TRADE-CUBA: Europe Accounts for Nearly Half of All Commerce

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Oct 31 2000 (IPS) - Europe accounts for nearly half of Cuba’s foreign trade, which this year will top the 5.1 billion dollar total posted in 1999, government officials reported at this week’s 18th Havana International Trade Fair.

Spain remains Cuba’s top trading partner, while Venezuela now ranks second, having passed Canada and Mexico on the list of 162 countries that do business with this Caribbean island nation, Foreign Trade Minister Raúl de la Nuez pointed out to participants at the fair, which opened at the weekend and runs through Nov 5.

Some 500 Cuban companies and 1,500 firms from 63 other countries are taking part in this year’s edition of the annual fair, the country’s biggest forum for clinching trade deals.

Trade between Cuba and Venezuela currently stands at over 500 million dollars, although commerce in goods other than oil fell from 39 million dollars in 1995 to 14.6 million in 1999.

Official sources in Venezuela attributed that situation to the lack of liquidity in Cuba, described as “an attractive market, but one that requires financing,” and to the freight costs, which are three times higher than they would be without the nearly four- decades-old United States embargo which sanctions boats that touch port in Cuba.

Europe represents a full 46 percent of Cuba’s trade. Of the total turnover with Europe, 78 percent involved the 15 members of the European Union (EU) which see in Cuba the conditions to make the island the hub of the bloc’s trade with the Caribbean.

“The idea of setting up shop in Cuba to deal with the rest of the Caribbean from here is tempting to many companies,” said Carlos Claret, director of Eurolatina, a body specialising in relations with Latin America, which is in charge of organising the EU pavilion at the Fair.

Among the advantages Cuba offers the European business community are its geographic position and the existence of a skilled workforce, Claret pointed out.

De la Nuez told the Cuban economic weekly Opciones that trade with the Americas represented around 39 percent of Cuba’s total turnover, two percent up from last year. Venezuela, Mexico and Brazil are, in that order, Cuba’s chief trading partners in Latin America.

By end-September, sugar accounted for 34 percent of this year’s total exports, while nickel — Cuba’s second-biggest export product — represented around 32 percent.

Overall, exports have grown 12 percent with respect to last year’s total, according to the trade minister.

The tourist sector, however, remains the driving force behind the slow recovery of the Cuban economy after 10 years of crisis, constituting “the main source of revenues in the balance of payments,” said De la Nuez.

Imports, meanwhile, have grown so far this year by 13 to 14 percent with respect to 1999, mainly due to the soaring oil prices.

Fifteen to 20 percent of imports are of foodstuffs, although purchases of machinery and other equipment also play a large role, after growing steadily in the past few years “as a result of the process of recovery of the economy,” the minister added.

De la Nuez underscored the financial difficulties facing his country, which is not a member of the International Monetary Fund (IMF), the World Bank or any other multilateral lending institution.

“We have to rely on short-term credits and, at times, on commercial loans with a high financial cost,” stressed De la Nuez, who pointed out that Cuba and Spain signed a loan agreement that has facilitated trade.

Cuba’s diplomats are trying to get it across to everyone interested in doing business with the island that its future purchases will depend on the financial and credit facilities it is offered.

No country can undertake an industrial investment project with a short-term loan, because at least five years are needed to purchase the necessary equipment and inputs, build, install, and start producing goods or services in order to begin paying off the loan and covering the costs of the investment, commented a Cuban diplomat accredited in Europe.

The specialised press here reported that EU participation in the Trade Fair reflected the bloc’s interest in maintaining and expanding its presence in Cuba, above and beyond ideological differences.

Stands in the European pavilion are showcasing sectors like computers and electronics, tourism, transport, the metallurgical industry, food, aquaculture and seafoods, advertising, engineering and construction.