By DENNIS GRUBAUGH
The death of former President Fidel Castro and the ongoing effort to normalize U.S.-Cuba relations have many Illinois companies increasingly hopeful of one day doing business with the Caribbean nation.
But much remains in the way of progress, says at least one local congressman and two Latin American experts.
U.S. Rep. Rodney Davis, a Taylorville Republican whose 13th Congressional District includes a large swath of Southwestern Illinois, has been to the island twice and frankly doesn’t believe it’s ready for an influx of American businesses. Infrastructure, hospitals and hotels are poor, and the odd-duck, dual currency makes trading impractical.
The Cuban peso, called a CUP, and the Cuban convertible peso, known as a CUC, are both legal tender in the country, but neither is exchangeable in foreign markets. The CUC is tied to the dollar and worth about 24 times as much as the CUP. Most Cubans are paid in the regular peso, but most consumer goods are priced in the convertible peso.
As Davis explains, the peso is valued much less than the American dollar. If tourists go to Cuba, they have to cash in their dollars to get a Cuban tourist peso. There is a 10 percent penalty charged when exchanging U.S. dollars and a 3 percent currency exchange fee.
That money is controlled by the government.
“So, any increase in tourism, immediately those Cuban tourist pesos go to the government. When a Cuban person goes to bank those tourist pesos, the bank pays them the value of a regular Cuban peso,” Davis said. “That, to me, doesn’t allow any increased economic opportunity for the Cuban people.”
Until the two currencies are combined, there will be few trade opportunities, he said.
December 17, 2016, marked two years since the Obama administration re-established formal diplomatic ties with Cuba, which were broken off when Castro came to power in 1959. A trade embargo, however, remains in place, and tourism is still severely limited.
Davis said interest in Cuban, particularly among agricultural industries in Illinois, is “across the board.” But that interest is not mutual.
“This is a country 90 miles off our coast with people who can buy cheaper products, better products, and ones that can be shipped to them much more quickly from the United States. But you have to have Cuba want that trade,” he said. “And the sad part of the president wanting to opening up more trade opportunities with Cuba is that Cuba has yet to take advantage of that opportunity.”
Statistics show Cuba trading less with the United States since the easing of relations than before, he said.
“I hope with the death of Fidel Castro there is opportunity to see more cracks in the armor and that (his brother, the president) Raul Castro will open up more opportunities for private sector investment,” he said.
Davis has been to Cuba twice, once in 2005, then 10 years later, in October 2015. Not much had changed.
By DENNIS GRUBAUGH
Throughout history, national economies have risen — and fallen — around international trade. That makes the unpredictable predilections of Donald Trump a subject of intense interest in Illinois, one of the largest participants in the exporting world.
Will he scuttle longstanding trade deals in the quest for something better, as he’s threatened? Could those actions be the precursor to a global trade war?
Among those watching the president-elect for some sign of what’s to come is Laura Ortega-Lamela, executive director of the International Business Council of the Illinois Chamber of Commerce. She’s hopeful that the new administration will resolve trade questions without dealing a blow to progress the agency has seen since its formation in 2013.
“A lot of things will have to be figured out,” she said. “The world in general seems to be on a trend of more protectionist measures, and I’m afraid it will have an impact. If those trends are solidified in legislation, that will have an impact, absolutely.”
On the other hand, global commerce has come so far that it’s hard to reverse, and U.S. policies may complement the more recent trends.
“The world has been acting in a way that it’s difficult to somehow radically change. Processes are completely integrated. The economy is globalized. Dismantling that is really difficult,” Ortega-Lamela said.
In the end, the forces for effective commerce will spell what happens, she feels.
The International Business Council works to open doors to allow smaller- and medium-size companies to gain access to international markets. It is one of seven subcouncils of the Illinois Chamber of Commerce, which the state’s biggest voice for businesses of all sizes and industry sectors.
The IBC was formed three years ago to help businesses compete on the world stage.
“We realized companies, more and more, are affected by federal regulations and policies that have to do with international agreements,” she said.
Illinois ranks third or fifth among the 50 states in exporting, depending on the goods being tallied. Illinois is No. 1 in foreign investment in the Midwest, primarily because of the presence of Chicago.
