President Obama’s surprise announcement that the U.S. will seek to re-establish diplomatic relations with Cuba after more than 50 years includes a call for increased exports of building materials for housing and, down the road, also could provide export opportunities for U.S. construction-equipment manufacturers, industry officials say.
The plan, which Obama announced in a Dec. 17 address, is the culmination of about 18 months of secret negotiations between the two countries.
Bill Lane, Caterpillar Inc. director of global government affairs, welcomed the announcement. He told ENR: “Caterpillar’s been calling for a new policy toward Cuba for more than a decade. And we believe engagement’s a powerful force in change and we’re hopeful this will cascade into a positive change in Cuba.”
He adds, “Based on actions from the business community in the past…I think you’re going to find the business community nearly unanimous on this move and will be very supportive.”
Lane says, “Hopefully, Cuba will respond in a positive way.”
The plan calls for increased sales and exports from the U.S. of products and services, including “certain building materials for private residential construction,” as well as consumer communications devices, software, hardware and services, according to a White House summary.
It will require amendments to Treasury and Commerce Dept. regulations.
Obama said, “I believe that American businesses should not be put at a disadvantage and that increased commerce is good for Americans and for Cubans.”
Initial plans do not include any U.S. assistance or increased exports of construction engineering, large commercial or infrastructure projects, or heavy-equipment sales.
But Caterpillar’s Lane says, “At one level, everything that Caterpillar makes in the United States is needed in Cuba.”
He adds, “Cuba doesn’t need to rebuild its infrastructure, it literally needs to build an infrastructure. So there’s going to be a demand for everything that we produce.”
Michael O'Brien, an Association of Equipment Manufacturers spokesman, said via email, "Any time AEM members have a new opportunity to establish markets for their products abroad, that's a good thing."
There is substantial construction interest in Cuba. Stephen Sandherr, Associated General Contractors of America CEO, says, "Let's face it, developers have been chomping at the bit to go down there and build hotels and other hospitality infrastructure. And I'm sure that there are a lot of contractors that would like to get in on that game."
Others are more circumspect. Javier Gonzalez, vice president of Louis Berger's global aviation services division and a Cuban American living in Miami, says that although he is “encouraged” by the announcement, it’s too early to tell what sort of opportunities will be created for design and engineering firms that want to work in Cuba.
“There certainly has to be a formal normalization between Cuba and the U.S. first in order to find out what would be the regulatory framework for design and engineering firms to offer services in Cuba,” he says. Establishing that framework will require changing laws in both the U.S. and Cuba to facilitate trade and commerce, he says.
The U.S. also has begun talks with Cuba about reestablishing an embassy in Havana and a Cuban embassy in the U.S., senior administration officials said in a conference call briefing.
But construction of a new embassy building in Havana appears unlikely.
One official added that setting up an embassy “shouldn’t be too difficult,” because the U.S. has had offices in Havana since 1977.
Those offices, called an “Interests Section,” handle such tasks as consular services and refugee processing and are housed in the former U.S. Embassy building.
The six-story facility, designed by Harrison Abramovitz architects, was opened in 1953, closed when the U.S. cut ties with Cuba in 1961 and reopened in 1977. It was renovated in 1997.
“So we have a presence there, but we are now going to transition that into an embassy,” the official added, but didn’t say how long the process would take.
Obama said that “I’m under no illusion about the continued barriers to freedom that remain for ordinary Cubans. But he added, “I am convinced that through a policy of engagement, we can more effectively stand up for our values and help the Cuban people help themselves as they move into the 21st Century.”
In 1962, President Kennedy declared a trade embargo against Cuba, which was codified in 1996 in the Helms-Burton Act. That same law permitted exports of some products, including donated food and medicine. But lifting or substantially easing the embargo is likely to require congressional action.
Capitol Hill reaction to Obama’s announcement was swift and tended to split along party lines.
Sen. Marco Rubio (R-Fla.) blasted the decision to normalize relations with Cuba as “inexplicable.”
Rubio, who will chair the Foreign Relations Committee’s western hemisphere subcommittee in the new Congress, said he would “make every effort to block this dangers and desperate attempt by the president to burnish his legacy at the Cuban people’s expense.”
House Speaker John Boehner (R-Ohio) said, “Relations with the Castro regime should not be revisited, let alone normalized, until the Cuban people enjoy freedom—and not one second sooner.”
Democrats praised the plan, though they noted that Cuba has done little over the years to improve its human-rights record.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) said that improved relations with Cuba could yield significant trade opportunities for U.S. companies.
He said, ”U.S. trade restrictions must be appropriately calibrated to ensure that we do not unnecessarily leave American jobs on the table.”
Wyden also asked the U.S. International Trade Commission to conduct a study of current policies on exports of goods and services to Cuba.
Lane observed, “This is going to set up an interesting public-policy debate…engagement vs. isolation and unilateral action vs. multilateral.”
He added, “And when it comes to Cuba we think it’s time to chart a new course.”
Lane said, “In order to attract the foreign investment so that the economy can have a robust level of growth, Cuba’s just going to need to become a freer society and embrace capitalistic principles and if that happens, Cuba can become a significant market.”