It was a big surprise for many when President Obama announced Wednesday that the U.S. would resume diplomatic relations with Cuba and asked Congress to re-evaluate the decades-long embargo.
Though the move yesterday does little to change the status quo, it’s a huge gesture. Importing and exporting goods is still off the table and market watchers are anxious to see how the Congress addresses the question of the 1960s embargo: it is the only institution that can lift the ban.
What Obama’s executive-move means for business however is unclear. Often Cuba is described as a country lost in time — with outdated infrastructure and even less access to information. (In 2010, only 15 percent of the population had access to the Internet, according to the United Nations.) There’s also no doubt that the Castro government hasn’t encouraged entrepreneurship nor business innovation during its regime. It’s a rocky situation at best for businesses interested in future Cuba and leaves many in a holding pattern.
“While we haven’t issued an official response as an association, we’re definitely waiting to see how this plays out,” said Nate Herman of the American Apparel and Footwear Association.
One key question facing the footwear industry has been whether manufacturing in Cuba is a viable option for the U.S. in the long view. The lack of infrastructure is certainly an obstacle, but the proximity to the U.S. is attractive.
“We’ve often engaged with regimes we don’t particularly care for from a political perspective. … We’ve been partnering with China for many years so some see this as a no-brainer. Others politically see the regime as one that has been very detrimental to the people at the least,” said Matt Priest, president of the FDRA. “I’d be more interested in the manufacturing perspective (and whether) there are opportunities for us there.”
The economic situation of the Cuban people will impact what business can expect to be able to sell as well. There is no doubt a demand for U.S. footwear brands, according to Priest, but whether it’s attainable for people is a key question. The average Cuban government employee takes home $20 a month, according to reports.
Alejandro Ingelmo, whose family were shoemakers in Cuba and emigrated after Castro was appointed, said he hopes that the political move brings freedom to the country. Still, he said he is reserving judgment.
“I know from what my parents and grandparents went through, I think it’s probably a good step towards finding some type of solution. There is still a lot of injustice there. I don’t think people talk about that enough,” said Ingelmo. “We take for granted that we’re free to say what we want. For us that is a natural and given thing. You don’t have to question it, but imagine a country where you’re not allowed to say what you want. People don’t talk about that. Maybe this is a step towards that, but I don’t really know.”
Like businesses in wait-and-see mode, political experts aren’t expecting Congress to sit quietly on the issue either. In the past weeks the President has taken an increasingly antagonizing stance against the newly elected Republican majority with executives orders first on immigration and now Cuba. Congress could simply refuse to address the Cuba issue on the floor, but the Senate, which must approve appointments for the new Havana embassy, could stop the process entirely.