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Adios for Cuba's free zones?
CubaNews / January 2005

By Larry Luxner

Cuba’s free zones could disappear in a relatively short time, warn European executives interviewed by the BBC.

According to the executives, who asked to remain anonymous, the Castro regime has offered them three options: get accredited through the Cuban Chamber of Commerce, form joint ventures with the government or offer their goods on consignment. Otherwise, these companies must leave the country.

Vice President Carlos Lage confirmed these options, adding that “we will do what is convenient in each case, as part of a pro-cess that has been in place for some time.”

Lage, speaking with British journalists, said the zones will not close altogether, “but we are adapting the function, objective and mission of the free zones as zones of interchange, warehousing and commercial relations.”

The free zones were born over a decade ago as a way of luring foreign capital. The Cuban government sought to utilize them as platforms to encourage the establishment of productive enterprises.

In the beginning, the idea was that these tax-free zones would bring money, technnology and markets, in addition to being a source of jobs at a time when the island was facing huge unemployment.

However, most of the companies using free zones today import products that ar-rive in Cuba completely finished — generating few jobs in the process.“

In each free zone, there are only three or four companies that produce something; the rest of us are inherently importers,” said one executive who has already been told to start packing his bags.

The first option, to try to get accredited by the Chamber of Commerce, involves bureaucracy so burdensome that it could take years. The other possibility, forming ventures with a Cuban state company, seems more simple but it implies government control over the business. And working on consignment means that companies leave their products in Cuba and charge according to how much is sold.

“In the next few months,” according to the BBC, “foreign business executives who today operate in the free zones must decide among these three options or leave their Cuba business behind.”

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