After years of rigid market planning in Cuba and the half-century-old U.S. embargo, restoring economic ties to something close to normal is likely to be complex and time-consuming. The United States must change laws and regulations, and Cuba must build an economy more hospitable to foreign investment.

"The Cuban government has a long way to go and a lot more to do," said Jodi Bond, vice president of the Americas at the U.S. Chamber of Commerce. "I don't think any businesses are under the illusion that this is going to be an easy transition or the floodgates will open."

Businesses eager to break into Cuba will face numerous obstacles:

— THE U.S. GOVERNMENT

President Barack Obama's announcement only relaxed restrictions on traveling and doing business in Cuba. And even Obama's limited action will require government regulators to craft new rules. The United States, for example, will now let companies like John Deere sell tractors to small private Cuban farmers but not to government-run farms. Yet it's not clear how the eligible farms will be defined.

"All these regulations have to be written; it's not simple," says Kirby Jones, a consultant on U.S.-Cuba trade issues. "That could take weeks or months."

— CUBA'S GOVERNMENT

Havana has sent mixed messages about its appetite for foreign involvement in its economy. In March, Cuba passed a law meant to attract foreign investment. But in September, it jailed a Canadian executive on corruption charges — a move that sent a chill through the expatriate community.

"The climate for foreign investment is not that great," said Archibald Ritter, an economist at Carleton University in Ottawa who specializes in Cuba. Ritter said foreign companies that want to enter the Cuban market might be required to establish joint ventures with state-owned firms.

China required such arrangements as it opened its economy in the 1980s and 1990s, and many U.S. and other foreign companies found the joint ventures useless and costly.

—THE CUBAN ECONOMY

Cuba is hardly rich. Its economy ranks No. 69 in the world, about the size of Hawaii's. Income per person is just $6,200, according to the United Nations. That means that Detroit automakers, for example, are unlikely to enjoy big sales in Cuba.

"Nobody can buy a brand-new car," said Karl Brauer, senior analyst for Kelley Blue Book.

U.S. car sales have been banned in Cuba since 1959. Cubans have been have been forced to patch together Fords, Chevrolets and Chryslers that date back to before Fidel Castro's revolution.

Since the Communist economic system isn't likely to change soon, many of those cars will have to stay on the road for years. That could mean an opportunity for U.S. companies that make or distribute vintage car parts, Brauer said.

Enter Danny Howell, who sells parts for classic Chevrolets near Orlando. His business, Southeast Chevy Parts Inc., specializes in original parts dating to 1955.

Howell, who scours car ads and storage facilities to buy cars for parts, already sells indirectly to Cuba. U.S. citizens who have Cuban relatives often buy parts and send them to Cuba to keep the old cars running. Demand should grow as trade restrictions are eased, Howell said.

By: DocMemory
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