Cuba Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The EU is the country’s main trading partner and largest investor (especially in tourism, construction, light industry and agriculture). Trade with the EU represents 36.5% of total trade in goods. Around a third of all tourists coming to Cuba are from the EU. In 2021, exports to Cuba from the EU fell due to the pandemic and amounted to EUR billion. Exports of goods from Cuba to the EU increased slightly to a value of EUR 365 million. Cuba’s share of total foreign trade with the EU is roughly 0.1%. The main export items from the EU to Cuba are food, products of the chemical industry, plastics, metals, machinery, household appliances and means of transport. Cuba’s main import items to the EU are agricultural products, beverages, and tobacco.

  • Allcountrylist: Overview of major industries in Cuba, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 2,061.60 2,159.50 2,109.30 1,466.90 1,345.40
Imports into the EU (million EUR) 457.4 304.7 344.4 362.6 365.3
Balance with the EU (million EUR) -1,604.3 -1,854.8 -1,765.0 -1 104.3 -980.2

Source: European Commission

Trade relations with the Czech Republic

Exports from the Czech Republic to Cuba in 2021 slightly increased from 0.2 to 0.3 billion CZK compared to the previous year, however, it was still not possible to restore the level before the coronavirus pandemic, when goods worth billion were exported from the Czech Republic to Cuba CZK. Exports from Cuba did not change significantly and amounted to CZK 0.2 billion. The main export items from the Czech Republic to Cuba are malt, wood, glass, tires, electricity. transformers, el. conductors, medical devices. The main import items from Cuba to the Czech Republic are alcohol. drinks, cigars and sugar. Cuba has long been in the 7th, i.e. the worst, credit risk category of the OECD. This is reflected in the lack of attractiveness for potential Czech exports and investments. Companies are faced with the problem of delayed payments, which reaches the order of years.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.2 0.7 1.3 0.2 0.3
Imports to the Czech Republic (billion CZK) 0.4 0.3 0.3 0.2 0.2
Balance with the Czech Republic (billion CZK) 0.2 -0.4 -1 -0.1 0.1

Source: CZSO

Trade relations with countries outside the EU

Exports from non-EU countries to Cuba have had a downward trend in the last two years, while imports to these countries have increased from EUR billion to EUR 7.29 billion in 2021. The main export items include cigars, sugar, nickel, and alcohol. In 2021, Cuba tried, among other things, to export its own vaccines against the coronavirus to developing countries. Cuba mainly imports meat products, wheat, corn, dairy products, rice and canned products from third countries. The main trade partners include China, Russia, Argentina, Venezuela, Mexico.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 236.8 170.8 ON 48.6 29.1
Imports to countries outside the EU (million EUR) 8,222.5 9,493.3 8 102.1 5,804.2 7,292.4
Balance with non-EU countries (million EUR) -7,985.7 -9,322.6 ON -5,755.5 -7,263.3

Source: EIU, Eurostat

Foreign direct investment

The Ministry of Foreign Trade and Foreign Investment (MINCEX) is the central body of the state in charge of designing, managing, implementing and controlling Cuba’s foreign investment policy. Investments are governed by Act No. 118 on Foreign Investments and are implemented in most cases in the form of a joint venture. The Cuban government does not publish data regarding foreign direct investment in the country. Investing in Cuba is generally very complicated, especially bureaucratically. Cuba tries to reach out to potential investors with a regularly published annual overview of investments. The greatest emphasis has long been placed on the development of a special zone in the area of ​​the port of Mariel (Zona Especial de Desarrollo de Mariel, ZEDM), which is located in a strategic location on the northern coast of Cuba. This zone offers space for the construction of new plants, whose ambition is not only to supply the Cuban market, but also to export to nearby Latin American countries. The advantage is that Cuba applies not only an accelerated approval process in this zone, but also tax breaks and other benefits. Currently, the plans for the development of the Mariel zone are rather ambitious and the overall pace of progress is very slow.

More than 600 announced investment opportunities, mainly focused on the food industry, tourism, oil industry, construction, etc., and 60 new projects in the Mariel development zone aimed at building new production plants, are mainly based on the demand for future self-sufficiency. A general overview of possible investments and the necessary information for potential investors in Cuba can be found at https://www.procuba.cu/en/portfolio-of-opportunities/

The possibility of establishing a mixed company, the so-called empresa mixta, opens up for Czech companies. In practice, this works on the principle that the Cuban side invests in the joint venture, for example, an important local brand including production facilities or real estate, and the foreign company invests capital, know-how and the ability to expand to foreign markets. This form of cooperation is mainly used in the tourism industry, where foreign hotel chains operate Cuban hotels, but also in various industries, especially the food industry.

