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Cruise cos rise on sector's surge, US-Cuba talks

NEW YORK, July 15 (Reuters) - Cruise companies leapt alongside a broad rise in consumer discretionary stocks on Wednesday, partly boosted by news that U.S. and Cuban officials began their first talks on Cuban migration this week.

The milestone talks between U.S. and Cuban officials have raised some hopes for unrestricted travel to Cuban ports, a move that could invigorate the popular Caribbean market. Still analysts caution the development of Cuban ports could take years.

"It's going to take a while, between one to three years, but when it does it should be very positive for the cruise industry," said Wachovia analyst Tim Condor.

But Condor also stressed that the jump in consumer discretionary stocks was propelling cruise stocks forward. The Standard & Poor's 500 index <.GSPD> tracking those shares was up more than 2 percent.

Carnival Corp plc CCL.N> jumped more than 5.7 percent, its highest one-day percentage jump in nearly a month. Royal Caribbean saw its largest one-day increase in about two months.

Shares of Royal Caribbean were up 8.27 percent, or $1.05, at $13.74, while Carnival were up 6.6 percent or $1.53 at $27.02.

Analysts have argued that the opening of Cuban ports would be a boost for the industry and would invigorate the popular Caribbean market.

Still infrastructure issues could post a stumbling block for rapid development, analysts said.

"Cuba is a wonderful destination," Royal Caribbean Chief Executive Richard Fain, said in an interview last month. "It's going to help the industry. It's not going to transform the industry."
 

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Port of New Orleans woos Cuba; Plans for fourth trip reflect high hopes
1 November 2009
The Times-Picayune

Ray Nagin's recent trip to Cuba may have raised eyebrows across the state -- with the New Orleans mayor praising the efficiency of totalitarian government -- but that has not kept officials with the Port of New Orleans from planning their own visit to the nation.

Port managers have traveled to Cuba three times in the last decade to explore trade opportunities with the island, which does more business with ports in Louisiana than in any other state. A fourth trip is "an expectation," although an exact date is difficult to pin down, said Port of New Orleans Marketing Director Robert Landry.

Although an embargo keeps the United States from buying products from Cuba, limits on exports eased in the 1990s and again in 2000, allowing shipments of food and health-care products. The United States sent $718 million worth of goods to Cuba last year, with Louisiana's $198 million in exports providing the most of any state, according to the U.S. Chamber of Commerce.

Recent missions to Cuba by the Port of New Orleans and other state officials -- including former Gov. Kathleen Blanco, who visited Havana in 2005 -- have fostered the prosperous trade relationship between Louisiana and the island. The trips have also laid groundwork for the day when the long grudge between the United States and Cuba ends, and the two countries open their borders.

"The country is going to be in dire need of a lot of things," Landry said. "We think the potential is very great."

Poultry and grain are the Port of New Orleans' top exports to Cuba. John Hyatt, a freight forwarder with New Orleans' Irwin Brown Co. said there could be an opportunity for Louisiana to ship forest products and most other commercial products.

"Cuba doesn't have an industrial base to speak of," Hyatt said.

President Barack Obama has vowed to enforce restrictions against Cuba until the nation makes significant strides toward democracy. But the administration has been friendlier toward Cuba than any presidency in recent memory, repealing laws that have kept Americans from visiting Cuban family members and making business trips.

Those changes -- along with Fidel Castro's surrender last year of the Cuban presidency to his brother Raul Castro -- have led some observers to speculate that open trade with the island is closer to reality than ever before.

But John Kavulich, a senior adviser to the U.S.-Cuba Trade and Economic Council in New York, said it is unlikely that the economy would benefit much even if the United States did open its borders to Cuba. The island -- which rations food and other goods among its citizens -- would have to make serious economic changes for U.S. businesses to make inroads. The island also has historic trading ties to Communist and dictatorial regimes that could make it difficult for American companies to compete, Kavulich said.

"Until changes include a lessening of dependence upon Venezuela and a lessening of dependence upon China and an overall lessening of Cuba's reliance on charity to sustain itself, then Cuba will remain what it is, and the opportunities for U.S. commercial interests will remain extremely limited," he said.

The United States was a top exporter of rice to Cuba just a few years ago, for example. But rice shipments have stopped in the last two years as Cuba has increased rice shipments from Vietnam, said Buddy Hanks, president of the Louisiana Rice Mill, which owns two rice-processing plants in Acadia Parish.

Hanks doubts that Cuba will change its ways or cut its Communist ties any time soon.

"Nothing has changed" since Obama took office, Hanks said.
 

