Texas businesses see green in prospects for Cuban trade

AUSTIN – Texas could see a $43 million boost in business each year if the United States lifts trade restrictions with Cuba, according to one estimate. And that’s just in agriculture.

John Doggett, a specialist in global competition at the University of Texas at Austin’s McCombs School of Business, said accessing the communist country’s 11 million consumers is an historic opportunity for Texas businesses of all kinds. 

“It’s off the scale,” he said.

Gov. Greg Abbott’s three-day business development trip to Cuba – he was scheduled to return Wednesday – signals the state’s strong interest in being at the head of the line should the United States open trade doors in the wake of reestablished diplomatic ties with Cuba.

President Obama announced plans last year to rekindle ties with the country – 54 years after the United States implemented an embargo on most business and travel.

Secretary of State John Kerry raised the American flag over the U.S. embassy in Havana in August.

Parr Rosson, a Texas A&M University agricultural economist, said ending the trade embargo will yield about $43 million per year for Texas agriculture as markets for tobacco, sugar, nickel and other commodities open to Cuba.

Canceling the embargo also will retire a policy that requires cash-only transactions for the limited trade that now happens between the countries, he said.

“Cash-only is still a problem,” Rosson said. “Allowing the use of credit would certainly be a plus.”

The thaw in Cuban relations is controversial.

Sen. Ted Cruz, a Republican candidate for the president whose father fled Cuba, has criticized Obama for reestablishing diplomatic relations.

But Abbott, a Republican, and some in Texas’ business community are seeing green – not red – over prospects of dealing with Cuba.

A spokesman for the state’s Republican Party was unable to say whether it has taken a position on the trip, but Abbott in a statement said, “Opening the door to business with Texas will expand free enterprise and the freedom that flows from it.”

Bill Hammond, CEO of the Texas Association of Business, said the group sees the trip as positive and applauds Abbott.

“We’re the No. 1 exporting state in the country,” he said, adding that trade, itself, is a diplomatic strategy.

“Trade is more likely to bring change than the embargo,” he said.

Cuba’s estimated $128 billion annual gross domestic product isn’t far behind those of Kenya or New Zealand, despite more than five decades of economic isolation from the United States, Doggett noted.

Cuba’s is the world’s 77th largest economy.

“And that’s under communist mismanagement,” Doggett said, adding that business there will surge given the “high probability” of relaxed restrictions on trade within the coming year.

Doggett pointed out that the U.S. does business with other regimes – China, for example – and countries with unstable economies, such as Greece.

At the moment, U.S. exports to Cuba are limited to medicine, agricultural and food products. Lifting the embargo stands to boost Texas’ warehousing, finance and business service industries, as well as real estate, transportation and other sectors, according to a report by the Center for North American Studies.

That’s not to mention oil and gas exploration, or tourism.

“Nobody’s been able to go to Cuba for 50 years,” Doggett said. “Cuba has untapped everything.”

For example, he anticipates that Dallas-based Southwest Airlines and Fort Worth-based American Airlines will fly direct from Texas to Cuba once air travel is unstoppered. Cruises for Cuba will be scheduled from Texas ports, as well.

Cuba imports about $2 billion in agricultural and food products, according to the Center for North American Studies.

The U.S. share of that has fallen from a high point in 2008 for several reasons including a ban on U.S. poultry due to avian influenza, weak economic conditions in Cuba and the fact that other trading partners extend credit, which the U.S. embargo doesn’t allow.

Laura Murillo, CEO of the Houston Hispanic Chamber of Commerce, said some Cuban-American members of her group oppose doing business with the country, but she thinks Abbott did the right thing in leading a delegation that included port directors from Houston, Beaumont and Corpus Christi.

“They are 50 years behind most places,” she said. “They’re going to have a lot of needs. At the end of the day they’re going to work with someone. Is it going to be us?”

John Austin covers the Texas Statehouse for CNHI’s newspapers and websites. Reach him at jaustin@cnhi.com.