Developing business with Cuba will take time

Dan Miner, Buffalo Business First

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A business deal involving Buffalo made international news recently when Roswell Park Cancer Institute’s CEO signed a deal with a Cuban cancer center to develop a new lung cancer vaccine.

The deal was the dominant news out of a trade mission led by Gov. Andrew Cuomo to Cuba — the outcome of President Barack Obama’s quest to normalize relations with the tiny communist country in the Caribbean.

But a closer look reveals that business opportunities in Cuba are relatively limited for area companies, besides health care-related partnerships that have been possible all along.

The reasons are many, according to local experts:

The effort to normalize relations remains a proposal, and anybody caught doing business with Cuba in the meantime could be subject to a range of government actions that could include criminal prosecution.

Cuba only has a population of roughly 11 million people, considerably fewer than the nearly 20 million who live in New York state. Thus it represents a tiny market of potential consumers compared to hot spots such as Brazil, which has about 200 million people.

Most of Buffalo’s manufacturers are middle-market companies that make parts for other manufacturing processes, and Cuba has very few factories that could be a potential fit.

There are some lifestyle factors that could make a difference in the lives of all U.S. residents, including Western New Yorkers, said Damon Piatek, president and CEO of Welke Customs Brokers USA.

The potential legality of Cuban cigars and rum — among the most popular items smuggled through area bridges from Canada — would provide a new and probably popular good, and the country is already the most popular vacation destination among Canadians.

But any such changes are five years away at the very least, Piatek said.

“My concern would be with industry, whether that’s manufacturers or distributors, is that they’re probably looking at this and thinking it’s closer than it really is,” Piatek said. “They may get a request on the Internet from a Cuban company that wants O-rings, or any kind of commodity. And then they get fines and penalties because we’re not there yet.”

Erin Cole, president and CEO of World Trade Center Buffalo Niagara, agreed.

“Somebody will find a niche there, no question, but it’s going to be very limited for one-off type thing,” she said. “But the key thing is the federal government still has the economic sanctions in place, and it’s anybody’s guess as to when (changes) will take place.”

Obama addressed the issue of Cuba in a Dec. 17 statement, mentioning normalized relations with China, a much larger communist country, and Vietnam, with which the United States fought a bitter war in the 1960s over political ideals.

“We are taking steps to increase travel, commerce and the flow of information to and from Cuba,” Obama said.

Cuomo’s trade mission in April was billed as a way for the governor to spur investment from Cuban interest in New York state, and the contingent included Howard Zemsky, a Buffalo resident and Empire State Development president and CEO; José Buscaglia-Salgado, the University at Buffalo’s director of Caribbean, Latin American and Latino Studies; and Candace Johnson, CEO of Roswell.

The dominant news from the trip was a deal between Roswell and Cuba’s Center for Molecular Immunology to develop a lung cancer vaccine in the United States. The deal raised the possibility of business opportunities in Buffalo, but the truth lies somewhere in between.

Medical partnerships have long been exempt from the otherwise extreme restrictions regarding trade between the United States and Cuba, and Roswell has had a relationship with the Center for Molecular Immunology for decades.

But this particular deal required Johnson’s signature, and her presence was the direct result of the changes that are underfoot.

Otherwise, it might have taken longer to be physically present in Cuba, such as a medical related trade show.

“It was a face-to-face sit-down at the table to actually talk about it so that we could do what we needed to do and get the paperwork necessary to file with the (U.S. Food and Drug Administration),” Johnson said.

“We were hopeful that would happen and that we would get that opportunity. It couldn’t have worked out any better.”

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