By Molly Parker
mparker@scbiznews.com
Published April 27, 2009
In July 2003, the late Jack Maybank’s boat The Helen III — named for his wife — made history as the first-ever U.S.-flagged vessel carrying American goods to call on Cuba since 1961.
For the Charleston businessman, the deal marked the culmination of 10 days of work on the ground in Havana building relationships with the people of Cuba.
His dealings there were a case study in contrasts between the countries’ strained relationship and the fruitful accords that have been forged between U.S. businesses and the Cuban government.
By 2005, despite an upstream row against U.S. bureaucracy, The Helen III was calling on Cuba more than once a month, mainly bringing food and blank newspaper rolls to the Caribbean nation 90 miles south of Key West, Fla.
It is just the type of successful-despite-the-odds situation to which critics of the 47-year U.S. embargo against Cuba point in calling for its end. Maybank died of cancer in 2007, and his son, Jack Jr., took over as chief executive.
The shipping component of the business was sold. But today, the younger Maybank is studying his father’s footprints, seeking out new trade opportunities with Cuba as U.S. President Barack Obama and Cuban President Raul Castro strike up an unprecedented dialogue.
“I think that the overall mentality is changing,” Maybank said. “This is so important to me. There is a lot more to come and a lot more needs to happen, but this is a step in the right direction.”
Even with the embargo in place, federal law since 2000 has allowed for the exportation of agricultural and medical goods. But South Carolina has all but bypassed the opportunity while neighboring states are growing their U.S.-Cuba trade lanes.
State support is needed
In 2008, the United States exported $717 million worth of goods to Cuba, according to the U.S. Census Bureau’s Federal Trade Statistics. South Carolina’s share of that: $0.
Meanwhile, Cuba has become Alabama’s No. 1 export market for poultry, with some 50,000 tons of chicken heading there from Mobile every year, said Maria Mendez, director of Latin-American trade with the Alabama State Port Authority.
Mendez spoke at recent a Cuban trade conference in Charleston put on by the College of Charleston’s Global Trade Initiative program at the School of Business and Economics.
Even under the current political landscape, opportunities exist, particularly for Southeastern states, to export food and other agricultural products to Cuba, Mendez said.
But because trade with Cuba can be difficult to navigate, doing business there requires a commitment from the state, she said. The Alabama Department of Agriculture has aggressively pursued opportunities in Cuba and helps interested businesses secure the federal licenses required to travel there legally, she said.
“Without the support of your state, you could be running in circles or spinning your wheels,” Mendez said.
Cuban cigars, but what else?
In 2004, an S.C. trade delegation that included Lt. Gov. Andre Bauer visited Cuba. During the last night the delegation was there, members met with then-President Fidel Castro, who passed out boxes of Cuban cigars, some of which he signed. The delegation also brought back a letter of intent for $10 million in export deals for S.C. agricultural products. But five years later, not one of those deals has materialized.
Gov. Mark Sanford’s spokesman, Joel Sawyer, said the governor was not involved in the trade mission and did not have a position on S.C. trade with Cuba. Sawyer suggested a call to Bauer’s office.
Bauer’s office directed questions to the S.C. Department of Commerce, saying the delegation delivered the report about the Cuban commitments to that department.
“I think that’s what everyone is waiting on,” chief of staff Jim Miles said.
Commerce spokeswoman Kara Borie tossed the hot potato, too.
“Certainly we have lots of trade opportunities we are working on throughout the world,” she said. “Cuba is not on that list.”
Asked whether it could be an opportunity in the future, Borie said Commerce’s trade missions concentrate on countries that might want manufactured goods. She suggested a call to the Department of Agriculture.
The S.C. Department of Agriculture’s former commissioner, Charlie Sharpe, was also a participant in the Cuba junket, but he resigned a year later after admitting he accepted a $10,000 bribe to protect a cockfighting ring.
After checking around the office, Assistant Agriculture Commissioner Larry Boyleston said it appears that little materialized from the trip. The state followed up with the Cuban government upon returning home, he said, but no response followed. “It just kind of dropped there.”
“I don’t know what the lieutenant governor did,” added Boyleston. “You might want to check with him.”
Change in rhetoric
Echoing the sentiments of presidents before him, Obama said that lifting the embargo would that require Raul Castro extend humanitarian relief to his citizens.
But the marked change in this current conversation is that Castro has signaled a willingness to participate.
“I almost fell out of my chair,” said Jake Colvin, vice president for global trade issues with the National Foreign Trade Council. “I couldn’t believe all the positive talk going back and forth.”
Within the scope of his presidential power, Obama has already eased U.S. policy toward Cuba, allowing Cuban-Americans to travel and send money more freely between the countries. Obama also has indicated he will use his powers to license U.S. telecommunications companies to establish cell phone and Internet service in Cuba.
The changes will have little impact as far as the broader scope of establishing new business relationships, said Mendez, with the Alabama port authority. Removing travel restrictions for all Americans, not just Cuban-Americans, would help drive a tourism industry and therefore exports, but Mendez is not overly optimistic that anything more will happen.
“I think all this is rhetoric, and this will be as much as we see, for the simple fact Obama wants to be re-elected and Florida is a key state,” she said.
