Facilitating U.S. – Cuba Business Partnerships

Grim_EmilyBy Emily Grim, Associate, Reneo Consulting LLC

On December 17, 2014, President Obama announced the normalization of relations between the United States and Cuba. Today, just a short-time after the president’s historic visit to Havana, American citizens are left wondering how this shift in diplomatic relations will affect our country and, more importantly, what our changing relationship with Cuba looks like moving forward.

The bottom-line is that mutually beneficial trade and business partnerships between the U.S. and Cuba have the potential to spur jobs and growth in both countries. As we embark on these new business partnerships, two significant steps must be taken to facilitate sustained and successful relationships.

First, U.S. businesses entering the Cuban marketplace must have access to appropriate insurance to build confidence in the security of their investments. Use of insurance by early U.S. movers in the Cuban realm will set essential precedent for how future business deals between the U.S. and Cuba are structured.

Second, parties to any deal should agree on clear and defined dispute resolution procedures. A better trade framework, including standardized arbitration and alternative dispute resolution procedures, will lead to a stronger and more secure relationship for both parties.

The need for a strong trade framework is immediate as the continued evolution of diplomatic relations between the two countries opens more opportunities for U.S. investment in Cuba. For example, for the first time in half a century, the U.S. Government has loosened restrictions to allow U.S. companies in the export and telecom sectors to enter the Cuban marketplace and even open offices, warehouses, and other sites necessary to facilitate business transactions and otherwise establish a physical presence in the country. Perhaps most importantly, the continued loosening of restrictions on U.S. travel to Cuba will be a huge driver for increased exchanges between U.S. and Cuban citizens, increased investment, particularly in the hospitality sector, and the overall growth of the Cuban economy. The challenge in this realm is whether investments in Cuba’s infrastructure can keep up with this influx of U.S. travelers.

Despite this rapid increase in potential business opportunities, U.S. investors can only realize the full value of these opportunities by paying close attention to Cuba’s unique investment climate and model for economic growth. The smartest U.S. investors will focus on the development of the Cuban economy itself—particularly its export sector—as the country still requires significant capital to become a strong trading partner.  

Evolving diplomatic relations will continue to impact the nature and scope of Cuban investment opportunities, and the learning curve inherent in these changing relations requires a two-way street of respect and flexibility from both sides. Only by using this two-sided approach will multiple sectors of our economy—from travel, hospitality, and transportation to agriculture, biotechnology, and telecommunications—maximize growth potential. In this unique climate, we must focus on facilitating long-term partnerships that support the creation of a robust U.S. trading partner.

About the Author: Emily Grim is an Associate at Reneo Consulting LLC. Most recently, Emily worked with both the United States and Cuban governments to help negotiate the release of American Alan Gross from prison in Cuba and to facilitate the first major change in United States policy toward Cuba in more than 50 years. Emily focuses on strategic analysis, legal strategy, legislative and lobbying services and government-related consulting for clients of Reneo. 


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