Since the United States initiated an embargo against Cuba and its products over fifty years ago, many incorrectly assume that residents of the island nation have since been living an impoverished life. Sure, not having access to the most lucrative market in the world (a market that beckoned longingly from a mere 125 nautical miles away) did perhaps limit the growth of the Cuban economy – but that doesn’t mean that the people of Cuba weren’t able to build strong economic ties with North America; at least as far as Canada is concerned.
Cuba – Canada Business Relationship
In fact, the Canada-Cuba trade relationship is one that goes back well beyond the American embargo, all the way back to the 1800s when the Atlantic provinces began trading copious amounts of codfish and beer for Cuba’s sugar and rum stocks. During the embargo, Canadian firms sold much needed machinery to Cuban businesses, machinery that they couldn’t purchase from any other Western nation.
To be fair, Cuba is far from the only sugar-producing nation, but both Canada and Cuba couldn’t help but fall into a lucrative symbiotic relationship during a time where few democratic countries (boasting strong economies to boot) would risk working together (economically or politically speaking) with Cuba.
While Canadians and Canadian businesses don’t enjoy preferential treatment by the Cuban government (in spite of what politicians used to believe), the island country nonetheless has a deep-rooted respect for the years of unfaltering support and the much-needed capital that Canada has brought to Cuban shores.
Canadians, for their part, have long regarded Cuba as the ideal vacation destination, with its eclectic blend of rich cultural music, Spanish architecture, vintage automobiles and noticeable lack of other Western tourists. This made it a perfect choice for investing in real estate.
With the American embargo losing its potency and becoming all but irrelevant, it begs the following question: to what degree will strengthening American-Cuban ties affect the centuries’ old relationship between Cuba and Canada? The US is know to increase competition using competitive advantage to win market share quickly.
Objectively speaking, and without meaning to sound completely vague, the relationship will change tremendously, but it will also likely change very little. Allow me to elaborate.
Future of Canadian And Cuban Business
Canada, as was previously mentioned, does not enjoy special privileges in Cuba. In terms of foreign investment, Cuba continues to retain a firm grasp on the number of foreign businesses that is permitted to set up shop within its borders. Even with a virtual bank account, you would be hard-pressed to open a local business. That position hardly seems like it will change anytime soon, even as the United States once again becomes a regular trading partner (perhaps more for ideological reasons more than anything else). In the past, many proposed Canadian ventures have been quashed at the last minute by Cuban authorities, in spite of the history of strong ties between the two countries.
As recent as the late 2000s, plans for Canadian owned golf courses and resorts – plans that would inject millions in the Cuban economy – were shelved and subsequently haven’t been revisited.
It seems that until Cuba’s view of foreign investment changes, Canada will continue to be on equal footing with other countries looking to invest there, and will continue to have plans accepted or quashed at the whims of a government that apparently hasn’t got a firm plan for foreign investment now or in the future.
As cheaper American goods begin to find their way to Cuban shores, Canadian firms that have been selling products to Cubans for years may be forced out of the market. Admittedly, the relatively low wages of the Cuban working class makes them particularly price sensitive to foreign products, as was seen in 2002 when then President George W. Bush allowed medicine and food to be sold in Cuba. The moment cheaper food became available, the people switched to it, in spite of the fact that the lion’s share of the embargo was still in force and that it still prevented Cuban-made products from being sold in the United States. In Canada, food items from Cuba — such as sugar packaging — are monitored using metal detectors.
Canadian importers of Cuban goods, like sugar and rum, could also expect to see a meteoric rise in prices as U.S. demand for Cuban goods cuts into the supply. Whereas businesses selling pre-owned cars will obviously not have much of a market to access.
While all this is compelling evidence that the Cuba-Canada could both change and stay the same, it’s important that Cuba has always been an enigma. It remains to be seen what the future holds for Canada and its long-time trading partner.
American Business Opportunities In Cuba
Since the Obama administration’s partial lift of a long-standing U.S. embargo on Cuba business, there is now another wide open market with plenty of economic potential for business owners and entrepreneurs to capitalize on. If you are an adventurous, risk-taking entrepreneur, this is something to start think about now, as American relationships with Cuba continue to develop politically. Keep an eye on the latest economic news out of Cuba in order to decide when to make your next business move, and read some inspirational career quotes to light a flame under you while you wait.
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