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Exporting to Cuba

About this Guide

The Canadian Trade Commissioner Service (TCS) in Cuba helps hundreds of Canadian companies a year in the Cuban market. We have taken the knowledge learned from helping these companies to develop this guide. Many Canadian exporters new to the market will find this guide quite accurate, while some companies will encounter a process far different that the one described here. In either case, the TCS is here to help. We recommend that you use this guide as part of the necessary research to determine if the Cuban market is the right target for your company.

About the Cuban Market

Cuba is an important export market for Canada and over the past decade has remained one of our top fifty export markets. The country continues to import the vast majority of its needs. Over 80% of goods are imported. Canada is a priority country for Cuba and efforts are made to do business with Canada when price, quality and financing terms make sense.

Cuba is also, however, a very complex market and not one recommended for first time exporters. Long timelines, complex bureaucratic processes, and securing your payments are all significant challenges. Companies looking for a quick sale will not find what they are seeking in Cuba. The three “P”s to doing business in Cuba are the following: patience, perseverance and partnership.

About the Trade Commissioner Service

The Canadian Trade Commissioner Service (TCS) helps companies navigate the complexities of international markets and make better business decisions. The TCS is on the ground in more than 160 cities worldwide, gaining market intelligence, uncovering opportunities for Canadian companies and helping reduce business costs and risks. The TCS is a free service of the Government of Canada, helping companies prepare for international markets, assess market potential, find qualified contacts and resolve business problems.

Our network of international contacts is unbeatable. As part of Foreign Affairs, Trade and Development Canada (DFATD) and of Canada’s network of embassies, the TCS has access to local governments and key business leaders and decision makers. We can help increase the credibility of Canadian companies in foreign markets, helping them gain access to local contacts not readily available to outside businesses. Learn more at www.tradecommissioner.gc.ca.

Step by Step Guide to Exporting to Cuba

1. Research the Market

Cuba is somewhat different from other export destinations and it is worth taking the time to do research prior to making a decision to pursue the market. As a strongly centralized government structure working on socialist principles there are subtle but important differences that set the market apart.

Cuba has long been a market of state-owned companies. Since Cuba began to undertake market liberalization programs in 2011, there has been the introduction to an important and growing private sector and cooperative sector. Private companies and cooperatives, however, cannot import leaving you, the Canadian exporter, with state-owned enterprises as your only customers.

Canada and Cuba have a long history of collaboration and Cuban buyers do prioritize Canadian suppliers where possible but decisions are made based on price, quality, financing and the strength of the relationship.

2. Get in Touch With the TCS

If you are relatively new to exporting, you may wish to speak with a Trade Commissioner based in one of our regional offices in a city near you. The TCS has regional offices in 16 Canadian cities. They can help you prepare to export and can help to guide you to a market that would be most appropriate for your business development needs.

If you feel you are ready, the Trade Commissioners in Havana can help you to understand who are your key buyers in the market and to provide you with contact details for the buyers you need to contact. They can advise you on any specific market conditions or challenges for your product and in many cases give you a feel for your competition already active in Cuba.

An up to date list of contacts for Trade Commissioners in Canada and abroad can be found on our website www.tradecommissioner.gc.ca.

3. Talk to Your Bank About Cuba

Payment terms in Cuba vary, but expect payment terms of between 360 days and 720 days on unconfirmed letters of credit which are the norm. Some buyers may be able to extend more competitive payments terms.

Export Development Canada (EDC) is active in Cuba, but their mechanisms to support Canadian exporters are limited. You should speak to EDC about your needs but also speak to your bank in parallel.

If there is no bank or EDC involvement, then Canadian companies exporting to Cuba need to be comfortable in assuming Cuban government payment risk. If your company cannot assume Cuba risk, your business development process stops here.

4. Understand export controls

Do I need an export permit?

The Government of Canada and Canadian exporters share a collective responsibility to ensure that exports of controlled goods and technology are conducted lawfully and in a manner consistent with Canada’s national interests and international obligations.

Export permits can be issued to any resident of Canada to export goods and technology included on the Export Control List (ECL). 

Please review Canada’s Export and brokering controls handbook to learn more.

