Trade policy and integration

Cuba has an open economy due to its dependence on foreign trade.  It annually trades on the average with 170 countries.

The priorities of its trade policy focus on ensuring markets for the main export products.  They also seek to favor the geographical approach to suppliers of basic items for the national economy.

During the last five-year period the country strengthened its links with the Latin American and Caribbean integration schemes.

Cuba has been a full member of the Latin American Association of Integration (ALADI) since August 26, 1999.  Trade with ALADI countries makes up for more than 80% of the Island's trade exchange with Latin America and the Caribbean.

In accordance with these same integrationist principles, Cuba signed the Trade and Economic Cooperation Agreement with the CARICOM in 2000.

The Island is also a member of the ACP (Africa-Caribbean-Pacific) Group and of the CARIFORUM, an agency in the Caribbean region for its relations with the European Union.

It has also signed agreements on Economic Complementation with Guatemala and the CARICOM member countries.  These agreements are the first of their kind to be signed with non-member countries of ALADI.

On the other hand, the European Union is Cuba's main trade partner with nearly 80% of its trade with the Old Continent.  Among the UE countries, Spain holds the first place followed by Holland, France, Italy and Germany. The main export products to that region are nickel, cigars, frozen juice, shellfish and sugar.  Foodstuffs, machinery and equipment, spare parts and chemical products stand out among imports.

The main market for Cuban sugar is Russia, fourth country in Cuba's trade exchange.  A sustained increase takes place in the exchanges with the People's Republic of China due to a large extent to the credit facilities granted by that country.

Main foreign trade products

As a characteristic of developing countries, the majority of Cuban export products are traditional products.  Alone five of them (sugar with 32%, nickel with 27%, tobacco with 14%, lobsters with 6% and rum with 1%) concentrate around 80% of the total value of exports in the country.  Medium-term forecasts indicate that these same products will continue to be the main exports.

However, a favorable element is the gradual incorporation of non-traditional exports, particularly those with a higher added value such as products from the iron, steel and mechanical industries, the pharmaceutical and biotechnological industries as well as fresh citrus and concentrates, among others.

On the other hand, imports make up for 75% of the trade exchange, with fuels and lubricants in the first place with 22% followed by foodstuffs with 13%, machinery and equipment with 17% and chemical products with 6%, among others.

Foreign trade system

The import and export operations are carried out by Cuban enterprises and other duly authorized entities registered at the National Registry of Exporters and Importers attached to the Chamber of Commerce of the Republic of Cuba.

These enterprises specialize in the import or export of certain groups of products.  In case of import or export of other goods not included in their nomenclature, these enterprises may request authorization from the Ministry of Foreign Trade to perform the operations.

Until the decade of the 1980s, foreign trade operations were performed only by some 30 state enterprises.  At present more than 400 Cuban entities participate in foreign trade activities, among them state enterprises and companies with 100% Cuban or mixed capital.  These entities may be specialized in certain groups of products or they market their own productions or those of groups or associations of small and medium industries with related productions.

Foreign businessmen must make sure that they sign the contracts with those Cuban enterprises authorized to perform foreign trade activities whose nomenclature includes the product in question, whether for export or import.

The import system does not establish limitations such as contingencies, quotas or licenses for individual cases.

All products that enter the country must be declared at customs and are subject to inspection.

The regulations in force related to the preservation of the national patrimony and the prohibitions of drugs, sanitary regulations and preservation of the environment must be taken into consideration as well as those on the protection of endangered species and the border movements of waste and other dangerous materials.

Useful contacts

Centro para la Promoción de las Exportaciones de Cuba

Infanta no. 16, Vedado,  La Habana, Cuba

Phone: 54 –2714 / 55 -0428

Fax: 66 - 2220

E-mail: cepecdir@infocex.cu

Website: www. cepec@softcal.cu 

Imports of goods on consignment

Different mercantile forms are used in Cuba according to the international trade practice.  Among them, the import of goods on consignment is very practical for those goods usually present in the Cuban market.

In their import operations, the Cuban entities sign consignment contracts, whereby the foreign entity acting as supplier commits itself to supply and consign to the Cuban entity acting as consignee goods to be settled once consumed or marketed.

The Cuban import entities also sign commission contracts for the sale of goods on consignment.  In this type of mercantile relation, the foreign companies provide the merchandise and the Cuban entity which acts as agent is committed to receive and deposit the goods and promote their sale in the national territory.  The Cuban entity acts in its name and on behalf of the foreign company once the foreign company has paid the commissions agreed upon for the trade services rendered.

