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Senator Flake when he was a representative - you know, we noticed him pretty early.  Caterpillar played a key role starting USA Engage.  We came out with a very hard hitting report card.  There was no curve - A, F, and what have you.  And there were two members that kept getting A-plusses. One was Representative Flake, who greatly believed in the power of trade and the power of engagement, and the other was [Rep.] Vick Snyder from Arkansas, whom some of you may remember.  He was a doctor and, you know, it was sort of counter-intuitive that a Democrat and Republican would share the same views on things. Today you sort of see the same thing with Senator Leahy [D VT] and Senator Flake.  So we're in a good place.  ...

One of the things I've learned is, don't bury the lead.  If you believe in something, say it.  So let me start out with two things.  Everything that Caterpillar makes in the United States is needed in Cuba.  Cuba wants to buy everything that we make.  We produce mining equipment. 

MINING EQUIPMENT
I took a team of Cat executives to Cuba in late April.  They have a mining industry.  There have rich veins of nickel.  They have a big mining presence.  They want to triple it.  And, right now, it's all European equipment.  We want it to be Caterpillar equipment. We didn't even know we didn't have the market till we went down there.  That's the one thing about isolation.  You think you're isolating the other country.  You're really isolating yourself.

CONSTRUCTION EQUIPMENT
Construction: a lot of Japanese equipment.  There are some Chinese trying to get in there, but they're not being very successful.  Actually the Cubans like high-quality products, and they're excited about buying American products. 

POWER GENERATING EQUIPMENT
You still get a lot of brownouts and what have you in Cuba, which brings us to power generation.  We produce power generation equipment in Indiana and in California, Illinois, and it's probably going to be one of the first type of products that we sell in Cuba, because as they expand they're going to need a much more robust power grid. 

 
We want to sell in Cuba.  We want to export to Cuba.  Make no mistake about this.  We're doing this for important commercial reasons.  We believe there will be initial demand for our products, and we believe there is potential for Cuba to be a robust market.

But for it to be a truly robust market, it is going to have to embrace reform.  And that's not going to be easy, because you are going from an economy that is largely closed to one that will have to be much more open to taking advantage of the pent up demand for investment and for American products. 

If the U.S. continues its policy, if it stays strict and says American firms cannot sell there, that demand will go to our competitors. 

ABOUT MY JOB
Let me just say too for some of the newer people in the room, younger people, it's sort of interesting, you know, how you describe your job.  My job:   I put all of the Caterpillar issues on trade into three broad buckets. 

We're always trying to convince other countries to lower their trade barriers on our products.  It's hard.  We do it through trade agreements. We do it through negotiations.  Trade Promotion Authority was the most recent victory.  But it takes a lot of work to convince people to allow you to sell into their countries and do it with minimal barriers.  That's one bucket. 

The second bucket - and these issues tend to be vary contentious - is we want to be able to keep the U.S. market open.  That's why we have been such a staunch opponent of things like Buy American, which sounds great but is often  just protectionism in disguise. 

The third bucket, the item that has always intrigued me the most, is where the U.S. Government says, We don't want you to export.  And then they come up with some cockamamie reason why.  Now, if it is part of a multilateral regime, it makes great sense.  And that was the whole idea of USA Engage.  It was never to be against multilateral sanctions.  Because actually, if sanctions are multilateral, there is a chance of them being successful. 

But what we found is, when you look at the history of unilateral sanctions, sanctions where it is just one country that is imposing sanctions, the track record is terrible.  When we were doing a sanctions history for USA Engage effort, we went back to the Peloponnesian War.  And I think Pericles said it best, What was I thinking? For those of you who don't recall, it wasn't really a good war for the Athenians.  The point being that unilateral sanctions are something that has such a poor track record you need to be extra diligent before you impose them.  You shouldn't be extra diligent when you take those sanctions off. 

It is time to end the trade embargo against Cuba.  It is time to lift the travel restrictions, and it is time for the American business community to articulate that message, amplify that message and amplify that message.

TIMING AND POLICY INITIATIVES
At Caterpillar, we thought we were great at picking timing.  But I have to tell you, sometimes, no matter how smart you think you are, you mess up.  In 1998 when Pope John Paul was going down to Havana, USA Engage had a little bit of money left, and we wanted to say, You know, the Pope going to Havana will be the greatest example of engagement since Nixon went to China.  So we worked together with the business community, and we took out a full page ad with an open letter to the government calling for a new policy toward Cuba.  It was somewhat vague, but it said, now is the time to do something different.  And that was on the Friday before the Monday. 