Canada’s export controls on U.S.-origin goods and technology

Export controls are generally defined with respect to technical characteristics, irrespective of the country of manufacture of an item. However, Canada’s ECL Item 5400 controls exports of the following: All goods and technology of U.S.-origin, unless they are included elsewhere in the ECL, whether in bond or cleared by Canada Border Services Agency, other than goods or technology that have been further processed or manufactured outside the U.S. so as to result in a substantial change in value, form or use of the goods or technology or in the production of new goods or technology.

Please note that the U.S. Department of Commerce changed the general de minimis rule for Cuba from 25% to 10% on October 21, 2019. Consequently, if your product contains greater than 10% U.S.-origin controlled content by value and you are exporting it to Cuba, it may be subject to U.S. Export Administration Regulations (EAR). Please review Part 734 of the EAR for additional information including exceptions to the general 10% de minimis rule and guidelines for de minimis.

Exports of ECL Item 5400 goods and technology to Cuba require individual export permits. Please note that any items that are controlled under ITAR will also require U.S. re-export authorization as part of their supporting documentation.

For the purpose of ECL item 5400, the clause “all goods and technology of U.S.-origin” means items that are manufactured/created in the U.S. “Origin” does not mean the country from which the items were last exported to Canada.

Exporters are advised to apply for an export permit if there is any doubt about the application of Item 5400 to their exports. Exporters will be notified in writing if their items are or are not subject to export controls.

Details on Canadian export controls on U.S.-origin goods and technology can be found in section D4 of the Export and brokering controls handbook.

Understand U.S. export controls requirements

The U.S. Government imposes re-transfer conditions on certain U.S.-origin goods and technology even after they have been exported from the U.S. Under U.S. law, U.S. export controls may apply extra-territorially, which means that they apply even after the goods or technology in question are outside the U.S. and out of the possession of U.S. persons or entities.

The U.S. has two main export controls systems:

SystemAdministered by
Export Administration Regulations (EAR)Bureau of Industry and Security -  U.S. Department of Commerce
International Traffic in Arms Regulations (ITAR)Directorate of Defense Trade Controls  - U.S. State Department

 

As a condition of authorizing exports of certain goods or technology to a Canadian company, the U.S. Government may require the Canadian company to obtain explicit re-export authorization before exporting the items from Canada to a third destination.

When certain goods or technology are exported from the U.S., invoices and shipping documents should contain a destination control statement which forbids, for example, further transfers to any country other than the specified destination “without the prior written approval of the U.S. Department of State” [ITAR Section 123.9(b)] or which prohibits “diversion contrary to U.S. law” (EAR Section 358.6).

The de minimis rule excepts anything with less than 10% US content by value. If your product or service contains more than 10% U.S. content, Canadian exporters are advised to contact their U.S. suppliers or the U.S. Government for more information about any required re-export authorizations.

5. Talk to Potential Buyers

Once you have done your research and determined that there is a market for your products and/or services and that you are comfortable with Cuban financial risk, the next step is to reach out to potential buyers. The TCS can provide your company with a shortlist of potential buyers and their contact information. An interesting venue for newcomers to the Cuban market is the International Fair of Havana which takes place every year around the beginning of November. Please contact the TCS for more details on this event.

Assume that officials at the Cuban buying agency do not speak English or French. In many agencies, they speak excellent English, in others just moderately and in many others, none at all. It is uncommon to find a French speaker. Your introductory email and any attached literature should be in Spanish. Messages written in anything but Spanish frequently go unanswered.

6. Prepare to Visit the Market

Cuban government official, including those that work for state-owned companies are not authorized to meet with foreign business people who are in Cuba on a tourist visa. It is necessary to secure a business visa in advance.

Cuba is a popular tourist destination and particularly in winter months hotels and car services can be sold out. Be sure to book both your transportation and hotel needs many weeks in advance. If you do not speak Spanish, you should also consider hiring an interpreter for your visit to ensure efficient communication with your interlocutors.

Business Visas

Cuban business visas, which can take up to 3 weeks to process, can be arranged via the Cuban Embassy in Ottawa or the Cuban consulates in Toronto and Montreal. Contact information, requirements, application form and payment instructions are available on their website: http://misiones.minrex.gob.cu/es/canada/.

