The National Capitol Building is pictured at the far end of a street in Havana, Cuba, on Sept. 18.Carl Court/Getty Images
The United States' latest move to ease restrictions on U.S. companies doing business in Cuba is part of a lengthy process that could, in the long run, provide more opportunities for Canadian firms that want to operate or expand there.
Canadian companies have always been free to set up shop in, or trade with, Cuba. But since the U.S. government announced last December that it would restore full diplomatic relations with Cuba and open up travel and commerce, there is the potential for a booming commercial environment on the island, thanks to the American presence.
Ralph Lean, who heads an initiative at Toronto-based law firm Gowling Lafleur Henderson LLP that advises clients keen to do business in Cuba, said there is now widespread interest among Canadians in investing there. Moves, such as Friday's sanctions amendments, will fuel that enthusiasm, he said, because it will help smooth the way for U.S. businesses and tourists to find their way to Cuba and expand overall commerce there.
He points out, however, that the shift in U.S. policy is a slow evolution. "The presidential branch has started the process," he said, but Congress will have to act to make it much more widespread. "That's going to be a little slower. … It is going to happen in increments."
Among the companies considering an expansion in Cuba is Bank of Nova Scotia, which had an extensive eight-branch operation there until shortly after the revolution in 1959. It reopened a representative office in 2012, and chief executive officer Brian Porter said earlier this year that the bank is exploring the possibility of opening a branch.
Scotiabank spokesman Marcelo Gomez-Wiuckstern said Friday that "We are still assessing how we will move forward and what we can do in Cuba."
Trade lawyer Larry Herman, of Herman & Associates, pointed out that increased U.S. activity could also generate more competition for some Canadian companies already operating in Cuba. Canadian travel agencies, for example, which have had the market to themselves, will soon see American competitors elbowing their way in.
Canadian firms "will now face stiffer competition from American companies," he said.
Mr. Herman also noted that some of the more stringent aspects of the U.S. trade embargo are still fully in effect. That includes the Helms-Burton Act, which penalizes some foreign companies trading with Cuba.
The Helms-Burton rules have most famously hit Sherritt International Corp., a Toronto-based resource company that generates the majority of its cash flow from Cuban oil and gas operations, along with a nickel and cobalt mining joint venture. Sherritt cannot sell any of its production in the United States, it cannot use any U.S.-made mining equipment, and it can't raise money in the United States. In addition, many of its directors and officers can't travel to the United States.
Sherritt's senior manager of communications Scott Tabachnick said the normalization of relations between the U.S. and Cuba is "a big step forward" but will have little impact on the company until Helms-Burton is lifted by Congress.
When that happens, however, "it could lead to major gains" for the company, he said. In the meantime "the further easing of restrictions on American companies is another positive step forward for Cuba," he added.