BY MIAMI HERALD STAFF

The three-level Carlos III shopping center in downtown Havana is a showcase of embargo-skirting goods. There are Wilson baseball caps, Westinghouse light fixtures, Proctor-Silex juicers and GE microwave ovens -- and that's on the second floor alone.

On the streets outside, trendy Sean John jeans and Ray-Ban sunglasses fight for space with ``Che'' Guevara T-shirts. Dell computers power some government ministries, and at least one Boeing 767 plies the skies for Cuba's national airline.

With so many U.S. goods on display, Cubans might be forgiven for thinking the nearly five-decades-old embargo doesn't so much keep products out as make them more expensive.

"The embargo is not between America and Cuba,'' said Manuel, 46, a Havana cab driver. "It's between Cubans -- those who can afford things and those who can't.''

While it is illegal for most U.S. companies and their subsidiaries to do business on the island, their products still flood the markets.

Some items -- such as food, agricultural goods and medicine -- are there legally under exceptions to the embargo. But others are spirited in by entrepreneurs, government front companies and independent distributors that worry little about U.S. laws.

"There is nothing we make that can't be purchased from foreign suppliers,'' said Washington, D.C., attorney Robert Muse, an embargo expert. "To the extent that they (Cubans) want it, they can get it.''

PRODUCT PATHWAYS

Nestled inside the Hicacos shopping center on Cuba's exclusive Varadero beach is a shop that sells dozens of models of New Balance running shoes.

Speaking from the company's headquarters in Boston, New Balance Vice President Edward Haddad said the company complies with the embargo but speculated that the sneakers may have been purchased from the company's independent Central American distributor that operates out of the duty-free zone in Colón, Panama.

Entrepreneurs from across the Caribbean stock up on a variety of goods in Colón for resale, he said.

"One of the reasons there may be so many American goods in Cuba is due to the nature of the way that region operates,'' he said. "A lot of it is cash and carry. They will go into the Colón Free Zone, buy products and bring them back. And the brand owners are completely unaware of what's going on.''

Kim Freeman, a GE spokeswoman, could not explain how the company's microwave ovens ended up on the shelves of Carlos III with a price tag of 260 convertible pesos, known as CUCs, or about $312.

"G.E. consumer industrial agreements with our distributors require them to comply with U.S. trade control regulations, which prohibit sales by U.S. companies to Cuba,'' Freeman said in a statement. Carlos III is managed by the state-owned conglomerate CIMEX. "We will investigate and take appropriate action if we confirm those agreements have been breached,'' she added.

Even items the size of jetliners have a way of slipping through the cracks.

Take, for instance, the Boeing 767 operated by Cubana de Aviación. Built in the early 1990s, the plane began commercial service with Brazil's Varig airline before being transferred to a Portuguese charter company, according to Airframes.org. The aircraft was eventually acquired by STP Airways of Sao Tome e Principe in 2008. Since then, the plane has been spotted operating for Cubana at several airports in Europe, according to three aircraft-tracking sources.

"We can't control how Boeing airplanes are traded in the after-market,'' said company spokesman Nicolaas Groeneveld-Meijer, who emphasized that the company adheres to the embargo. "Airlines of other countries are free to sell their Boeing airplanes to Cuba second- or third-hand. We don't provide technical support to those airplanes, in accordance with U.S. restrictions.''

In some cases, businesses can be found liable if their products end up in Cuba's stores.

Since January, the Office of Foreign Asset Control, or OFAC, has sanctioned eight companies and individuals for violating the embargo. In July, OFAC fined Philips Electronics of North America $128,750 after one of its foreign affiliates sold medical equipment to Cuba. The company voluntarily disclosed the violation but declined requests to talk about the issue.

While that case was clear-cut, most are not, said Timothy Ashby, a Cuba expert with the law firm of Sonnenschein, Nath & Rosenthal in Miami. In some cases, Cuban-American travelers legally take in consumer goods that end up on the black market; other times, the products enter from third countries without the manufacturer's knowledge.

All the holes in the embargo make it "virtually impossible to sanction producers,'' Ashby said.

LOCAL BUYING POWER

While U.S. consumer goods may be readily available on the island, they are not always within reach of average Cubans.

Take the Wilson baseball cap, for example. With a price tag of 11.20 convertible pesos, that makes it about $14. Now consider that base minimum wage on the island is about $10 a month. If the same cap were adjusted for the U.S. minimum wage, it would cost $1,624. (The comparison is not entirely accurate, though, for a nation where housing, food and medical treatment are either free or subsidized.)

Although prices on many imported goods are exorbitant by Cuban standards, on a recent weekday Carlos III and other stores that sell such products were buzzing with shoppers.

José, 36, went to Trasval, a massive hardware store crammed full of ProLine tool sets and Rubbermaid trash cans, to find a new horn for his 1980s-era Peugeot.

It took him about three months to raise the 36 CUCs, or $43, he needed to make the purchase.

"I got lucky,'' said José, a cab driver. "A guy gave me a $20 tip for taking him to Varadero.''

The rest, he saved in dribs and drabs.

While virtually all imported goods are sold in CUCs, the vast majority of Cubans are paid in pesos, which trade at a rate of 24 per CUC.

Cab drivers and those employed in the tourism industry are better off than many because they often have access to tips in CUCs, which they are expected to turn over to the government but sometimes keep.

Those reliant on government salaries often suffer.

"The only way you can walk in there (CUC stores) is if you have relatives abroad sending you money or you are doing something illegal,'' said Miguel, 46, a physical education teacher who said he makes about $15 per month. "We live in a system that makes everyone a criminal.''

Given time, many will admit that they've skimmed from work or done black-market labor to earn extra money.

The popularity of the CUC stores and their imported goods becomes apparent when compared with what pesos buy.

The motto of the Variedades 23 y 10 store in the Vedado neighborhood is "Everything in the local currency.''

But on a recent weekday, the sprawling store -- which used to be a Woolworth's -- featured empty display cases powdered with dust and a smattering of items.

There were T-shirts for 80 pesos ($3.30), men's slacks for 160 pesos ($6.67) and packaged food. But most of the activity revolved around a small butcher's station, which was displaying four pieces of meat: two types of mixed sausage, a slab of bacon and a chicken.

"This isn't particularly empty,'' said an elderly woman as she wandered off with a loaf of bread and a pair of flip-flops. "Sometimes there's more, but sometimes there's less.''

However, as market forces and U.S. business interests keep chipping away at the embargo, some believe the day is not far off when U.S. companies can trade with the island directly.

"The embargo doesn't really work, and there's no good way of enforcing it,'' said Ashby, the Miami-based lawyer. "You won't see the embargo go away all at once, but I think within seven years most of it will be gone.''

Miami Herald reporters Al Chardy and Rui Ferreira contributed to this report. In addition, a Miami Herald staff writer reported from Havana. The name of the reporter and the last names of the people interviewed in Cuba were withheld because the journalist lacked the visa required by the Cuban government to report from the island. The government routinely denies Herald requests for such visas.