7. Visit Cuba to Meet Clients

Personal contact is an essential part of the Cuban business relationship. Business decisions are made on the basis of price, quality, and financing terms but also on the personal trust that is developed through face to face contact.

Developing business without at least one visit is not possible. As business development in Cuba normally takes well over a year, budget on more than one visit during the business development process and, depending on the nature of your business, at least one visit per year to maintain established business ties.

Cuba is tough on corruption and perceptions of corruption can vary considerably from expectations in Canada.
Leaving professional samples for a buying agency in order for them to perform an evaluation would be normal business practice, but leave the gifts at home as this could cross the line of what is acceptable in Cuba. Offers of dinner or lunches are also likely to be turned down and understand that if they are accepted, your interlocutor will have had to seek authorization in advance. It is best to keep meetings as formal and in the buyer’s office. An interlocutor that freely accepts gifts, or asks for them, should immediately raise alarms.

8. Register Your Company as an Approved Vendor

Once you have developed business and had face to face contact with your local buyers, the next step in the process is to register your company as an authorized supplier. A Cuban buying agency that is interested in your product and/or service, cannot solicit you for quotes until you are registered as a supplier. Because of the costs and delays associated with this step, we usually recommend waiting for a clear indication of interest from a Cuban importer before initiating a registration process.

The registration process is time consuming but straightforward. You will be invited to register by the buying agency. You will be asked to complete an application form with general information on the company and to supply a number of background documents. The background documents requested do vary depending on the buying agency, but generally consist of a copy of your business license, a letter of good standing from your bank, a CV of the lead for business development with Cuba, financial statements and the company’s shareholder agreement.

Put together the documents and then have them all translated to Spanish (mandatory) and have the documents inspected and stamped by the Cuban Embassy or Consulates (also mandatory). The process can vary and you will sometimes also be asked to have the documents legalized and protocolized by a public notary in Cuba or Canada.

There is no fee to register, but you will incur costs for translation and stamping fees. Companies report that total costs for translation and legalization in both countries range between $5000 and $10,000 depending on the size of their company and the number of documents required.

Once all of the documents are submitted, it typically takes between 3-4 months to complete the registration process, but it can be longer depending among other things on the urgency of the importer’s need for your products. The documents are first analysed by the relevant buying agency and finally transmitted to the Ministry of Foreign Trade and Investment who is responsible for issuing the registration number. If you wish to register with more than one buying agency, the process for registering with the second (or more) agencies is greatly streamlined once you already have a registration number.

If you have not had business activity for a period of two years your registration expires and the process must begin from zero.

9. Receive Request for Quotes

Congratulations! You are now a registered vendor and can receive requests for quotes. Cuban buying agencies issue requests for quotes on an invitation only basis – there are very rarely public tendering documents.

Responses to requests for quotes must be complete. Requests for quote that do not meet all the essential requirements will likely see you automatically eliminated from the competition. As request for quotes are invitation only and to registered vendors only, you are in a small list of competing companies and it would be unfortunate to be eliminated on a technical matter.

10. Negotiate and Win Contract

Negotiating is a fluid process. Be prepared to show flexibility in some areas but to be firm in other areas that are essential to your company. Remember that business development in Cuba is lengthy and complex and once in contract negotiations you are likely up against a very small pool of competitors.

11. Receive Payment

It is not a sale until you have been paid. Cuba has a long history of honouring payments and we are not aware of well conducted business that has not received payment. In recent years, however, there have been significant problems with late payments or the necessity to re-negotiate payment dates. Cuban buyers are willing to accept and pay penalties for late payments as well as interest costs.

Be prepared for the possibility that payments will not be made on time, especially if your cash flow is tight. Do not put your company in a challenging situation where a late payment will jeopardize your payments to suppliers or put your company in financial distress.

12. Tell Us About Your Success

Your success is our success. If we have been assisting you, we greatly appreciate hearing about your sales. We treat all interactions as commercially confidential, so your information is always safe with us. Please allow us to celebrate your accomplishments with you!

The TCS in Havana

Embassy of Canada
Calle 30 No.518 esq. 7ma
Miramar, La Habana

HAVANTD@international.gc.ca
+53-7-204-2516 extension 3893386

www.cuba.gc.ca

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