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Cuba And Cigars: Advancing Relations Could Hinge On Fair Regulations

Apr 4, 2016 | By Mary L. Landrieu
Cuba And Cigars: Advancing Relations Could Hinge On Fair Regulations

President Obama just embarked upon a historic trip to Cuba, becoming the first American president to do so since Calvin Coolidge in 1928. While both sides of the political aisle can debate the virtue of such a trip, it is important to highlight some underlying issues that frame the discussions that are taking place.

First, there should be a commitment to advance political reform and civil liberties for the Cuban people as we pursue economic and trade relations. Congress should thoroughly review issues of human rights and personal freedom in Cuba as they are advancing any of over a dozen pieces of filed legislation intended to normalize relations.

However, simultaneous with the President's effort to improve this relationship with Cuba, the U.S. Food & Drug Administration is working on regulations that could threaten one of Cuba's most promising exports, and a significant export product for several nations in Latin America—the premium handmade cigar.

Since December 17, 2014 when the President announced to the nation his initiative to improve relations with Cuba, the one consistent image of the island nation has been the cigar. References to Cuban cigars, as a staple of their economy and international symbol of the country, began to surface throughout our national media. The immediate discussion turned to "Will we be able to get Cuban cigars into the United States?" Rules on this were being addressed by the Treasury Department as recent as last week and Americans traveling to Cuba in recent months have been permitted to return with up to $100 of cigars for personal consumption.

During a February speech to the U.S. Chamber of Commerce, Cuban trade minister Rodrigo Malmierca Díaz called upon the Administration to allow for exports of various Cuban products, specifically noting cigars.

On the other side of Washington, however, the U.S. Food & Drug Administration is pursuing the regulation of premium handmade cigars, threatening the very industry that has by some estimates over 250,000 jobs within 50 factories in Cuba.

It is the implications this regulatory program has for the rest of Latin America that is even more troubling. The nations of Honduras, Nicaragua and the Dominican Republic have over 300,000 jobs associated with the premium cigar industry, and from seed to shore, these jobs serve as a foundation for each nation's economy.

Twice, in a joint letter to six federal agencies including Commerce, Agriculture, State, Homeland Security and the National Security Council, each respective Ambassador to the United States from these three nations, has voiced their concern on the FDA effort to regulate premium handmade cigars.

The Ambassadors noted, "No regulatory measure should threaten such jobs, and hence raise the specter of political and economic consequences within our region." The FDA's own notice in the Unified Regulatory Agenda states "this regulatory action will be likely to have international trade and investment effects."

The Honorable Jorge Alberto Milla Reyes, Ambassador to the United States from Honduras, has also raised the implications of cigar regulation on the question of immigration. He stated, "There are, indeed, international trade and economic implications for with regulating premium cigars from Honduras and throughout Latin America. The government of Honduras values the investment and source of employment provided by the premium cigar industry, and knows well how it provides for over 35,000 families in Honduras and 300,000 in the region. We cannot underestimate how this contributes to stability, especially at this time of concern over such issues as immigration and security."

Regulating and threatening the stability of the premium cigar industry, which is more of an art form than public health issue, would also seem to run counter to the efforts by vice president Biden to advance economic and trade opportunities in the region. While Central American aid packages are introduced in Congress, the FDA is jeopardizing one of the stable sources of employment within this politically and economically sensitive region.

Under this regulatory proposal, new cigar blends would have to submit to the FDA for "premarket approval," through a costly and cumbersome application process, that could take years for processing. One estimate is that it could take 5,000 hours, just for the application. And because of a "predicate date" of 2007, all cigars since then coming into the U.S. market, whether Cuban or the rest of the Latin America and Caribbean Basin, would be subject to a "new product" set of standards to enter, that few could afford. It would destroy the boutique sector of the industry, and halt any limited release commemorative cigars. The Small Business Administration's Office of Advocacy, in a comment letter to the regulatory docket found FDA's Initial Regulatory Flexibility Analysis "deficient—because it does not adequately describe the impacts on all types of newly covered small entities." I could not agree more. Small businesses in America, Cuba and throughout Latin America would be devastated.

The premium cigar industry also represents thousands of American jobs, through over 2,000 retail businesses, and a supplier and logistics network that spans from the Port of Miami to the distribution houses of Pennsylvania. It is hundreds of family farms from Lancaster County in the heart of Amish country, to the Connecticut River Valley. Small businesses from The Cigar Factory on Decatur Street in New Orleans, to El Titan De Bronze in the Little Havana community of Miami. These artisan businesses could never sustain federal regulation.

As with most regulations, there could be numerous unintended consequences if there is an effort to treat Havana any differently than Estelí, Danlí or Santiago. The notion of an American bureaucracy negatively treating an industry that is purely for discerning adults, and serves as a source of invaluable jobs from the Pinar del Río region of Cuba to the Jamastran Valley of Honduras.

Let's hope the President now has a better understanding of how this product of economic and cultural significance to Cuba, Latin America and the United States fits into a larger picture that warrants a balanced approach to regulation.

Mary L. Landrieu served as a member of the United States Senate from 1997–2015, where she chaired the Senate Small Business Committee, and Energy Committee. She is now with the firm of Van Ness Feldman, and is a consultant to Cigar Rights of America and the International Premium Cigar & Pipe Retailers Association.

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