Importing and exporting in the private sector, the genesis of change

Access to foreign trade services by non-state forms of management represents a benefit both for them and for economic dynamism.

Among the recent updates to Cuba’s economic policy is the possibility granted to non-state forms of management (FGNEs) to access foreign trade services, namely imports and exports. This is the result of a regulation presented in July 2020 and that, at the time, already visualized a territorial map including more than a thousand exportable goods and services.

To carry out market identification, product valuation, contracts and procedures for the private sector, the government appointed an initial group of 37 specialized state enterprises (41 in March 2021) since these institutions not only have experience in this field, but also the portfolios of potential customers for each item, and the suppliers to satisfy importers. The Cubatramite.com website offers the record of each company with its contact information and the list of products to be imported and exported. 

The Ministry of Foreign Trade and Investment (MINCEX) intends to draw up a map of exports, which will make it possible to locate the products and companies engaged in this activity, as well as offering the possibility for foreign clients to visualize the offers. The ministry’s Director General of Foreign Trade, Vivian Herrera, stated last October that of all the provinces of the country, the greatest export potential can be found in Pinar del Río, Artemisa, Granma, Las Tunas and the Isle of Youth. Meanwhile, the products with the greatest supply are fruits, vegetables, charcoal, canned food, citrus fruits, handmade footwear, furniture and handicrafts.

These services are covered and regulated by MINCEX Resolution 315/2020, a legal document that clarifies the contractual nature of the commercial relations between both economic actors. The resolution also establishes that in order to be included in the portfolio of domestic suppliers and clients, FGNEs must submit the documentation evidencing their status as a form of non-state management and a copy of the contract signed with a bank for the opening of a current account in freely convertible currency (FCC). 

The regulation also clarifies that before making a sale, the national parties agree on the description of goods and services, quantity, technical and quality specifications, prices, available budget to cover the expenses of the operation, financial terms and payment form, types of containers and packaging, temperatures and other physical parameters required for transportation.

In addition, the sales price is agreed by the exporting entities with the foreign client, using as a reference the existing market price for similar products and services and quality. Meanwhile, the Resolution establishes the agreement between national parties of an acquisition price for the service or goods, after deducting the expenses incurred in national transportation, freight, insurance, customs operations, commercial margin and other corresponding costs, through to the delivery to the foreign client.

On the other hand, Resolution 114/2020 of the Ministry of Economy and Planning establishes that upon exporting, FGNEs receive 80% of the income received by the exporting entity in their FCC accounts set up for this purpose and in accordance with the provisions of the Central Bank of Cuba, after deducting the costs of operations and the commercial margin. Meanwhile, the remaining 20% is delivered in local currency. All payments and charges are made by means of magnetic stripe cards.

Although similar, the import process has its particularities. Antonio Morilla Saínz, commercial specialist at the Corporación Cimex Cienfuegos, explains that it takes time “because we have to find the supplier; make a bid to define the price and, once an offer is made and sent to us, it is presented to the interested party to ensure  conformity. From there, the contract is signed and 80% of the value of the product is paid through a POS system, and once it is picked up, the other 20% is paid.”

Regarding this, Resolution 315/2020 specifies that the selection of the final offer is the decision of the non-state management forms. Meanwhile, the import sales price is determined by the importing enterprise and includes the cost, insurance and freight paid to the supplier, plus expenses for customs operations, tariffs, national transportation, inspection, handling, clearance and others that may apply, until delivery to the FGNE.

“There are several ways to import goods,” reports MINCEX official, Vivian Herrera. “When they come from abroad it takes a little longer. On the other hand, if done through a consignment or bonded warehouse, the non-state form of management receives the products it wants to import more promptly, since they are already in national territory.” Morilla Saínz adds that “importing requires time; for example, products coming from Europe take a month and if they come from Asia it takes about three months”; to which must be added the obstacles to such transactions caused by both the U.S. blockade and the delays due to the pandemic.

A point to be considered by those seeking to acquire supplies is that those products and equipment that are currently sold in FCC stores throughout the country are not imported in this way, unless they are specific types not available in these establishments. However, the authorities should consider that those private enterprises with importing capacity have a high potential to circumvent the U.S. economic blockade, with the subsequent benefit for the whole economy, but this is a subject for a future article.

In July 2020, 1,026 exportable goods and services were identified nationwide, and in October 2020, this number had reached 1,145 goods and services. In July 2020, 382 non-state management forms were identified as having export potential, by the end of August there were 418, and by the end of December there were 621.

In January, 4,450 FGNEs had approached exporting and importing enterprises. 

 There are 41 enterprises specialized in foreign trade services:

Quimimport, Consumimport, Maquimport, Maprinter, Imeco, Acinox, Comercial DIVEP, Metalcuba, Transimport, COPEXTEL S.A., Etecsa, FCBC, TRD, CIMEX S.A., SASA, Solintel, Apicuba, Cítricos Caribe S.A., Empresa Agroindustrial Ceballos, Empresa Agroindustrial Victoria de Girón, Frutas Selectas, ALCONA S.A., Cubaexport, CARIBEX, ENCOMIL, UNECA, DINVAI Construcciones S.A., Interaudit S.A., CIH, ACOREC, Artex, SOFTEL, DESOFT, CINESOFT, CITMATEL, BK Import Export, Comercializadora ITH S.A., Icaic, Egrem, Galerías de Arte Génesis, Empresa Importadora-Exportadora of the Ministry of the Food Industry.

“We are working to find other ways for non-state management forms that do not reside in the same territory as state-owned enterprises and we are evaluating the opening of offices in other territories of the country.” Vivian Herrera Cid, Director General of Foreign Trade.