Gecomex (Grupo Empresarial del Comercio Exterior) is the state corporation responsible for all imports and exports outside of energy, mining and military needs. It represents some 18 state companies including, most importantly, Alimport, the entity that imports $2 billion in food annually. Cuba Trade spoke with Gecomex General Director Aurelio Mollineda Martinez about the state’s priorities and processes for importing and exporting goods to and from Cuba.
What is the function of Gecomex?
Gecomex is a holding company, a structure that was created as part of the updating of the Cuban economic model. The companies that are part of these holdings used to belong to other ministries. Within this structure there are 18 companies… All are involved in foreign trade and play an important role within the Cuban economy. We are in charge of importing goods for [various] sectors of the economy and we are in charge of distributing the supply of raw materials and intermediate goods to anyone who may need it.
What are examples of the companies that make up Gecomex?
We have a company within our structure named Quimimport that is in charge of importing fertilizers and pesticides…. We have another company in charge of importing metals, and one for agriculture machinery, with all the implements, all the tools… We are also in charge of the export of cane sugar.
What other things does Gecomex export?
Honey, charcoal, coffee, cocoa, and sometimes live animals… We are responsible for about 36 percent of the imports of Cuba and about 18 percent of the exports of Cuba.
So, if I am a foreign company, what is the process by which I make an application for bringing products into Cuba?
Gecomex works with the selection of its suppliers in the same way as any other company worldwide. Internally we don’t have restrictions for the origin of a product. It’s only determined by what a given [Cuban] company wants, and which [foreign firm] wants to do business with us. There is no law in Cuba stating that there is a ban on doing business with any company in the world. We follow a normal compliance process. We get to know each other, so we can know that this company can provide the product. We always ask for a bank statement and get to know the financial situation of a company. This is a simple process, by which we can include a company in our portfolio of suppliers or sellers – although today I can’t include much in our portfolio in terms of U.S. suppliers. But that’s not because of me.
Now, in the other direction, if I am a Cuban farmer and want to export my mangoes to the United States, do I need permission first from Alimport?
In the case of such products, there are [Cuban] companies that specialize in this matter. For example, we have Cuba Azucar, which oversees the export of sugar, and molasses, which is derived from sugar… Generally, all products made by farmers need to go through a process, and almost all these processes are undertaken in state owned plants. So, it’s important for you to know that farming in Cuba is the state. At the level of private farmers or individual farmers, they don’t have the necessary means to produce a product with the quality to be exported… For example, honey is collected from all honey croppers and taken to a processing center. And generally, all the honey that is exported is validated in foreign labs. And therefore, we can guarantee that this product won’t be rejected.
We think there are enormous opportunities for products from Cuba to enter the U.S. and while most are prohibited, in certain cases they’re not … for example charcoal… So why aren’t more Cuban products coming to the United States?
It’s because we need authorized requesters from the United States. I believe this is no mystery at all for DOC or OFAC. I have personally explained to them how complicated it is for a U.S. company to get a license to do business with Cuba. Unfortunately, this is not part of my competence because otherwise I would have to hire 10 different law firms for an explanation on how to get a license… [as for exports to the U.S.] they want an organic product that is only produced by a private farmer and doesn’t go through the hands of any other state company and that’s very complicated. I think that they [U.S. buyers] are missing a great opportunity.
What about other, non-U.S. markets?
We’re in charge of exporting coffee, honey, organic molasses, cocoa, charcoal, and that’s basically what we export to Europe and Asia and Canada. Canada and Europe are high-end consumers of honey and they have extensively recognized the quality of our honey. The coffee that we’re able to export, whether coffee beans or processed coffee – the Asian countries buy it up. They want it all.
Does the U.S. blockade and the difficulties it creates, especially in banking, make it more difficult in dealing with the rest of the world?
So much so that it made me get a master’s degree in international finance. It’s no secret to anyone the extraterritorial nature of the blockade, and that the fines to financial institutions have made it very hard to get payments and to make payments.
Tourism is on the rise in Cuba and I assume this means you will need different inputs to satisfy the demands of tourists. How has this affected your planning, and have you made changes to accommodate what tourists want?
As a structure, we have been willing to grow to satisfy the demands that increased tourism puts on the development of other sectors of the Cuban economy… there are many products I import that go into a production chain that ultimately goes to the tourism sector. In the short term, because the demand for packaging increases, I have to import more plastic resin… A long-term example would be [tourist demand for] potatoes. To have more potatoes in Cuba, more potato seeds must be imported… Agriculture has increased its production and many of the products are destined for the tourism sector, so this means that I must increase the imports of inputs, whether it’s fertilizers or machinery…
One thing said by U.S. economists is that Cuba needs wholesale markets where individual businesses can buy at a lower price. Why isn’t there a better wholesale market for small businesses?
We have limitations when it comes to a normal flow of goods. We must buy from many places and at times, far-away places. We are lacking funds, and where we could get better financing conditions. The blockade has affected us – not only in our trading relations with the United States but in our relations with many other suppliers… To create the conditions for a true wholesale market in Cuba relies a lot on imports because this must be an open market… When I’m able to buy 100 thousand tons at a time, then I can guarantee a good price in the wholesale markets.
Relatively speaking, how important is the U.S. market in both directions, and how important is that relative to the rest of the world?
The U.S. market has many advantages for us. It’s very close, they have the technology and high volumes of production which allow for good prices. But no country relies on only one market. We will always share our goods and purchases. Meaning that we must approach things normally, not in the way they are today. Under normal conditions you find a product, you have a tender process and then you choose to make the business [deal]. Since U.S. producers are outside of these normal conditions, they are limited [as sources].