In 1959, Fidel Castro and his group successfully revolted against president Fulgencio Batista. Castro created as the first Communist state in the Western Hemisphere. Since 1960, U.S. and Cuba severed their ties. They maintained diplomatic isolation with each other. For instance, Castro nationalized U.S. - owned properties, hiked taxes on American imports, and established trade deals with the Soviet Union.
For the United States, they slashed the import quota for Cuban sugar and imposed nearly full trade embargo with Cuba. In 1962, President John F . Kennedy established an embargo upon all trade and restricted travel between U.S. and Cuba. Though some adjustments have been made to the trade embargo in order to allow for the export of some U.S. medical supplies and agricultural products to Cuba. However, according to the Cuban government estimates, the embargo results in a loss of approximately $1.126 trillion over the next fifty years.
In 2008, Fidel Castro retired and he handed over the presidency to his brother, Raul Castro. Since his taking office, he announced the reforms which include loosing restrictions on personal freedoms, decentralizing the agricultural sector, relaxing restrictions on small businesses, liberalizing real estate markets, making it easier for Cubans to obtain government permission to travel abroad, and expanding access to consumer goods.
In 2009, President Barak Obama eased restrictions on travel and remittances to Cuba, allowing Cuban-American to send unlimited funds to their family and non-family members in Cuba and permitting travel there for religious and educational purposes. In addition, Barack Obama permitted U.S. telecommunications companies to provide more cellular and satellite service in Cuba.
There was a big change happened on December 17, 2014. Barack Obama and Raul Castro announced the restoration of full diplomatic ties for the first time in more than fifty years.
There are some examples of advantages and disadvantages of maintaining trade embargo with Cuba of the United States.
First of all, the embargo should not be lifted because Cuba has not met the conditions required to lift it. According to U.S. law, Cuba must legalize all political activity, release all political prisoners, and commit to free and fair elections in the transition to representative democracy. Secondly, the cuban government consistently responded with the acts of an aggression to U.S. attempts to soften the embargo, which makes U.S. worried about what would happen if the sanction were fully lifted. Also, even many people from democratic countries traveled to Cuba, it didn't lead to promote any changes in Cuba so that the open travel is insufficient for spreading democracy in Cuba.
By implementing trade embargo, it harms U.S. economy. For example, according to The US Chamber of Commerce, the embargo costs the United States $1.2 billion annually in lost sales of exports to Cuba. In addition, not only for the U.S. economy but also the embargo harms the people of Cuba. Because they are not accepted to access technology, medicine, affordable food, and other goods.
In conclusion, the trade embargo significantly impacts exports, imports, net exports, net capital outflow, and economic growth. Exports and imports for both countries would decrease as a result of the embargo. In terms of net exports, U.S. exports more goods than they import them from Cuba so that U.S. has a positive net exports. Net capital outflow would also be negative by the embargo. Because U.S. lost the tie of investing their goods to Cuba. By lifting the embargo with Cuba, U.S. economic growth would increase by exporting goods to the island and allowing loosen the restrictions of traveling.
References:
Cuba Embargo - ProCon.org. (n.d.). Retrieved April 20, 2016, from http://cuba-embargo.procon.org/
(n.d.). Retrieved April 21, 2016, from http://www.cfr.org/cuba/timeline-us-cuba-relations/p32817
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