International Trade

New Cuba Policy Is a Step Away from a “Free Cuba”

Today, President Trump struck a middle ground on American policy toward Cuba, between those supporting the historic opening of the island nation under the Obama Administration and those calling for total restriction of trade ties between the United States and Cuba in response to delayed progress on human rights. The new policy prohibits American companies from doing business with Cuba’s Armed Forces Business Enterprises Group, a military arm that controls most of the island’s economy. Further, the President convened a task force of governmental and non-governmental organizations “examining challenges and opportunities for expanding internet access in Cuba, including through federal government support and activities that encourage freedom of expression through independent media and internet freedom so that the Cuban people can enjoy the free and unregulated flow of information.” This is a laudable idea that should be commended by all Americans. The President also announced tougher enforcement of American travel policies toward Cuba. Although American tourism to Cuba is banned, “education” visits were interpreted rather broadly under the Obama Administration. Prospective travelers to Cuba will be more heavily scrutinized to ensure they conform to the 12 authorized categories for travel to Cuba. The U.S. Embassy in Cuba will remain open and U.S.-Cuba commercial flights will continue, but the march toward normalization in relations between our two countries has been partially reversed.

The new policies stopped short of rolling back restored diplomatic relations or imposing a new trade embargo on Cuba and reveal the Trump Administration’s pragmatic attitude toward foreign affairs. However, there are a number of reasons greater openness, not less is in the best interests of both the United States and Cuba.

It is in the strategic interest of the United States to strengthen relations with Cuba. A mere 90 miles from the U.S. coast, Cuba occupies an important geostrategic area for the United States and for potential American adversaries. U.S. hostility toward the repressive Castro regime in the early 1960s (which included a number of failed assassination attempts) resulted in the Soviet Union’s placement of nuclear missiles on the island, coming precariously close to sparking a nuclear conflict between the world’s then superpowers. Today, the stakes are less dramatic, but arguably just as significant. The opening to Cuba removed an obstacle not only to positive U.S.-Cuban relations but also bolstered U.S. relations with Latin America, where the U.S. embargo on Cuba had been a sticking point for generations. Canada’s relations with Cuba never experienced the strains the United States’ have with roughly one million Canadians traveling to Cuba annually as well. Strengthening US- Cuba relations can foster overall positive hemispheric relations preventing Cuban alignment with America’s geopolitical competitors like China and Russia.

There is certainly an economic case to be made for closer economic ties with Cuba. If the U.S. removed restrictions to trade and travel, U.S. tourism to Cuba would increase dramatically along with Cuban spending on American goods. A 2016 U.S. International Trade Commission report found two million Americans would likely visit Cuba every year if travel restrictions were lifted. The same report found if U.S. restrictions on American exports to Cuba were lifted, U.S. exports to Cuba in agriculture and manufactured goods would increase to $1.8 billion per year. If restrictions on a number of American agricultural exports to Cuba were lifted, the United States’ share of the agriculture market in Cuba would increase from 16 percent to 34 percent. Though nominally communist, the island has become an incubator for a fragile cadre of entrepreneurs that have emerged in recent years, mostly because of the prospect of business with the United States and reoccurring issues in Cuba’s state-run economy. Continued economic engagement with Cuba could help this small group blossom into a larger (and politically powerful) private sector. In 2016, in part because of the opening to Cuba, a Cuban lung cancer vaccine was tested by the U.S. Food and Drug Administration (FDA) for the first time in America, highlighting the possibilities for innovations resulting from partnerships with Cuban enterprises and universities.

Some have argued the 50 year embargo on Cuba imposed far more costs on the Cuban people than it did on the communist regime of Fidel Castro. By isolating Cuba, the United States limited the economic freedom of ordinary Cubans, while giving Castro a propaganda victory. The more the United States restricts Cubans’ access to American goods and services, the more the communist government of Cuba (now headed by Fidel’s brother Raúl Castro) is shielded from accountability for its own economic failures. Reversing the beginnings of trade normalization with Cuba and the economic opportunities it created for American businesses and the Cuban people would be a boon for the dictatorship of Raúl Castro.

The United States tried isolation and embargo in its Cuba policy for more than half a century, only for Fidel Castro to outlive all the other relics of the Cold War. Opening Cuba to American economic and cultural influence stands a much better chance of turning a bitter enemy into a business partner.

In Depth: International Trade

International trade creates and supports millions of American jobs that offer higher than average wages and drive economic growth. As a testament to the strength of American entrepreneurship, the vast majority of U.S. exporters are not large corporations but small to medium-sized enterprises. Those that doubt the power of global…

+ International Trade In Depth