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Opportunities for Jamaica in new US-Cuba policy

  • Written by Jamaica Observer Editorial
  • Published in Opinion
A US and a Cuban flag hang from the same balcony in Old Havana, Cuba, on Friday, December 19, 2014. (PHOTO: AP) A US and a Cuban flag hang from the same balcony in Old Havana, Cuba, on Friday, December 19, 2014. (PHOTO: AP)
JAMAICA OBSERVER EDITORIAL, December 21, 2014 - HISTORY will absolve President Obama's decision to mend fences with Cuba and his view that the US embargo no longer has any constructive purpose. Jamaica, wisely, has long opposed the embargo and repeatedly called for the end to this policy.

We note, however, that the new US policy towards Cuba has implications for Jamaica, some of which constitute opportunities and others which are potentially adverse. While Jamaica has, in the past, taken the approach that changes in Cuba to date and in the near future should be seen as potential opportunities, we have to be careful not to be lulled into a false sense of complacency.

We need to seize these so-called opportunities and recognise that Cuba's reintegration into the global economy will generate competition for Jamaica in a wide array of sectors, both present and future.

Cuba will provide opportunities which can only be seized if we have goods and services that they need and that are internationally competitive in quality and price. Every country in the world has, or will soon see the potential opportunities in Cuba and that means Jamaica will have to compete against the best in the world. If our trade deficit is any indication, there is cause to worry.

Cuba in the next couple years will be strong competition for Jamaica in tourism and for foreign investment because of lower wages, a disciplined labour force, broad public education, excellent public health, a larger national market and economies of scale in production.

There is no need to panic because Cuba has and will continue to have in the next decade disadvantages such as poor infrastructure, the ingrained culture of bureaucracy, restricted access to imports from the US, absence of global standards and a shortage of modern capital goods, eg cars, trucks, manufacturing machinery, etc.

Tourism is the most obvious sector to face escalating Cuban competition. Cuba would be a less expensive destination which would be attractive because it would be the forbidden fruit of American travel. The inability of Cuba to service an increased visitor demand derives from inadequate hotel rooms, substandard quality of facilities and limited entertainment and sight-seeing attractions.

However, cruise ships can dock at any port, even where the facilities are rudimentary, and therefore could divert some business in the short term. The construction of hotels and the importation of modern transportation equipment will take several years.

The new Cuba would be very attractive to direct foreign investment, some of which might have chosen Jamaica instead, especially now when the economy desperately needs capital inflows. Once US investors are free to enter Cuba there will be the proverbial giant sucking sound of US investment.

Cuban products, for example, sugar, rum, and cigars, as well as light manufacturing could compete with Jamaican products. Note that the Havana Club is already in 140 countries (more countries than Appleton) and will be salivating at the US market.

On the plus side, our long friendship with Cuba could work for us, as Cuba will need tourism expertise as well as co-operation in sports and culture. These are areas in which we can safely walk hand-in-hand with Cuba to the mountain top.