Agency contracts may also adopt the form whereby the foreign supplier deposits the goods in a warehouse under the customs deposit regime.  In that case the Cuban agent or commissioner is only responsible for the sale of the goods in the national territory.

Import of samples and advertising material

The Cuban customs legislation foresees the greatest facilities for both the import and re-export of goods for fairs, exhibitions and similar purposes.  The most outstanding aspect of this system is that the exhibitors are not demanded payment of guarantee for custom duties.

Temporary imports of samples destined to fairs and exhibitions and samples sent to commissioners or branches of foreign companies registered in the country are exempted from payment of custom duties.

Cuba has signed several conventions to facilitate the temporary import of professional materials and samples for fairs and exhibitions.  Cuba has also subscribed the International Convention for the Facilitation of Imports of Trade Samples and Advertising Material.

Customs Regimes

The Cuban customs legislation includes all customs regimes that are part of the International Agreement for the Simplifying of Customs Regimes, also known as the Kyoto Agreement, approved by the Customs Cooperation Council in 1973.

Customs regimes

·                Customs deposits

·                Customs transit

·                Dispatch for consumption

·                Temporary admission of goods for re-export in the same condition

·                Temporary admission of goods for active improvement

·                Temporary admission of goods for passive improvement

·                Temporary admission of goods for re-import in the same condition

·                Replacement as per franchise

·                Replacement as per warranty

·                Transshipment

Customs deposit regime

Customs regime according to which imported goods are stored under customs control at a place selected to this purpose (customs deposit) without payment of customs duties in attendance of the granting of a new regime.

The customs deposit regime is the regime with suspension of rights most widespread in Cuba.  Under this regime the depositor imports the goods and they must afterwards be declared for consumption by any of the entities authorized to market imports.

According to the Customs Law, the granting of the customs deposit regime may be requested by commercial importers, branches and agents of foreign mercantile societies who must submit the documents required by the norms in force to the Chief of the General Customs of the Republic.

The depositor may dispose at any time of the goods in deposit and he may re-export, transfer, abandon or sell them wholly or partially.

The dispatch for consumption of goods under the customs deposit regime may only be performed by juridical persons authorized to perform foreign trade operations.  In order to declare for consumption goods under the customs deposit regime, importers must comply with the terms established for this regime as if the goods came from abroad, and submit the required documents.

Forbidden imports and exports

The import and export of the following goods is forbidden:

·                drugs

·                explosives

·                pornographic objects, photos, literature or any other article contrary to good manners

·                any article, including literature, that attempts against the country's security and domestic order

·                animals, plants and their parts listed in Annex No. 1 of the CITES    

·                Agreement (protected or endangered species)

Donations

Any means received, whether or not related to international cooperation projects, either in species or cash, of a non-refundable character, whose value may be an income to the State Central Budget and with a socially useful destination is considered a donation.  Donations are distributed through the established mechanisms until they reach the beneficiaries.

   -  Beneficiary and donor

The beneficiaries are the State Central Organs, the political, social, mass and other non-governmental Cuban institutions.  They may receive donations from both official and non-official sources.  The donor is the entity that finances the donation.

  -  Sources of financing

Bilateral official, multilateral and non-governmental.

  -  Authorization and execution of imports

The Ministry for Foreign Investment and Economic Collaboration (MINVEC) is the State Central Administration organ in charge of coordinating and controlling donations from different sources except those from friendship organizations and groups of solidarity, which are coordinated by the Cuban Institute for Friendship among the Peoples (ICAP).

Ministry for Foreign Investment and Economic Collaboration (MINVEC)

Calle Primera esq. a 18, 4to piso

Miramar, Ciudad de La Habana

Tel: (53-7) 202-7497)

Empresa de Servicios a la Colaboración (ESCO)

Calle 24 No. 111 entre Primera y Tercera

Miramar, Ciudad de La Habana

Tel: (53-7) 209-1850/203-6566, ext. 8

Tariffs

Legal framework

The Tariff Regulations of the Republic of Cuba came in force by Decree-Law No. 124 in 1990.  They are based on the nomenclature of the Harmonized Commodity Description and Coding System with an 8-digit national breakdown.  The use of this nomenclature facilitates the description and coding of goods.  By Resolution No. 108/2002 of April 3, 2002, the National Bureau of Statistics approved the adaptation of the Cuban Tariff Regulation to the unique Spanish version of the Harmonized Commodity Description and Coding System and to the Third Amendment to that system.  That same resolution establishes that it will come in force on January 1, 2003.

