Canning Paper | Cuba – Open For Business?

Cuba – Open For Business?: Canning Papers

02nd Nov 2015

The possibilities for international businesses in the Cuban market have been greatly restricted by US sanctions and by the Cuban system of economic management since the early 1960s. Both of these are now undergoing a transformation. The restoration of US-Cuban diplomatic relations – announced on December 17th 2014 and eventually implemented in mid-2015 – represents a huge political breakthrough after 54 years, and has heralded some initial easing of sanctions regulations and expectations of further moves ahead. Within Cuba, a process of economic transformation, which began in response to the demise of the Soviet bloc in the early 1990s, has intensified under the presidency of Raúl Castro. The legal complexities, economic pressures and shifting political currents within the US and Cuba create both opportunities and difficulties for international businesses considering the Cuban market. This paper examines the current position and prospects.

Executive Summary

Since December 17th 2014, a steady stream of reports of progress in bilateral negotiations between the US and Cuba have given an impression that Cuba is, or soon will be, ‘open for business’. But while the change in bilateral relations certainly alters the prognosis for the coming years, the process of dismantling US economic sanctions and opening up the economy remains at an early stage, is likely to be a longer and complicated one. New opportunities have been created, and it is now highly probable that many of the remaining barriers to foreign business will be dismantled in the coming years. However, companies contemplating entry into the market need to be aware of the factors determining the likely pace and sequencing of the changes, and risks along the way. This paper provides an outline of changes in US sanctions so far, their impact on international business, and the next stages, then considers the trajectory of reform within Cuba and its implications for future opportunities. It concludes with a checklist of the emerging opportunities and risks.

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