Mendez’s family left Cuba in 1961 when she was 9 years old. Over the years, she has watched various presidential administrations talk about lifting the embargo, only to watch deals fall through in the end.
“My question is: Are we sacrificing our economics because of a love affair we have with Cuba?” she asked.
Tedious and frustrating
S.C. Farm Bureau Federation President David Winkles said he traveled to Cuba about six years ago as part of a trip organized by the American Farm Bureau, long an advocate of an end to the embargo.
Winkles said Cuba is a potential market for S.C. agricultural products but said many farmers in the state either believe it is not worth the hassle or don’t know where to begin.
“It’s extremely hard to do business with the Cubans based on executive order through the administration, particularly the Bush administration,” he said. “It’s a lot of hoops to jump through.”
That’s something Jack Maybank Jr. knows all too well. Maybank’s company was able to build inroads in Cuba after President George W. Bush signed into federal law the Trade Sanctions Reform and Export Enhancement Act of 2000, relaxing certain U.S. economic sanctions.
But the law is far from easy to navigate.
To ship products to Cuba, Jack Maybank Sr. had to broker complicated third-party deals with U.S.-approved foreign banks, because the law prohibits U.S. businesses from extending credit to Cuba. To complicate matters, the U.S. government could — and often did — blacklist certain foreign banks in the middle of a deal, the younger Maybank said, requiring the company to seek out another third-party broker.
Still, Winkles said that if the S.C. Commerce and Agriculture departments were to facilitate the effort, his organization would be interested.
For its part, the Agriculture Department is looking into securing a license that would allow businesses to travel to Cuba under its umbrella. Aaron Wood, international marketing specialist for the department, said several businesses interested in traveling to Havana for a fall expo have called since the trade conference in Charleston.
“I think, for a variety of reasons, we would encourage anyone who is seriously interested in trading with Cuba to get a license on their own,” he said.
Licenses are issued through the U.S. Department of Commerce and the Treasury Department.
S.C. opportunities
South Carolina is one of the nation’s top producers of turkeys, but Winkles said the limited discussions he’s had with poultry farmers indicates they already have enough demand.
Otherwise, South Carolina is a net importer of agricultural products, so a vast amount of food exports is not likely to spring up overnight, Winkles said. Speakers at the recent trade conference encouraged businesses to think outside the box as it relates to the agricultural products that are allowed for export to Cuba. Paper and wood products fall in that category, for instance.
John Hassell, interim CEO of the S.C. State Ports Authority, said demand would have to drive the establishment of a trade line between the ports of Charleston and Havana.
“I think the key is the volume and the service to and from,” Hassell said. “You have to have both, and if service is not viable from Charleston now, I think the key is to give South Carolina businesses access to other services that are available to do that trade.”
Eventually, if enough business is established, a shipping line might offer to make that call from the Port of Charleston, Hassell said. The Port of Charleston, he said, is the northernmost East Coast port likely to benefit from renewed trade relations with Cuba.
Big business’s push
Where South Carolina could really benefit is in the exportation of manufactured goods, such as Caterpillar earth-moving machines, vehicles and energy-related products produced by General Electric in the Upstate. Big business is a driving push behind the political momentum to end the embargo.
Bill Lane, the Washington, D.C., director of governmental affairs for Caterpillar Inc., which operates a manufacturing facility in the Upstate and in Summerville, said the company has been lobbying for an end to the embargo since 1998 and calling for a policy “based on engagement rather than unilateral sanctions.”
“When you visit Cuba, you will quickly find that Cuba doesn’t need to rebuild its infrastructure, it needs to build an infrastructure, and there’s a need for just about everything that Caterpillar produces,” he said.
The demand would not be immediate for loads of big yellow Caterpillar tractors — Cuba hasn’t been a huge market for bulldozers from other countries where a trade embargo with the island nation does not exist. For Cuba to become a serious market, political reform will be necessary, Lane said.
“So the question is: How do you promote political reform and freedom, and do you do it through isolation or through engagement?” he said. “Our feeling is that, after 50 years of isolation, we should try a different policy.”
Right now, the company, headquartered in Peoria, Ill., is urging Obama to at least consider lifting the travel ban for all Americans, something he could do through his administrative powers and without lifting the embargo.
The ties that bind
The political debate might be acrimonious, but businesses with economic ties to Cuba say the people are easy to work with and count them among their most rewarding relationships.
Sean Register, who owns a small shipping company in Richmond Hill, Ga., said his business contacts in Cuba got wind last December that it was his birthday and threw him a party.
“The people are amazing,” he said.
In 2008, Register estimated he sent 20 vessels to Cuba carrying about 150,000 tons of food and wood products. Register said he would love to see a twice-monthly call from the Port of Charleston to Cuba, carrying fresh produce there and returning with Cuban rum and cigars.
So strong was the senior Maybank’s connection to his Cuban partners that he was offered an experimental cancer vaccine — Cuba is known for its advanced biomedical research — several years ago, after his diagnosis, only a few years after he began doing business with the United States’ southern neighbor.
“We didn’t do it,” Maybank Jr. said. “Maybe we should have. Who knows? But it’s an example of the friendships we made there and the type of people they are.”
Reach Molly Parker at 843-849-3144