More than 23,000 Illinois companies currently export goods and services, according to recent numbers from the International Trade Association. Exports from Illinois helped contribute to the $2.26 trillion of U.S. exports in 2015.
The Chamber’s IBC monitors all this closely. From exporting to Cuba, to immigration reform, to the current debate over the Trans-Pacific Partnership, the council has an interest. The agency has taken companies to visit the Illinois congressional delegation in Washington, D.C., on multiple occasions, as well as hosted relevant meetings and educational sessions back home, to talk over current issues.
The IBC has an exclusive partnership with the U.S. Trade and Development Agency.
“Through the Chamber we will be getting specific contracts and tenders (formal invitations to submit bids) that will be passed along to companies in attempts to build their exporting of both goods and services in developing markets,” Ortega-Lamela said.
The council has worked to establish partnerships with other countries, from Ecuador to Brazil to Japan to Peru. “Name it, we have access to a portfolio of opportunities for business leads that I immediately attach to our companies. Without our help in providing this context and access to information it would be very, very difficult.”
The IBC last month won a Governor’s Export Award in the category of Export Awareness and Development for its efforts to show off the state around the world. One of its notable successes, W.S. Darley (a fire equipment and services business in Itasca) also received an award for continuing excellence in exporting.
“We have a few small- to medium-size companies that have been tremendously successful. W.S. Darley has been very successful in opening markets in Africa. I’m working with them on facilitating others. They have an interest in Cuba and they have an interest in Ecuador,” Ortega-Lamela said.
Many eyes are on Cuba
A lot of Illinois companies have an interest in Cuba
“Even before President Obama announced warming up of relations with Cuba (in December 2014), we were working with the Illinois Cuba Working Group and the Illinois Soybean Association. We had put together a program to educate the stakeholders and promote policies that are conducive to our businesses, especially the agricultural business, exporting to markets like Cuba. We see a phenomenal opportunity, especially in the awakening of the island opening to business. And the possibility of it having a tourism boom.”
Twice, she accompanied members to Cuba, representing three main exporting sectors — corn growers, medical device makers and logistics operators.
She described the outcomes as “interesting, I will say. I think we became better educated. Just because the United States is somehow changing the rules a little bit and providing for the opportunity for some companies under certain circumstances to do business in Cuba doesn’t mean Cuba is somehow changed or altered in any way.
“They have to factor in that when they arrive to the island they need to do business according to the Cuban rules and regulations. And those are not easy,” she said. “We are talking about a common-law system. We’re talking about regulations that are very old and many, many commercial codes and regulations. Those have a lot of traditions that are quite difficult to change. Add to that the fact that this is a Communist state. Most of the commerce is not just regulated, it’s done by the state or state companies.”
She added: “It really is quite difficult to understand how to actually do business there. Some of the companies that came with me were lucky because of my own personal background. Speaking Spanish, I relate to them. Being a Spanish attorney born in Madrid, my training is in civic code systems. It made it easier for me to understand the rules, regulation and philosophy. How the commercial registry works, things like that.”
Illinois and the rest of the country will eventually be a major partner again with Cuba, she feels.
“A lot of it will be a force of commerce coming in, not just from the United States and entrepreneurs from within the island, but also from Spain, Brazil, Germany, Japan, China. There are definitely other countries, pushing and pushing hard to do business with the island. It will come, by necessity.”
IBJ Staff Report
One of the first items out of the gate for the newly seated Congress is finding a cure for Obamacare.
The expected vote to repeal and replace the Patient Protection and Affordable Care Act is less a question that the specifics of what congressmen come up with, how long it will take before it goes into effect and how many people will be lost along the way as a result of shifts in national health-care coverage.
The Republican majority is united on repeal, but not on the fix for President Barack Obama’s signature legislation.
Some Republicans would revise and rebrand Obamacare by jettisoning unpopular provisions like its requirement that most Americans carry health insurance, while preserving popular provisions like allowing young people through age 26 to remain on their parents’ coverage. Others would rip up the Affordable Care Act and not replace it.
