After Cuomo’s visit, trade deals with Cuba nowhere in sight

Editor’s note: City & State Senior Editor Jon Lentz was one of the journalists who accompanied Gov. Andrew Cuomo on his trade mission to Cuba.

On his return flight from Cuba last spring, Gov. Andrew Cuomo said he was surprised he was departing the island nation with two business deals already in the works. 

“Frankly, I did not believe we would make that much progress in that short a period of time,” Cuomo told reporters. “I was shocked that they made as much progress as they did in two days.”

But nearly 11 months later, there is little sign that the governor has actually generated much new business, raising questions about whether expanding trade between New York and Cuba is a top priority for his administration and spurring criticism that his visit was little more than a taxpayer-funded photo op.

“If you evaluate the trip based upon the return on investment, the amount of money that was spent – almost $200,000 – and what was achieved, it is a substantial negative rate of return for the taxpayers of New York state,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. “For the ego of the governor, it’s a triple-digit return on the investment.”

Skeptics say the concerns were there ever since the details of the trade mission came out. One common complaint was that the trip, which spanned only a day and half, was far too short to develop any real business ties.

“If you noticed, the governor of Virginia went to Cuba and spent three days in Cuba, and not only that, he hosted the Cuban ambassador and the Cuban foreign trade minister in Virginia,” said Antonio Martinez, a lawyer who heads the Cuba & Latin America Trade Group at Gotham Government Relations. “The end result of that, Virginia is the state in first place as a top exporter to Cuba for agricultural products.”

Joining the governor on his whirlwind visit were at least 14 staffers and another 18 journalists, compared with representatives of just seven New York-based companies – despite the dozens of empty seats on the JetBlue charter flight. Even though the export of food and agricultural products has long been the single biggest source of U.S. trade with Cuba, thanks to a humanitarian exception to the trade embargo, the Cuomo administration did not bring anyone from the state’s agriculture department. The administration also paid $25,000 for a Washington, D.C.-based consultant to plan the trip, sources said, and has not made that state contract public.

“It was a lot of overkill and he wanted to present this presidential-type aroma to what he was doing,” Kavulich said. “But it was all about him. There were more journalists than there were businesspeople. There were more of his staff than there were businesspeople. That’s not the correct equation.”

Jason Conwall, a spokesman for Empire State Development, the state economic development agency that funded the governor’s trade mission, blamed the Cuban government for keeping the delegation small despite “tremendous interest” among New York companies in joining the trip. According to Conwall, the companies and other entities that participated were a diverse group, both geographically and in terms of company size.

“MINREX, Cuba’s Foreign Ministry, asked us to keep our delegation small because of limited capacity to host a large group, and we appealed on several occasions to expand it, to which MINREX graciously complied,” said Conwall. “In the end, we worked together to reach an agreement on the number of New York state participants and press that met our requests and was within their capacity to host.”

By comparison, Arkansas Gov. Asa Hutchinson took representatives of 13 companies and just two executive staff members and four state agency staffers on his trip to Cuba this past September, according to data compiled by Kavulich. In January, Virginia Gov. Terry McAuliffe was accompanied by seven companies as well as eight executive or agency staffers on his Cuba visit.

The Cuomo administration, for its part, has touted several deals involving New York companies following its April 20-21 trade mission, although the announcements glossed over the largely incremental nature of the agreements.

Infor Global Solutions Inc., a Manhattan business software company, signed an agreement during the April trip to distribute health care software on the island. Infor secured an export license from the U.S. Department of Commerce last year, and is continuing to work with its counterparts in Cuba, according to ESD. But it’s unclear whether the deal has resulted in any actual sales, and the company did not respond to a request for comment.

At the end of the April visit Cuomo also announced a collaboration between Buffalo’s Roswell Park Cancer Institute and Cuba’s Center for Molecular Immunology to develop a vaccine for lung cancer. But Roswell Park had already been pursuing the partnership, and it could be years before its CimaVax vaccine translates into new business – if it ever does at all.

Dr. Kelvin Lee, who runs the immunology department at Roswell Park Cancer Institute, said in a statement that the institute’s “innovative” work with the Center for Molecular Immunology in Havana began in 2011, but that joining Cuomo’s trade mission had “absolutely moved our research forward” and put the partnership “into fast gear.”

“Since then we’ve been working with the CIM team to design an early-phase trial,” Lee told City & State this month. “We’re just finishing up that work now and expect to be submitting our application to the FDA soon, and could possibly be offering CimaVax in a U.S. clinical trial as early as late this year.”

In May 2015, shortly after the trip, JetBlue announced an additional charter flight to Cuba, which Cuomo cited as “proof that our approach is delivering results for New York businesses.” JetBlue’s CEO also applauded the governor for “helping position JetBlue as the leading carrier to Cuba.” But JetBlue had been operating charter flights to Cuba since 2011, long before it joined the governor’s trade mission, casting doubt on whether the governor played any significant role in adding the new flight.

Similarly, a MasterCard executive accompanied the governor on the trip, even though the credit card company had already announced that its cards would be accepted on the island. According to ESD, the company held its first meetings in Cuba while on Cuomo’s trade mission.

“MasterCard had already released the block on the cards to be used,” Kavulich noted. “But the issues that remained weren’t on the Cuban side as much as they were on the U.S. side. There just needed to be more regulations to basically lessen and hopefully remove the transactional liability that is now going to be happening. It might be released actually before the president goes. There’s no one-plus-one-equals-two with respect to their being on that trip with the governor.”

Among the remaining companies who joined Cuomo’s trade mission, no deals were announced. A spokesman for Pfizer said the trip was “an educational experience and we were not pursuing commercial business opportunities.” Regeneron Pharmaceuticals CEO Leonard Schleifer also joined the governor, but a company representative said it was in his capacity as co-chairman of the Mid-Hudson Regional Economic Development Council.

Plattsburgh International Airport officials viewed the trade mission as a “fact-finding trip,” according to Garry Douglas, the president and CEO of the North Country Chamber of Commerce, which represents the airport. The airport is preparing to handle international flights in 2017, Douglas said in an email, and it already serves as a secondary airport for Montreal, a city with many locals traveling to Cuba for vacation.

“The trip allowed us to more fully understand the Cuban market as it begins to open up; to establish contacts with Cuban aviation and tourism officials; and to establish a dialogue with JetBlue Airlines, which will not bring immediate results but hopefully can lead to a relationship in the future,” Douglas said.

Chobani, a yogurt company that is one of Cuomo’s favorite local economic success stories, did not respond to a request for comment. Another agricultural company, Cayuga Milk Ingredients, also has yet to make any sales in Cuba.

“Nothing really came out of it, and the main reason nothing came out of it is the embargo is still in place with Cuba,” said Cayuga Milk Ingredients CEO Kevin Ellis. “As part of that embargo, buyers of agricultural products have to pay cash in advance in Cuba. So that’s a big deterrent for anybody doing business in Cuba, because they really like extended payment terms and we’re not able to offer it. Although we had good discussions in Cuba, they really didn’t evolve into any business.”