it's unlikely that a Republican president will stand in the way.”

Wilkinson says the EU's policy of bringing about reform through trade with Cuba likely will serve as a model for the U.S. as it renews relations with the island nation. He sees a joint U.S.-EU stance towards Cuba as good for proponents of democracy.

“Cuba has benefited politically from being able to play the two blocks off each other,” he said. “Logically, Cuba will be unable to resist pressures from both the U.S. and the EU to alter its political setup once both normalize relations.”

Trade between the U.S. and Cuba has been ongoing for years in medicine and food, but volumes remain uneven. Exports from the U.S. to Cuba totaled $710 million in 2008 but slumped to $291 million last year, according to the U.S.-Cuba Trade and Economic Council.

“There certainly hasn't been an absence of trade between the U.S. and Cuba,” Sebastian Balfour of the London School of Economics told Bloomberg BNA on Sept. 4. “The Louisiana Chamber of Commerce, for example, has been very involved in exporting to Cuba. Cuba is one of their biggest customers. But there's more of a push right now in both the U.S. and the Cuban side to open up.”

EU and Cuban negotiators aim to sign an “enabling framework” to allow closer mutual engagement.

Seeking Economic Cooperation

“These negotiations cover mainly three pillars: political, economic and trade, and development cooperation,” an EU trade spokeswoman explained to Bloomberg BNA in an e-mail Sept. 4. “During the last round, significant progress was made above all on cooperation and economic issues. The next round will review that and will cover other issues in the negotiation round ahead of us.”

The official said the deal being negotiated between the EU and Cuba isn't a preferential trade agreement. “Neither Cuba nor the EU is offering or seeking trade concessions,” she said. “It is more about consolidating the framework for economic interaction.”

The Embassy of Cuba in Brussels was unable to provide a response to questions e-mailed to it by Bloomberg BNA by deadline.

The EU is Cuba's second-largest trading partner after Venezuela. European companies have been active in Cuba since the 1990s and have established themselves in a wide array of industries, in particular, the tourism sector.

Cuba is the only country in Latin America with which the EU lacks a commercial agreement. It has been suggested that the EU had declined to deepen relations with Cuba to avoid upsetting the U.S. But now that the U.S. has softened its line towards Cuba, EU policymakers are betting that the U.S. won't seek to penalize European multinationals that do business with Cuba.

To contact the reporter on this story: Michael Scaturro in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com