An agreement between Cuba and the Alabama State Port Authority signaled the continuation of a relationship that goes back centuries and could pay off in the very near future.
The port authority in Mobile and the National Port Administration of Cuba on Thursday, Feb. 2, signed a five-year cooperative agreement in Tampa. The Memorandum of Understanding (MOU) between the port and Cuba marks the first port agreement involving the two countries signed on U.S. soil since 1959.
State port CEO Jimmy Lyons and Rene Rolando Fernandez de Lara Cabezas, director of inland waterway and sea transport of the Republic of Cuba Ministry of Transportation, acknowledged mutual interest in facilitating trade growth and promoting all water carrier services between Asia, Europe, Latin America and the United States Gulf Coast.
“It’s another one of our efforts to maintain a relationship between this port and Cuba,” Lyons said.
However, what happens with trade in the future is out of their hands at the moment. In order to enjoy the full extent of trade between the two countries, the federal government must roll back a decades-long embargo preventing it, Lyons said.
“True free trade cannot happen until Congress acts,” Lyons said. “It highlights the need to drop the embargo altogether. It is a 50-year-old policy that has not worked.”
While former President Barack Obama’s administration took steps to normalize relations with the island nation, it’s unclear what, if anything, President Donald Trump’s administration plans to do.
“It’s not clear the position [Trump] will take,” Lyons emphasized.
In October 2016, the U.S. Treasury Office of Foreign Assets Control eased a rule prohibiting vessels from Cuba from entering a U.S. port within 180 days of its departure from Cuba. While the amendment may allow vessel operators to efficiently deploy their vessels and avoid the 180-day waiting period, ocean carriers must nonetheless comply with all other U.S. restrictions in order to take advantage of the amended rule.
Simply put, ocean carriers engaged in sanctioned trade between Cuba and the U.S. can take advantage of the 180-day rule waiver.
In addition, ships originating from worldwide ports and transiting through Cuba can take advantage of the waiver as long as the carrier does not load non-sanctioned cargoes bound for the U.S. Currently, ZIM Integrated Shipping Ltd. provides bookings between the Port of Mobile and the Port of Mariel, Cuba.
There is some hope for the embargo to be lifted by Congress, as President Raul Castro has promised to step down in 2018. Lyons said this could open the door to trade, as much of the opposition to lifting the embargo was predicated on Castro being in power.
If the embargo were lifted, Lyons said he sees great potential in the relationship between the ports. He said trade would grow, as evidenced by the volume of lumber — nearly 12,000 tons per week — traveling to the Dominican Republic and Haiti.
As it is, some goods are sanctioned by the U.S. for trade with Cuba. The largest volume of those products coming out of the state port is chicken, Lyons said. Two ships per month leave the port headed for Cuba, with roughly 4,000 tons total heading south.
“Most of those chickens are raised and produced in Alabama,” Lyons said.
While it may not lead directly to more trade between the port and Cuba, the MOU will allow the two entities to explore avenues of legal trade, as well as collaborate in cargo marketing studies and strategies. The MOU will also allow Alabama and the Cuban ports to share data that would be mutually beneficial to the respective seaports.
The agreement was signed in Florida while a Cuban delegation attended a National Association of Port Authorities conference. However, Florida ports did not sign the MOU. Lyons said Gov. Rick Scott threatened to pull nearly $2 billion in state funding from the ports if they participated. The result could have a significant impact on Alabama’s port, but it’s too early to tell, Lyons said.