US Equipment Cos. Ink Deals With Cuba

Business Deals Avoid New Restrictions Handed Down by Trump

Jim Patrico
By  Jim Patrico , Progressive Farmer Senior Editor
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Cuban farmers could certainly use some new tractors. These relics on a farm south in the village of Melena del Sur are typical of the tractors Cubans have kept running since the U.S. embargo started more than 60 years ago. (DTN/The Progressive Farmer photo by Jim Patrico)

PLATTSBURG, Mo. (DTN) -- U.S. equipment manufacturers such as John Deere and Caterpillar appear to be have beaten the clock on new restrictions on doing business in Cuba that were announced Wednesday by the Trump administration.

Over the last week, both John Deere and Caterpillar announced agreements with the Cuban government that should let the two Illinois-based companies sell farm tractors and other heavy equipment on the island.

White House officials held a background briefing on Wednesday detailing tighter rules for travel and business transactions with Cuba. However, part of the new rules put in place will "grandfather" any business deals that are reached before the new rules are posted in the Federal Register on Thursday.

American companies who wanted to do business with Cuba had some sense about pending restrictions. There was a rush of activity tied to the annual Havana International Fair, Cuba's largest commercial fair. Focus of the event is the Mariel Special Development Zone, a container ship facility near Havana and center of Cuba's import/export businesses.

In June, President Donald Trump announced that he was "cancelling the last administration's completely one-sided deal with Cuba."

Most of the restrictions announced Wednesday had to do with travel, though some business activities also will be curtailed on the island. Americans would no longer get to just travel to Cuba, but would have to travel under the auspice of a sponsor organization subject to U.S. jurisdiction. A list of restricted entities includes more than 180 government ministries, businesses, marinas, stores and 84 hotels across the island.

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Administration officials noted any travel already arranged or business agreements already reached with entities on the restricted list would be allowed to move forward. Administration officials also said the new rules would "likely" not restrict any agricultural commodity exports to Cuba.

Deere announced last week it would send 5000 Series tractors (between 75-115 horsepower) to Cuba this month. "This equipment is for testing and appraisal to ensure it will work with specific Cuban agricultural conditions and farming practices," said Deere spokesman Ken Golden. A report in Manufacturer News quotes Golden as saying Deere would send "several hundred tractors and associated implements" over a four-year period.

"Deere believes that improvements in the Cuban agricultural sector would improve the availability and affordability of food for the general population," Golden said in a news release. "The dairy, row-crop and fruit and vegetable are sectors of specific emphasis."

The Cuba Standard, a Miami-based business publication, quoted Golden as saying that Deere's planned sales of several hundred tractors (as well as implements and spare parts) are "completely covered by three separate export licenses already issued by the U.S. Department of Commerce."

John Deere Finance is arranging "an appropriate credit facility" that will be guaranteed by its Cuban bank, according to Golden.

In 2016, Cleber LLC -- a partnership of entrepreneurs Horace Clemmons and Saul Berenthal -- was the first American company to obtain a license from the U.S. government to sell tractors to Cuba. It later ran into trouble with Cuban bureaucracy and never established its planned factory on the island. Cleber still hopes to sell small tractors in Cuba built in a factory in Alabama.

Caterpillar was the first out of the chute at the Havana International Fair with an announcement late last week that its Puerto Rico-based distributor -- RIMCO -- will set up shop in Cuba.

The Miami Herald reported that RIMCO would establish a warehouse and distribution center at Mariel for unspecified product lines. The distributor has "a license from the Commerce Department and other agencies," according to Caroline McConnie, RIMCO vice president.

Deere and Caterpillar hope their announcements will give them protection from any tightening of restrictions by the Trump administration. But it is too early to tell.

The Miami Herald quotes James Williams, president of Engage Cuba, a group that lobbies for normalization of relations between the United States and Cuba: "Despite President Trump's harsh rhetoric, Cuba is open for business. The question is, will President Trump and Congress allow U.S. companies to compete for these growing opportunities, or keep them on the sidelines as Cuba's markets continue to grow?"

An updated list of restricted entities associated with Cuba can be found here: https://www.state.gov/…

Jim Patrico can be reached at jim.patrico@dtn.com

Follow Jim Patrico on Twitter @jimpatrico

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Jim Patrico

Jim Patrico
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