And the Pope landed in Cuba on that Monday, kissed the ground.  There were 5,000 reporters there, but by about one o'clock in the afternoon, all the key reporters were rushing back to Washington because there was a personal scandal with the President, and that overwhelmed the Cuba issue. The Pope quickly fell to the inside of the Washington Post as far as stories were concerned.

The Pope is going down again, and we are very hopeful that that there is nothing that's going to overwhelm that visit.  We believe this visit will be a possible watershed event as far as the power of engagement and the importance of ending the isolation that we've had toward Cuba. 

CATERPILLER'S 1998 CUBA VISIT AND LATER
Caterpillar went down in 1998.   We felt it was time.  We felt it was a safe place.  We got very little pushback even in 1998.  As part of that trip we visited some hospitals, and we noticed they were suffering from brownouts.  We donated some diesel engine generator sets.  It took us six years to get permission to get those generator sets in place, but in 2004 we were able to do that, and we went back down there. 

By 2004, however, it was clear that this issue wasn't moving forward.  So we put it on the back burner.  We focused on more relevant issues, mainly the free trade agreements with Latin America and Australia.

 
OBAMA AND REPUBLICANS ON CUBA
Fast forward to the Obama Administration.  It looked like they were going to take a slow approach to it.  We got word about two weeks before the announcement in December that something was up.  We thought it was going to be pretty modest. We were shocked when it wasn't.  And we were pleased when it wasn't.

I'm a moderate Republican.  I might be the last one left in this town.  But I have to say, I've been saying good things about the President on this issue.  I think it took a lot of courage, and I believe it is going to go down as one of his true legacies as president. 

When you go down to Cuba, you're going to find the President is very popular.  Of course, when you go down to Panama, you find out that Carter is very popular.  And when you go to Africa, it's George Bush. And when you go to Israel, it's Clinton.  And when you go to China it's Nixon.  So, sometimes these can be regional accomplishments.

But there is no question about it: this is a signature event. It's something the President needs credit for.  But to preserve that initiative, the Administration needs to be bolder than they've been so far on waiving sanctions.  And Republicans have to embrace what they are all about.  Senator Flake articulated it perfectly.  We're about engagement.  We're about commercial activities.  We're about international trade.  And, when it comes to Cuba, we're violating all of those principles. 

CHANGE IN CUBA
Will this result in enormous change in Cuba?  It's going to put pressure on the Cubans.  If they want to truly benefit from the foreign investment that could take place, they're going to have to make changes.  And change is sometimes difficult. So, we're hopeful it will bring about changes. 

SUMMING UP
At the Fourth of July picnics, I thought everyone was going to be talking to me about how important Trade Promotion Authority was.  No one ever brought it up.  But everyone brought up Cuba. When can I go?  When should I go?  What time of year?  Don't go in the summer.  Go in the winter. Is the food good? Yes.  The hotels, are they great? No. They need a lot of investments.

So let me just give you two thoughts.  Ask people to pick the state of the United States that is most like Cuba in terms of size and population.  I've asked a lot of people.  Usually, they pick New Hampshire, Delaware, maybe Connecticut.  It's not any of those.    It's Ohio.  Pennsylvania is close.  The point is that Cuba is much bigger and there is much more potential than people realize. 

Secondly, when you go to Cuba, you're going to be intrigued with a lot of the history, the time warp factor of it.  You're going to see a lot of old cars, cars that are about 60 years old.  They're actually in pretty good shape.  When you open up the hood, you realize, these are some natural mechanics that have kept these things running for sixty years.

At Caterpillar, we don't care about the cars.  What we noticed when we were there is that those cars are being driven on 60-year-old roads.  Now we know something about roads.  What we want to do is focus on rebuilding those roads, providing more power generation, being part of their mining sector, and actually building the types of things that promote engagement from a physical sense - bridges, and roads, hospitals and power.  We'll let you all do the engagement from a people standpoint.  And maybe together we'll have a bright future. 

When you look back at your career in Washington and you name the three things that you worked on that were most important and most fulfilling, I can tell you right now, Cuba will be one of them.