Obama plans to kick-start U.S. business with Cuba on Havana trip next week

MIAMI — When he makes his historic visit to Cuba next week, President Obama will try to kick-start a business relationship that has yet to flourish despite intense administration efforts.

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Obama will arrive with a delegation that includes the CEOs of Xerox and Marriott International  to help nudge along deals in the works. U.S. airlines are set to resume commercial flights to Cuba this summer, a New York-based research facility is working with Cuban researchers on a lung cancer vaccine, and an Alabama-based tractor company has won approval to build a factory near Havana. Hotel chains Marriott and Starwood could announce their own deals during the president's trip, according to a report in The Wall Street Journal. And AT&T could join Sprint and Verizon in providing roaming services on the island.

Cementing as many of those deals now is key, given Congress' current refusal to lift the trade embargo against Cuba and Republican presidential candidates' opposition to Obama's opening with the Cuban government, said Ralph Patino, who is nearing a deal with the Cuban government to open a building products and supply store outside Havana.

"Once these companies are embedded, it will be very difficult to roll back come another administration," said Patino, a Cuban-American and Miami attorney.

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Despite those advances, the expanded business relationship envisioned by the Obama administration remains far from becoming fully realized because of resistance from Cuba.

One reason is a long-held suspicion of dealing with a country that has imposed an embargo for more than five decades. Michael Sherwin, CEO of the Columbiana (Ohio) Boiler Co., visited the island last month to explore selling containers his company manufactures to transport chlorine for water treatment plants. Sherwin said the Cubans were welcoming but guarded.

"I don't know if (the U.S.) is going to be their first choice on everything because we're the ones who closed the door and threw away the key to the lock," Sherwin said. "The door has been opened, what, an inch?"

Another cause for delay is the fact that other countries have rushed to Cuba following Obama's December 2014 announcement, including French President François Hollande, the foreign minister of Japan and a group of Russian senators.

Fernandez said Cuba is now using that new-found attention to negotiate better terms from competing companies. "Everything in Cuba all of a sudden has become much more valuable," Fernandez said.

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It's not just the Cuban side holding up the pace of negotiations. U.S. companies struggle to figure out what they can do legally in Cuba.

Sofia Berger, vice president of Louis Berger, a New Jersey infrastructure construction company, said it operates in countries blanketed by economic and regulatory restrictions, like Iraq and Afghanistan. But figuring out what the company can do in Cuba has given her legal team headaches and forced it to hire outside help.

"It's been an interesting experience," she said after a trip to Havana last month. "We're pretty adventurous. However, (Cuba) has been an eye-opening experience."

The economic embargo bans most trade and travel. Over the years, Congress has created some exceptions, such as allowing U.S. companies to sell food, medicine and other humanitarian goods to the impoverished island.

The Obama administration has since worked around the edges of the embargo, allowing American companies to sell construction materials, agricultural equipment, telecommunications infrastructure and other goods. Some products and services can only be sold to Cuba's emerging entrepreneurial class, while some can be sold directly to the government so long as it benefits the public good.

Companies in some fields are allowed to establish a physical presence on the island, and some can open bank accounts there. But most sales to Cuba still require the Havana government to pay cash in advance, a complex transaction often involving third parties. "I still don't know how I get paid," Sherwin said.

The end result is an island still waiting to see the full force of U.S. investment.

Gilberto Castañedo, a Havana-based artist, said he was overwhelmed when he first heard that the U.S. market would finally become open. But he's yet to see any results.

Castañedo, 39, said finding the electronics and vinyl materials he uses to make custom lamps is a daily scavenger hunt. He never knows what he's going to find each day, if he finds anything at all. That's why he hopes business with the U.S. opens more quickly.

"The initiative is there, the hope to produce is there," he said. "Just give us the chance."