Cuba: Mariel Free-Trade Zone Almost Ready

Progreso Weekly

Areal view of the beginning of the expansion of the warehouse area for the industrial zone.
Areal view of the beginning of the expansion of the warehouse area for the industrial zone.

HAVANA TIMES – The Special Development Zone at Mariel (49 kilometers west of the capital), under construction for the past several years, already contains several factories and port facilities, as well as an impressive infrastructure.

This development zone will operate under a special Customs arrangement that will permit the importation and exportation of products, as well as the production and sale of value-added merchandise for the national and foreign markets. It will begin operations in the next several weeks as a free-trade industrial zone, the first of its kind in Cuba.

Rodrigo Malmierca, Minister of Foreign Investment and Foreign Trade, said some months ago that the free-trade zone is designed “to increase exports and provide an effective substitute for imports.” Malmierca also said that it represents “an interesting opportunity for foreign capital.”

His words are significant at a time when enactment of a long-expected investment law seems imminent. The law’s content is still unknown; however, it is expected to be attractive enough to bring aboard potential investors.

To some foreign businessmen and especially to potential investors who have talked with our correspondents, what’s essential is not only “the flexibility of the legislation but also the number of steps we must take to sign a contract.” In other words: agility in the paperwork is imperative.

For the time being, those who wish to participate in this experience will find propitious laws, such as the one recently enacted by the Ministry of Finances and Prices, which exempts from taxes some specific merchandises that, after being transformed in the Mariel facilities, can be sold abroad.

Favored with a refund of export fees will be those companies that bring beneficial results to the national economy, as indicated by one of the paragraphs of the official resolution. “All legal persons residing in national territory can apply for the benefits of the existing regulations, so long as they fulfill the requirements established by this regulation,” the paragraph reads.

The monumental port, fitted for the mooring of large-draught ships, will take over the maritime trade that now utilizes Havana Bay, which is insufficient for the mooring of large vessels and unsuitable for the development projects now being undertaken or envisioned.

The purpose and progressive materialization of this ambitious plan is one of the major joint ventures assumed by Cuba and Brazil. From Brazil come some of the $900 million that the works will cost; they include processing industries and a container park, as well as the dredging and land-filling of the Mariel Bay.

Everything seems to indicate that the project will soon begin to operate in part. Full-scale operations are set for 2014-2015.


12 thoughts on “Cuba: Mariel Free-Trade Zone Almost Ready

  • April 12, 2013 at 11:39 pm
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    Nice try John, but wrong again. In the tourism business, the POS (Point of Sale) is in Cuba. Cuba collects the receips and pays the foreign partner their 49% share of the profits. When products are manufactured and then shipped out (anywhere but the US) the POS is in a foreign country. The foreign partner makes the sale and collects the profits. A little creative accounting and the 51% Cuban ownership is a lot less profitable.

  • April 12, 2013 at 6:02 pm
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    Hahahaha! Mr. Jones, are you suggesting that Cuba is a threat to commerce in Miami? How terribly naive. Do your homework. Supertankers need deepwater ports. Hence the deepening of Mariel. They also need a marketplace to sell the products loaded onto the ship and unloaded from the ship. Cuba’s 11 million poor people alone can not justify that level of commerce UNLESS these ships can also travel to nearby US ports. BTW, the threat, if any, posed by a real working port in Cuba would be felt in Texas, Louisiana and Mississippi, not Miami. The Port of Huston and the Port of South Louisiana are two of the top ten busiest ports in the world by cargo volume. Seven of the top ten busiest ports in the U.S. are on the Gulf Coast. The Port of Pascagoula is Mississippi’s largest seaport and the Port of Gulfport is the third busiest container port in the Gulf of Mexico. Once fully expanded, the Port of Mariel will have the maximum capacity to do about one-tenth of the commerce that the Port of Gulfport currently does. Do you make this stuff up yourself or do you have help?

  • April 12, 2013 at 12:49 pm
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    Tourism you say? The foreign hotel operators are charge $400/month for each worker assigned to them by their Cuban partner (a subsidiary of the Cuban armed forces holding company), and the workers are paid a salary of $20 per month. That works out to an income tax rate of 95%! Do you think that’s not exploitation?

  • April 12, 2013 at 11:34 am
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    This project, like any other in the world, can be a success or bust. It can be an important factor in the development of Cuba or an environmental disaster. But simply because it happens to be in Cuba, here are the usual fatalists, visionaries, knows-all, ready to dismiss the idea, introduce doubts, derail the possibility of Cubans earning a decent salary.

    When Cuba does not build or create employment, it is what typifies communism. When it can afford to create any project, we are reminded of floods, heat, storms, lightening and every other adverse factors that are in its future, although these are not unique or exclusive to Cuba.

    The project of the Port of Mariel, will not depend on scare tactics such as vessels entering Cuba cannot return to the US. When there is greater interest, stupid laws are circumvented, as it happens with Crawley Shipping Co., out of Jacksonville, Florida, whose freighters have a regular shipping route between the US and Cuba.

    What will become a species in danger of extinction when the Port of Mariel become operational, will be the Port of Miami with its limited expansion capabilities, real estate costs, taxes, freight transportation through mid-town, labor cost, corrupt local government, high rate of freight loss through robberies, etc. all of which, may prompt the business world, as they did in China, India, Brazil and elsewhere, to relocate their operation to areas of higher profit/productivity.

