Why the United States Should Trade with Cuba
Feb 04, 2015
On December 16, 2014, President Obama announced his intention to move towards normalizing U.S. relations with Cuba, at the same that Cuban President Raoul Castro made a similar announcement. The first steps taken that day were the U.S. release of five Cuban nationals convicted in 2001 of espionage against the United States, and Cuba’s release of USAID contractor Alan Gross and a Cuban national who had spied against Cuba on behalf of the U.S. government. The government of Cuba also committed to release 53 Cuban dissidents imprisoned as political prisoners, a process just completed in early January. Both countries also announced plans to exchange ambassadors—at present, each country allows only the presence of a diplomatic interest section for the other, without full diplomatic privileges.
The President also indicated his desire to resume normal trading relations with Cuba, although full removal of trade sanctions will require Congressional action. Even though the embargo was initiated by Executive Action back in the 1960’s by Presidents Eisenhower and Kennedy, much of the sanction structure was subsequently codified into law. At the time of the December 2014 announcement, only food and medical supplies could be legally shipped from the United States to Cuba, under very restrictive financial rules, with Americans desiring to travel to Cuba facing very tight restrictions. Travel to Cuba for tourism is barred for Americans, and travel for other reasons (such as family visits, professional research or journalism) has required specific licenses and approval from an office in the U.S. Department of the Treasury.
On January 15, 2015, the Obama administration announced the concrete steps it was able to take to ease those restrictions under its administrative authority, but unfettered trade and travel between the two countries will have wait further Congressional action. Although recent polling suggests that the American public supports the President’s decision on Cuba—a January 2015 NBC News/WSJ poll found that 60 percent of Americans approved of his actions—strenuous opposition remains in Congress, especially among those of Cuban-American heritage or representing influential Cuban-American populations in their home districts or states.
The arguments against normalization come down to two related strands of reasoning—relaxing restrictions will encourage the Cuban government to persist with their human rights abuses and we should not reward the Cuban government for failing to bring democracy to their country. While we know that broad-based trade sanctions can play a role in convincing recalcitrant governments to change course, such as the effort undertaken (both governmental sanctions and private boycotts) against the apartheid government of South Africa in the 1980’s and 1990’s, there is no evidence that they work when only one country, however powerful, supports such an approach. Instead, our more than 50 years of applying pressure on the Cuban government through our sanctions regime has had no perceptible impact on their behavior, and has given the Castro-led government a ready-made excuse for the poor performance of their economy.
As to the United States not trading with countries whose governments we don't approve of, the independent watchdog group Freedom House annually classifies every country in the world as either being ‘free’, ‘partially free’, or ‘not free’. In 2014, their ‘not free’ list featured 48 countries, including Cuba. According to U.S. Department of Commerce data, the United States trades with every one of those countries, including Cuba, with total U.S. exports (all goods and services) to the 48 countries reaching more than $186 billion in 2013. Total U.S. exports ranged from only $6 million in exports to North Korea up to $121 billion in exports to China. The list includes Jordan, with whom the United States has had a free trade agreement since 2001, and Brunei and Vietnam, who are partners in the ongoing Trans Pacific Partnership (TPP) negotiations. Other noteworthy countries on the list are Saudi Arabia, Egypt, Tajikistan, and Uzbekistan who are strategic U.S. geopolitical partners despite their autocratic governments. Afghanistan and Iraq, who have received billions in assistance from the U.S. government and allied countries over the last decade to rebuild their war-torn economies and political systems, also appear on the list. If we can trade with all of these other countries, why not with Cuba?
As President Obama noted in his 2015 State of the Union address on January 20, our current policy with Cuba is ‘long past its expiration date’. In a future blog posting, I plan to discuss potential U.S. agricultural export opportunities with Cuba resulting from the President’s decision.