The Tariffs Law of the Republic of Cuba is in force according to Decree-Law No. 162 of April 3, 1996.

Tariffs of the Republic of Cuba for non-commercial imports:

  -   Decree-Law No. 22 of April 16, 1979

  -   Decree-Law No. 178 of October 13, 1997

Tariff Structure

The Tariff has two columns:

  -   the General Tariff, which is applied to non-members of the World Trade

Organization (WTO) and to countries with no bilateral trade agreements with

Cuba.

  -   the Most-favored Nation Tariff, which is applied to members of the WTO

and to those countries with bilateral trade agreements with Cuba.

At present, the largest part of the country's imports is subject to the most-favored nation tariff.

The average most-favored nation tariff is 10.7%, while the general tariff does not exceed 17%.  Tariffs for raw materials are 5%, 10% and 15%.  Only an 8% of the sub-entries has tariffs that exceed 20%, and more than 90% of them have tariffs below 15%.

Tariff calculations are based on the value of the goods (ad valorem).

Norms of origin

The By-laws on Norms of Origin adapted to the principles contained in the Agreement on Norms of Origin of the WTO entered in force by Resolution No. 4 of 1997 of the ministries of Finances and Prices and Foreign Trade.

Certificates of Origin

Document testifying the origin of a product through a statement made by the exporter of the beneficiary country, certified by the authorized organ.  In the case of Cuba, this organ is the Chamber of Commerce of the Republic of Cuba.

It enables the granting or not of tariff preferences.

Certificates issued by the Chamber of Commerce of Cuba

·                Certificate of Origin: used in the export of goods of origin that are not included in preferential schemes.

·                ALADI Certificate of Origin: for exports of goods of origin included in the partial scope schemes signed by Cuba with countries of Latin America as well as for the Regional Tariff Preference.

·                ICO Certificate of Origin: used to testify the origin of coffee.

·                Form A (SGP) Certificate of Origin: for exports of goods of Cuban origin to countries of the European Union and others that accept this certificate although they are not part of this integration mechanism.

·                SGPC Certificate of Origin: for exports of goods of origin intended for countries of the Group of 77.

·                Certificate of Provenance: although it is not precisely a certificate of origin it is commonly used in international trade and issued with the purpose of certifying the Cuban provenance of a good in cases in which it does not comply with the Cuban norms of origin.  It is prepared by the Chamber of Commerce upon receipt of the commercial invoice and a statement under oath of the exporter.

International organizations

Cuba is a member of different international economic organizations.  It has a very active participation in the work of United Nations organizations such as the UNCTAD, UNDP, ECLA and others.

From the three main organs for the international economic relations at world level, Cuba is only a member of the World Trade Organization (WTO) but does not belong to the International Monetary Fund (IMF) mor to the World Bank (WB).

At a regional level, Cuba does not participate of the negotiation process for the creation of the Free Trade Area of The Americas (FTAA) nor is it beneficiary of the Initiative for the Caribbean Basin applied by the United States to the countries in the region.  Notwithstanding, the country is following several initiatives for the economic integration in the hemisphere.

Cuba is also a member of the basic products organizations (for sugar, coffee and grains) and of the Common Fund of Basic Products.

  -  World Trade Organization (WTO)

As a founding member of the General Agreement on Tariffs and Trade (GATT), Cuba participated in the negotiations of the Uruguay Round and signed its final statement.  With the ratification of the agreement that established the WTO, Cuba became a full member of this organization on April 20, 1995.  In compliance with the resulting commitments, a whole process of incorporation to the Cuban legislation of the provisions contained in the different agreements has taken place.

  -  General System of Preferences (GSP)

The General System of Preferences was created at the III UNCTAD Conference in Santiago de Chile in 1972.  According to this system, developed countries grant developing countries tariff access to their markets with a preferential, non-discriminatory and non-reciprocal treatment.

There are currently 14 preference schemes applied by Australia, Canada, Japan, New Zealand, Norway, Switzerland, the United States of America, Belarus, Bulgaria, the Czech Republic, Hungary, Poland, the Russian Federation and Slovakia.  The countries of the European Union apply a common scheme.  Cuba is a beneficiary of all SGP schemes except that of the United States