Jocelyn MasonKelly McFarlane

Anita NyagaInt’l Trade RelationsDecember 9, 2009

US-Cuban Trade Relations

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Timeline

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Date Action

1959 President Eisenhower officially recognized the government of Cuba, after the Cuban Revolution

October 19, 1960

Prohibition of all exports from US to Cuba

January 3, 1961

US withdrew diplomatic recognition of the Cuban government

1962 President Kennedy broadened the partial trade restrictions imposed by Eisenhower to a ban on all trade with Cuba, except for non-subsidized sale of foods and medicines.

1963 Prohibited travel and financial transactions by U.S. citizens with Cuba

1975 US allows foreign subsidiaries of US companies to sell products in Cuba, and that it would no longer penalize other nations for trade with Cuba

Timeline Con’t

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Date Action

1977 President Carter drops the ban on travel to Cuba

1978 President Carter allows remittances to be sent into Cuba

1981 President Reagan tightened the embargo and re-established the travel ban

1992 Cuban Democracy Act- prohibited foreign-based subsidiaries of US companies from trading with Cuba, travel to Cuba by US citizens, and family remittances to Cuba

1996 Helms-Burton Act- prohibits any non-US company that "knowingly traffics in property in Cuba confiscated without compensation from a US person" can be subjected to litigation and company's leadership can be refused entry into the US

Timeline Con’t

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Date Action

1999 Changes to the embargo, which include: - Sales of some food and agricultural products to private individuals and non-governmental organizations,- An increase in the number of charter flights to Cuba- Increases the amount of money a US visitor can spend on the island from $100 per day to $185 per day.

2001 US companies began selling food to Cuba for the first time since the embargo began

2004 President Bush enforces the travel ban and bans vessels from traveling to Cuban ports from US ports

March 2009 President Obama signs a Congressional spending bill easing economic sanctions and travel restrictions for Cuban-Americans

Embargo Restrictions

TravelRemittancesExport of goods into CubaLimit flight and port activityBusiness

Trade PartnersSubsidiaries

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Goals of the Embargo

Government ReformHuman rights improvementsLimit trade opportunities

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US CUBA TRADE RELATIONSMAJOR ISSUES

The US embargo against Cuba is a financial, economic and commercial sanction that has been in effect since 1960.

The embargo makes it illegal for US corporations to do business with Cuba

US CUBA TRADE RELATIONSMAJOR ISSUES

CUBAN ASSETS CONTROL REGULATIONSIssued on July 10th 1963 under “Trading With the Enemy Act”These regulations affect:

All US citizens and permanent residentsAll organizations and individuals in the USSubsidiaries and branches of US organizations all over

the world

US CUBA TRADE RELATIONSMAJOR ISSUES

Anyone engaging in transactions that involve property in the US and any property that is under US jurisdiction

These regulations are overseen by the “Office of Foreign Assets Control” (OFAC) which is under the Treasury Department

US CUBA TRADE RELATIONSMAJOR ISSUES

RESTRICTIONS

It’s illegal for US citizens to spend money or receive gifts in Cuba unless you have a US government license that is issued by OFAC

RESTRICTIONS Cont.

FinancialCommercial EconomicGeneral license for travelVisitsBan on goods from CubaRemittances Imports and exports

US CUBA TRADE RELATIONSMAJOR ISSUES

President Obama recently directed the Secretaries of State, Commerce and Treasury to take steps to:

“Lift all restrictions on transactions related to the travel of Cuban Americans to Cuba.

Remove restrictions on remittances to family members in Cuba.

Authorize U.S. telecommunications network providers to enter into agreements to establish fiber-optic cable and satellite telecommunications facilities linking the United States and Cuba. “

US CUBA TRADE RELATIONSMAJOR ISSUES

“License U.S. telecommunications service providers to enter into roaming service agreements with Cuba's telecommunications service providers.

License U.S. satellite radio and satellite television service providers to engage in transactions necessary to provide services to customers in Cuba.

License persons subject to U.S. jurisdiction to activate and pay U.S. and third-country service providers for telecommunications, satellite radio and satellite television services provided to individuals in Cuba.

Authorize the donation of certain consumer telecommunication devices without a license.

Add certain humanitarian items to the list of items eligible for export through licensing exceptions.”

