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Cuba moves to safeguard monopoly on imported goods

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(Globalpost/GlobalPost)

By Marc Frank

HAVANA (Reuters) - Three years after opening up retail services, Cuba tightened the reins on Thursday with new regulations aimed at stopping the sale of imported goods at lower prices than those offered by the state.

In 2010, communist-run Cuba allowed retail services in the form of 200 individual activities from clowns, seamstresses, food vendors, taxis and the building trades, to small businesses such as restaurants, cafeterias, bed and breakfasts and home-based movie theaters.

Enterprising residents have taken advantage of some of the categories, for example seamstress and household supplies salesman, to offer imported clothing and supplies in greater variety and at lower cost than the state.

Others buy out available supplies at state stores and resell them at higher prices, which is also banned by the new regulations.

Cubans appeared to oppose restricting the sale of imported goods, but support putting an end to reselling local products.

"I am against the import ban. I can't tolerate the shoddy clothing the state stores sell, they are very expensive and of poor quality," said Xiomara, a Havana nurse who like others did not provide her last name.

"At the same time, things like plumbing and electric supplies, that they buy in the stores to resell at twice the price, that's unbridled robbery," she said.

The opening to small business, along with loosened travel restrictions between the United States and Cuba, has led to a flood of items being brought into the island by travelers. These items, from spices, sauces and beauty products to clothing, hardware and household goods, often are not available locally or are sold by the state at a minimum 240 percent markup.

Thousands of people currently sell the imported goods from their front yards, porches and living rooms in competition with state-run outlets, and many more go door to door without a license and avoid paying taxes.

A year ago, the state dramatically increased customs duties on travelers with the apparent aim of protecting state-run stores from the growing flow of merchandise imported informally.

KEEPING STATE MONOPOLY

Thursday's measures were first announced at a July parliament meeting by the head of the Communist Party's economic reform commission, Marino Murillo, who estimated some 20,000 mom-and-pop businesses, out of more than 300,000, would be affected.

The measures appeared aimed at protecting the state's monopoly on the wholesale and retail sale of goods.

The new regulations, which were published in the official Gazette on Thursday and become law in 30 days, are aimed at "a better regulation of this form of non-state management" opined the Communist Party daily, Granma. It said there were now 436,000 self-employed people, of which around 100,000 work at small businesses, according to the government.

The regulations include a new list of authorized types of self-employment and their descriptions, with the addition of phrases to stop the resale and importation of goods.

For example, the description of a seamstress now has added, "does not include the sale of manufactured or imported clothing," and the description of household goods salesman states, "does not include articles obtained from retail stores or imported (electric appliances, furniture, clothing and shoes, among others)."

Jose, a 45-year-old who sells household supplies from his porch in Havana, said the measure might lead him to close down.

"I sell a lot of locally crafted things, but also stuff from abroad. There is no doubt they have closed the door on me, and if I can't balance the books I'll hand in my license," he said.

Since taking over for his ailing brother, Fidel, in 2008, Raul Castro has pushed for the "modernization" of the state-monopolized economy, promoted some types of small business and farming, including cooperatives, and lifted some onerous restrictions on daily life in the Caribbean nation, such as travel restrictions.

Currently, 78 percent of a labor force of 5 million works for the state and the remainder in the non-state sector mainly work in retail services and farming.

(Editing by Jane Sutton and Doina Chiacu)

http://www.globalpost.com/dispatch/news/thomson-reuters/130926/cuba-moves-safeguard-monopoly-imported-goods