    If that happened, will Wall Mart stop buying products from China?

    The airport of Miami, with its large Air Cargo distribution center to Latin America, is the next high risk business in south Florida, which relocated from its home base in Jacksonville, Florida to Miami; to be 2 hours flying time closer to south America and now it finds itself up against an idle airport in Los Caños, Guantanamo, which happens to be, 2 hours closer to south America than Miami. Ironic!!

    The designers of the Cuban embargo 50 years ago, never thought, how this monstrosity may eventually back-fire and destroy the livelihood of many communities in the US.

  • April 12, 2013 at 9:47 am
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    The tourism trade was also a partnership with Cuba and foreign (capitalist) companies and it was set up so that Cuba maintained a majority share in all these enterprises and could avoid the exploitation of the island as it was under capitalism .

    The FTZ COULD operate in much the same manner and while sacrificing some autonomy, still benefit the society as a whole .

    If the FTZ brings in much needed cash that would otherwise not be realized , then it is a big plus as would be anything that would ameliorate the effects of the U.S. economic war on the Cuban people.

    We won’t know until it is operating .

  • April 11, 2013 at 7:48 pm
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    Wow! Somehow we’re (mostly) in agreement on this issue. As it stands, this project sounds like a gigantic boondoggle to sell dirt cheap Cuban labour to foreign capitalists for the benefit of Cuban state-run corporations. The people will get screwed.

  • April 11, 2013 at 5:02 pm
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    It still amazes me that the Marxian thinkers of the PCC see “capital” as investment money possessed by foreign capitalists, rather than as the readiness of the Cuban working people to labor and create use-values.

    Instead of freeing up the constipated, bureaucratic economy, by re-establishing private productive property rights, they invite imperialistic enterprise into the country, and hope for an economic dynamism that state monopoly could never deliver.

    I’ve held out hope for a long time that the Cuban revolution might take a new look at Marxism as a counter-revolutionary ideology and program, and possibly correct itself. That hope lingers, but gets dimmer with each passing day.

    Let’s hope that there are things involved in the Mariel Free-Trade Zone that we do not know, and that the experiment will help the Cuban people. As far as showing the world workable socialism however, that ship seems to have sailed.

  • April 11, 2013 at 2:05 pm
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    The concept will be known by what it does for the Cuban society as whole.
    IF this FTZ idea -soon to be a reality- was proposed as a means to create more wealth for all and by principled socialists, then more power to them .

    OTOH if this is a slow slide into some form of neo-colonialist sweat shop arrangement , then no go .
    Given that Cuban wages are really poverty level and even a 50% raise for workers at the port would still be a low wage for a hemispheric manufacturer to have to pay.

    I get a very uneasy feeling about this but still hope it will not sell out, but strengthen the revolution.

    They haven’t sold out yet.

  • April 11, 2013 at 10:25 am
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    The Mariel Free-Trade Zone will become yet another huge white elephant, the misbegotten experiment in instant economic development.

    The idea is that foreign firms will bring their container ships full of raw materials and parts. In the nearby factories, Cuban workers will process these with “value added” ie: a dirt cheap & docile labour force. The finished products will then be re-exported to markets in… where? Not to the US, as the embargo is not going to be lifted any time soon. Does the Cuban government expect Walmart will start lobbying Congress so they can get their cheap crap assembled in Cuba instead of China? Not likely.

    As Moses pointed out, larger container ships won’t go to Mariel if they want to avoid being banned from US ports. The facility will be under-utilized for at lest a decade, meaning the expected returns on investments won’t be flowing in.

    The report mentions comments from foreign businessmen wanting changes in Cuban laws, bureaucracy and financial institutions before they will consider investing in this project.

    This project looks like a “cargo cult” version of economic development. Build things that look like a modern economy, (but without the necessary legal and financial institutions) and then hope it all just naturally appears.

  • April 11, 2013 at 9:46 am
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    The Brazilian conglomerate Odebrecht’s investment in the Port of Mariel deepening project is, in large part, based on the assumption that the US embargo against Cuba will be lifted sooner rather than later. The embargo prohibits ships which have docked in Cuba from docking in US ports for at least six months. Supertankers which can not currently enter Cuban ports because of the shallowness of the waters would not likely enter Cuban waters even after Mariel is deepened if they were precluded from entering US ports for 6 months. Smaller transport ships do not carry the commerce to justify the Mariel investment. Also, many foreign companies are un
    likely to relocate their manufacturing to the Mariel Free-Trade Zone in Cuba if they remain unable to sell their finished products to the US market because of the embargo. Finally, apologists of the regime should be concerned that Cubans are the least likely to benefit directly from these “capitalist tools” designed to invigorate the moribund Cuban economy. While Cuban workers would clearly find private sector jobs in the employ of foreign companies, the lion’s share of profits would leave Cuba with the untaxed goods to be sold abroad. Revenues from those sales would go directly to the coffers of the foreign companies. Refunding export taxes leaves little else for Cuba to benefit. Wasn’t the whole point of the revolution was to prevent this sort of thing?

  • April 11, 2013 at 9:25 am
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    I have the impression that this will have a profound effect on the country. For some, it will be a blessing; for others, a curse.

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