Cuban Barriers May Hinder Trade, Investment: ITC Report

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Barriers linked with Cuba’s state-controlled economy may make it hard for foreign partners to trade or invest in the country, but the lifting of restrictions could expand US exports, especially US farm products, the International Trade Commission (ITC) said in a report released Apr. 18. Link to report.

The report, requested by the Senate Finance Committee, will likely be an important tool as the Obama administration continues to call for an end to the decades-old US trade embargo on Cuba.

US sanctions on Cuba have “largely prevented” US companies and investors from entering the Cuban market, the report said. If US restrictions are lifted, US exports could be expanded, but “Cuban nontariff measures, institutional and infrastructural factors, and other barriers, including those associated with a non-market, state-controlled economy, still exist and may affect the ability of foreign partners to trade with or invest in the country,” according to the ITC.

US agricultural exports to Cuba could see significant gains from the removal of US trade restrictions, the ITC said.

“For manufactured goods,” the agency said, “exports would likely increase somewhat after the removal of US restrictions, with prospects for larger increases in the longer term, subject to changes in Cuban policy and economic growth.” Cuba imports many of the manufactured items it once produced. The US can ship most items at a lower cost than competitors, the ITC said. US services exports probably wouldn’t grow significantly in the near term, but could increase over a longer time span, the agency said.

Factors that could hinder US trade and investment include the Cuban government’s control of trade and distribution, limits on foreign investment and property ownership, dual currency and exchange rate systems, as well as politically motivated decisions. Customs duties and procedures and sanitary and phytosanitary measures on agricultural imports don’t appear to significantly affect trade, according to the ITC.

Background. Cuba ranked as the seventh-largest US export market before the US imposed restrictions. In 2014, Cuba was the 125th-largest US market, with US exports to Cuba reaching $299 million, according to the report.

Note: There are several interesting tables on Cuba agricultural trade over the years, as well as the estimated effect on exports of eliminating U.S. export financing and travel restrictions to Cuba on agricultural exports, by state. There are also comments on individual ag commodities.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.