U.S. Rep. Rodney Davis, R-Taylorville, who represents the 13th Congressional District, said the health-care law has got to go, but be replaced.
“It’s been pretty clear that it’s been a disaster,” he told the Illinois Business Journal. “We will again vote to repeal it, and this time we have a president that will take our repeal and replace (bill) and make some major changes. I think the American people demanded it. I think one of the major reasons Donald Trump was elected president was the outlandish premium increases we saw under the Affordable Care Act.”
Davis, who represents much of Southwestern Illinois, used a local example to illustrate the problem.
“In my hometown alone, one of my friends who is an independent insurance agent said his clients had a minimum 67 percent increase in premiums, up to 80-something percent. This is with deductibles of up to $6,000 a year. You can have insurance but it’s unaffordable to use and that’s unacceptable to the American people — and to me.”
Monica Bristow, president of the Godfrey-based RiverBend Growth Association, has heard the rumblings among the economic development agency’s membership — as well as among her own staff.
“The big thing I’m hearing is health-care relief. It’s huge. One of my own employees, their rate went up 61 percent and the hospitals aren’t even within the network. It really is sad that they are paying so much money and not getting anything for it,” she said. “But they have to have insurance. It’s almost criminal what they’re paying. It’s not affordable.”
Bristow — like most in Congress — doubts that the revamp can be done within a year. Some experts have wondered whether the changes could actually be enacted in Trump’s four-year term.
Republicans have “a really narrow path,” Grace-Marie Turner of the Galen Institute, a free-market health-care research organization, told the Associated Press. “They’ve got to deal with the politics of this, they’ve got to make sure they come up with good policy, and they also have process challenges.”
House Ways and Means Chairman Kevin Brady, R-Texas, compared the challenge to tax reform — another of Trump’s priorities. “Unlike Obamacare, which ripped up the individual market, this will be done deliberately, in an appropriate timetable.”
Republicans say they will move quickly to repeal the ACA, while suspending the effective date to allow them to craft a replacement.
Many Republicans quietly favor stripping out the ACA’s taxes and requirements. The unpopular “individual mandate”’ to carry health insurance or risk fines could be replaced with other persuasion short of a government dictate. Rules on insurers would be loosened.
But popular provisions such as protecting those with pre-existing health conditions would be retained in some form, as well as financial assistance for low- and moderate-income people.
The health-care industry itself, including hospitals, insurers and pharmaceutical companies, largely favors changes.
While a rebranded version of Obama’s law may well cover fewer people, the goal of “universal access” instead of universal coverage underwritten by government may be more politically acceptable.
Republicans are riding a wave into the next Congress but they might not be so fortunate in the 2018 elections, by which time the Obamacare votes will have been tallied.
MoveOn.org, the largest independent, progressive, organizing group in the United States and a prime supporter of Obamacare, is drawing ranks for a fight.
“The conventional wisdom in Washington, D.C., is that come January, Republicans will be able to abolish the Affordable Care Act, torpedoing health insurance coverage for 30 million people and that nobody will make a peep about it. …we showed that the conventional wisdom is dead wrong,” the organization said in a statement, referring to a gathering on Dec. 20 of organization members and allies gathered outside 82 Republican House and Senate offices in 26 states across the country. Thousands more people supposedly flooded state GOP offices with phone calls.
“Our message: “Don’t take away our health care.” And if you try, you’ve got a fight on your hands,” the MoveOn statement said.
Associated Press contributed some information for this report
ALTON – Simmons Hanly Conroy, one of the nation's largest mass torts firms, is pleased to announce that the firm has grown its shareholder ranks with the elevation of 14 attorneys, effective Jan. 1
The firm’s new shareholders are Karoline Carstens, W. Brent Copple, Kenneth P. Danzinger, Suvir Dhar, Ryan Dickherber, Cody Favilla, Crystal Foley, John Foley, Courtney Gregory, Ryan Kiwala, Chris Levy, John Richardson, Andrew S. Williams and Brent Zadorozny.
All of the newly named shareholders are based in the firm’s Alton office, except Danzinger, who works from Chicago, and Crystal Foley and Zadorozny, who both are based in the firm’s El Segundo, Calif., office.