Caterpillar dealer to open shop in Cuba special development zone

HAVANA (Reuters) - Rimco, Caterpillar Inc’s dealer for Cuba, said on Wednesday it would open a distribution center for the U.S. heavy equipment maker at Havana’s Mariel special development zone, making it the first U.S. company to open up shop there.

A view of the booth of Rimco, Caterpillar Inc's dealer for Cuba, at the 35th Havana International Fair in Havana, Cuba, November 1, 2017. REUTERS/Alexandre Meneghini

The deal, signed this week, came as worsening U.S.-Cuban political relations curb U.S. business interest in the Communist-run island of 11 million inhabitants in the wake of the historic 2014 detente.

The United States voted against a U.N. General Assembly resolution that was passed on Wednesday calling for the lifting of the decades-old U.S. economic embargo against Cuba, reversing an abstention by Washington last year. [nL2N1N71KF]

“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, Vice President of the privately-held Puerto Rican company Rimco, said in a news conference at Cuba’s annual trade fair. “We have a license from the commerce department and other agencies.”

A license from the Treasury Department’s Office of Foreign Assets Control (OFAC), which handles economic and trade sanctions, was not necessary, she said.

Mariel Director Ana Teresa Igarza said at the news conference that Rimco hoped to open up shop in 2018, and the deal was one of 30 projects, including 11 Mariel had signed off on this year.

Cuba created the zone, just west of Havana, three years ago to attract foreign capital with tax and customs breaks to boost its anemic economy. It hopes the port there could become a hub for the Caribbean and Central and South America.

It is controlled by Almacenes Universales, a company belonging to the Armed Forces Business Enterprises Group (GAESA), which could prove problematic for U.S. companies.

U.S. President Donald Trump in June ordered a ban on business dealings with the military as part of a tightening of trade and travel restrictions.

The new regulations, including that ban, have yet to be unveiled. The Trump administration has said that any deals signed before then would be grandfathered in.

Caterpillar has been building relations with Cuba, which needs to update its ageing infrastructure, and lobbying to lift the U.S. embargo on the country.

Former Chief Executive Doug Oberhelman visited in May last year to meet with the government and make a donation to the foundation that preserves the heritage of U.S. writer Ernest Hemingway in Cuba.

Reporting by Marc Frank; Writing by Sarah Marsh; Editing by Richard Chang and Susan Thomas