FTAs and treaties

Treaties with the EU

There is no preferential trade regime for trade with Cuba. In 2014, Cuba, as a statistically middle-income country, dropped out of the Generalized Tariff Preferences (GSP) system. Cuba’s relations with the EU are governed by the EU-Cuba Political Dialogue and Cooperation Agreement (PDCA), signed in December 2016 in Brussels.

Contracts with the Czech Republic

In May 2019, negotiations with Cuba on succession to bilateral treaties were successfully completed. The most important bilateral agreements are: the Economic Agreement between the Czechoslovak Republic and the Republic of Cuba (Havana, June 10, 1960) and its additional protocol of June 10, 1960 (Prague, October 28, 1960), the Consular Convention between the Czechoslovak Republic and the Republic of Cuba (Havana, April 7, 1973), Treaty between the Czechoslovak Republic and the Republic of Cuba on Mutual Legal Assistance in Civil, Family and Criminal Matters (Prague, April 18, 1980), Agreement between the Government of the Czechoslovak Republic and the Government of the Republic of Cuba on Cooperation in the Development of Science and Technology until 1990 (Prague, January 29, 1982), Agreement on Trade and Economic Cooperation between the Czech Republic and Cuba (On December 10, 1996 in Singapore),

Developmental cooperation

Development cooperation between the European Union and Cuba began in 1988. Since then, the EU has financed more than two hundred projects in the amount of approximately EUR 300 million. Currently, approximately 80 projects worth EUR 155 million are being implemented, which represents a three-fold increase compared to the average of the previous decade. The development cooperation program for the years 2021-2027 focuses on supporting the sustainability of cities and strengthening the national economy with an emphasis on small and medium-sized enterprises, as well as on the sector of agriculture, energy, communication technologies, and biotechnology.

Cuba is not among the priority countries of bilateral development cooperation of the Czech Republic.

Prospective fields of study (MOP)

Agricultural and food industry

Due to chronic food and feed shortages in Cuba, caused by outdated and inefficient agricultural production with virtually no mechanization, there is an urgent need to modernize food production, processing and storage. Increasing food self-sufficiency is even described by the Cuban government as a matter of national security, and investments in this area are considered a priority. Cuba offers investment opportunities especially in the Mariel zone, and there are also opportunities in the area of ​​renovation of its own production facilities and food factories.

Energy industry

Cuba has long been dealing with a chronic energy deficit, and the government’s priority is to create, expand and modernize production capacity and support oil exploration projects. The need to modernize fossil fuel power plants and repair the outdated and loss-making distribution network represents a significant opportunity for Czech industry. Renewable energy sources, the use of which is declared as part of the country’s long-term economic and social development program, are also becoming an interesting opportunity.

Construction industry

The need for modernization in Cuba affects practically all Cuban architecture and infrastructure. However, in addition to the traditional lack of liquidity, efforts to repair it and build a new one run into a related lack of quality building material. Cuba’s interest in new modern technologies for increasing the efficiency of construction, the production of materials, spare parts, but also the reconstruction and repair of buildings, as well as the design and construction of hotel complexes, can be perceived as an opportunity for Czech exports.

Healthcare and pharmaceutical industry

Despite the economic crisis, Cuba has invested in the development of its own vaccines against the coronavirus. However, the Cuban healthcare system only has outdated hospital equipment and diagnostic equipment, and the country has been struggling with a long-term shortage of all kinds of medicine. Czech exporters are offered the opportunity to establish cooperation in the aforementioned areas, and foreign investors are offered the opportunity to build treatment centers and spas, or centers focused on plastic surgery and aesthetic medicine.

Mining, mining and oil industry

Cuba has rich mineral deposits, nickel in particular is one of the country’s main exports. Due to the outdated mechanization, it does not use its deposits to the maximum and does not have the possibility to carry out new surveys. In this area, Czech companies are offered the opportunity to invest, especially in areas of newly identified deposits of gold and precious metals, possibly marble, minerals, etc.

Services

Cuba is a popular tourist destination, with up to million tourists visiting it annually before the pandemic. Czech companies are offered the opportunity to participate in the construction and operation of hotels and tourist centers, the construction of amusement and water parks, or the rental and operation of already built accommodation centers.

Cuba Trade