* Measure affects 20,000 small businesses
* Vendors demand licenses
* State seeks to defend import monopoly
By Rosa Tania Valdes
HAVANA, Oct 3 (Reuters) - The Cuban government appearedheaded for its first serious clash with the island's newlycreated "non-state" sector of small businesses over aprohibition on the sale of imported clothing and other goods.
The decree issued last week potentially affects some 20,000small businesses and their employees who sell clothing, hardwareand other goods brought in informally by travelers, some of whomvisit the Caribbean island regularly carrying merchandise fromthe United States, Spain and Latin American countries.
Three years ago the government of President Raul Castro, whoreplaced his brother Fidel in 2008, opened up retail services to"self employment" in the form of 200 licensed activities fromclowns, seamstresses, food vendors, taxis and the buildingtrades, to small businesses such as restaurants, cafeterias, bedand breakfasts and entertainment.
The government said the measure aimed at absorbing excessstate labor, improving services, eliminating inefficiencies andbringing black-market activity above ground.
There are now 436,000 self-employed people, of which around100,000 work as employees of small businesses, according to thegovernment.
Enterprising residents have taken advantage of some of thecategories, for example seamstress and household suppliessalesman, to offer imported clothing and supplies in greatervariety and at lower cost than the state.
Entrepreneurs, their employees and clients waxed furiousover the clothing sale prohibition this week in the CentralHavana district of the capital where a few dozen vendors had setup shop on a vacant lot to sell clothing, shoes andundergarments.
"We call on the authorities to reconsider. We have a lot ofproduct and money invested in this," Justo Castillo, arepresentative of the official labor federation which has triedto organize the self employed, said.
"Banning this means unemployment for these people forcingthem to do whatever. They will move into the black market,return to illegal activity," he said, as the crowd that hadgathered applauded.
Castro has instituted a series of market-oriented reforms toCuba's Soviet style economy where the state still employs 79percent of the 5 million-strong labor force.
Last week's measure appears aimed at protecting the state'smonopoly on the wholesale and retail sale of imported goods,which has resulted in widespread black-market activity due toexorbitant prices and shoddy quality.
The regulation includes a new list of authorized types ofself employment and their descriptions, with the addition ofphrases 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 importedclothing."
The general public is also up in arms over the measure.
"There goes the chance to buy a pair of shoes or jeans thatare worthwhile," said retiree Ramon, who asked his last name notbe used.
The public clamor is so loud that it appears to have reachedcommunist authorities.
Blogger Yohandry Fontana, who is closely identified with thegovernment, released a series of tweets this week criticizingthe measure.
"Bad news," he said in one of the tweets.
"Wouldn't it be easier, I ask, to approve the sale ofimported clothing by the self employed than push this activityinto the black market?"
The new measure has yet to be enforced, at least in Havanaeven though authorities say it is now the law of the land.
José Barreiro Alfonso, an adviser to the Ministry of Laborand Social Security, said in an interview on Thursday with theofficial Juventud Rebelde newspaper that vendors would bevisited on an individual basis.
"It is an effort to have an individual conversation and gaintheir understanding of the law," he said.
- Small Businesses
- Consumer Discretionary