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New Cuban port, economic zone a potential lifeline, but US embargo rules still a challenge
12 November 2013

MARIEL, Cuba (AP) - Life still moves slowly in this small, dusty town, where kids play freely in narrow streets nearly devoid of traffic and many people carry parasols to ward off the pounding tropical sun.

But that's all about to change. The town best known as the launch point of a mass maritime exodus to the U.S. in 1980 is being transformed into a huge, modern, $900 million port and special commercial zone.

The island nation's Communist authorities expect Mariel to become a center for foreign investment. It could also position Cuba to take advantage of a trade boom if the U.S. ever lifts its 51-year embargo and starts sending container ships south -- something investors have been waiting for, in vain, for years. Others suspect the port's impact on Cuba may be more modest, reflecting the country's long-stagnant economy.

"The Port of Mariel could ... contribute to a revival of Cuban foreign trade, more so if there are improvements in relations with the United States," said Arturo Lopez-Levy, an economist and lecturer at the University of Denver.

Plans to overhaul the Port of Mariel began in 2009 when officials determined the country's main harbor in Havana is too shallow for bigger, deeper-draft "post-Panamax" vessels, which starting in 2015 will begin crossing through an expanded Panama Canal and carry an increasing share of regional cargo. An automobile tunnel that traverses the mouth of Havana's bay makes it impossible to make the waterway deeper.

Even with the U.S. embargo, the ability of Mariel to take in deeper-draft ships will let Cuba keep pace with global shipping innovations and accommodate more cargo. Hopes are equally high for the adjacent, 180-square-mile (465-square-kilometer) industrial park and special development zone, which officially launched Nov. 1.

During a recent visit by The Associated Press, orange-clad, helmeted workers in the port zone were building what looked like a large warehouse while trucks arrived loaded with construction materials. Hundreds of yards (meters) of docks appeared nearly completed, ahead of the port's expected opening early next year.

Simply swapping one port for another, however, won't be enough to right Cuba's rickety economy, which relies heavily on food and other imports while making most of its foreign income from tourism, nickel mining and the export of services such as tens of thousands of medical professionals.

Authorities hope to attract foreign firms to invest and set up shop in the development zone, with a priority on industries such as food, biotech, renewable energy, packaging and telecommunications.

Foreign companies that answer the call will be exempted from paying taxes on labor, profits and sales and services, at least at first. Tax rates will rise to 12 percent on profits after a decade of operation and 1 percent on sales and services after 12 months.

"It will be a world-class special zone," said Ana Teresa Igarza, director of the office overseeing the development zone during a presentation about the port last week at the Havana Trade Fair.

Still, Cuba has had trouble keeping the foreign investors already here, most of which are joint ventures with government agencies.

Earlier this year, the government said 190 mixed-ownership companies were operating in the country, compared with 400 in the early 2000s.

Foreign executives and diplomats have said stifling bureaucracy and corruption crackdowns targeting some foreign-run businesses have dampened enthusiasm, as have rules prohibiting foreign companies from hiring employees directly. Instead, they must contract workers through a state-run employment agency.

Critics also bemoan a lack of office space and infrastructure.

Investment also has been restricted by the embargo, which would ban companies from selling products routed through Cuba in the United States. Embargo rules also prohibit ships from docking in the United States for six months after calling in Cuban ports.

Cuban officials are betting Mariel will be attractive enough to overcome those problems.

"To what extent (the embargo) may affect the development of the special zone, we can't calculate," Foreign Trade Minister Rodrigo Malmierca said. "Despite the embargo, investors will still come."

Malmierca also vowed that the Communist government will never expropriate foreign businesses, as it did following the 1959 revolution.

Brazil, which is Cuba's No. 2 trading partner in Latin America after oil benefactor Venezuela, is providing credit to pay two-thirds of the project's costs. Raw materials are presumably coming from a mix of imports and items that can be produced locally, such as cement.

Igarza said Brazilian, Chinese, German, Japanese, Mexican, Russian, Spanish and Vietnamese investors have expressed interest. Venezuela, China and Vietnam are increasingly important business partners for Cuba, and Mariel could serve as a hub for petroleum products.

"I think that (Mariel) will generate interest among all businesspeople," said Leo Parejas, an executive at LeoProex, a Barcelona, Spain-based company that offers transportation and commerce services.

For the residents of Mariel, the port means an unknown number of new jobs, a window into the global economy and perhaps a few more cars on the streets.

"Before, this was a small fishing town with a dock where the boats would come in," said Jose Ramon Reyes, an 85-year-old barber who cuts his customers' hair on the front porch of his modest home. "Now it seems this is going to be a second Havana."
 
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