US CUBA TRADE RELATIONSCRITICAL ISSUE

•The critical issue here is the embargo itself.•This has led to some unintended consequences such as:

•Humanitarian issues•Castro is using the embargo as a scapegoat for the country’s problems

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Arguments Supporting the Embargo

• Originally was in response to Cuba’s expropriation of ~$1.8 billion of U.S.-owned property in late 1960s (according to the U.S. Foreign Claims Settlement Commission

• An important symbolic protest of Cuba’s lack of political, civil, and economic freedoms and disrespect for human rights

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Arguments Supporting the Embargo

• Supporters of the U.S. embargo against Cuba have contributed nearly $11 million to members of Congress since 2004•The top five recipients: Miami's three Cuban-American Republican members of Congress, John McCain and New Jersey Democratic Sen. Robert Menendez

“I will not apologize for the Cuban-American community practicing its constitutional, democratic right to support candidates who believe in freedom and democracy for the Cuban people over business and tourism interests."

Mauricio Claver-Carone, Director of the U.S.-Cuba Democracy PAC

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Arguments Against the Embargo

Cost to the United States vs. Cost to Cuba• U.S.:• Estimates range from $1.2 - $4.84

billion/year in lost sales and exports• Cuba:• $685 million annually (Cuban government

estimate)• Black markets

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Arguments Against the Embargo

Cost to the United States vs. Cost to Cuba

Beyond the economic costs, the blockade has deprived U.S. citizens of Cuba’s medical breakthroughs:

• First meningitis B vaccine• Treatments for the eye disease retinitis pigmentosa• A preservative for un-refrigerated milk • CimaVax EGF: the first therapeutic vaccine for lung

cancer. 19

Arguments Against the Embargo

Popular Opinion:

• CBS News/NYTimes Poll: • 67% Americans think the US should re-establish

diplomatic and trade relations with Cuba (20% say should not and 13% unsure)

• The UN has voted 18 times (187 – 3 with 2 abstentions) to condemn the embargo including this past October

• The EU has also condemned the embargo20

Arguments Against the Embargo

Special Interests

• Business industry leaders• Agriculture• U.S. travel industry

• Religious and humanitarian leaders including the Vatican

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Arguments Against the Embargo

Benefits realized from the 2000 liberalization of the embargo (The Trade Sanctions Reform and Export Enhancement Act):

• Increases in commerce – total sales of farm products to Cuba have increased from near 0 to ~$700 million in 2008

• Previously dead last, Cuba is now the 6th largest Latin American customer for U.S. agricultural products22

Arguments Against the Embargo

Castro uses the embargo as a scapegoat for the economic and social welfare problems in Cuba

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Is trade embargo with Cuba hurting U.S.

interests?

- From CNNPolitics.com

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Video

"The embargo has been a failure by every measure. It has not changed the course or nature of the Cuban government. It has not liberated a single Cuban citizen. In fact, the embargo has made the Cuban people a bit more impoverished, without making them one bit more free. At the same time, it has deprived Americans of their freedom to travel and has cost US farmers and other producers billions of dollars of potential exports."

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Daniel Griswold, director of the Cato Institute's Center for Trade Policy Studies

(June 2009)

Lift the Ban26

Policy Proposal

Sources

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http://www.cubatrade.org/http://www.cubatrade.org/CubaExportStats.pdfhttp://www.bis.doc.gov/policiesandregulations/regionalconsidera

tions/cuba.pdfhttp://www.aei.org/outlook/8739Robles, Francis. “U.N. condemns Cuba embargo by U.S.”

http://www.mcclatchydc.com/251/story/77950.html . 10/29/2009Pepper, Margot. “The costs of the embargo.”

http://www.dollarsandsense.org/archives/2009/0309pepper.htmlClark, Lesley. “Money talks: Report links donations, Cuba

embargo support.” http://www.mcclatchydc.com/251/story/78884.html. 11/16/2009

Gerz-Escandon, Jennifer. “End the US-Cuba embargo: It's a win-win.” http://www.csmonitor.com/2008/1009/p09s02-coop.html

Sources

http://www.pollingreport.com/cuba.htmhttp://www.treas.gov/offices/enforcement/

ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/

ofac/programs/ascii/cuba.txt\http://www.nytimes.com/2009/04/13/us/

politics/13cuba-factsheet.html?_r=1&pagewanted=all

http://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=all