Trade and Cuba

Blog #1

Bridget Boenke

April 19, 2016

            When Fidel Castro overthrew Cuban president Fulgencio Batista in 1959, the U.S. dissolved all ties with Cuba by forbidding trade and restricting travel to the country. As Fidel Castro increased trade with the Soviet Union, the U.S. decided to stop importing and exporting goods to and from Cuba. A “full economic embargo” was put into place by President John F. Kennedy. Major issues including the Cuban Missile Crisis, the Bay of Pigs invasion, and the accusation of Cuba being a “state sponsor of terrorism” created hostility between the U.S. and Cuba. However, once Barack Obama took office, he decided it was time to work towards ending this embargo. 2014 and 2015 were turning points, where Barack Obama and Raúl Castro agreed to “restore full diplomatic ties” and exchange prisoners. Since then, people have been able to travel to Cuba with more ease and personal communication to the country has improved. However, according to the 1996 Helms-Burton Act, “the embargo may not be lifted until Cuba holds free and fair elections”(Renwick, Lee, and McBride). Raúl Castro has stated that he will be stepping down in the next few years, but Congress (the body that decides to life the embargo) does not appear confident that they will be lifting the embargo in the next few years. Since becoming the 5^th largest trading partner with Cuba in 2007, the U.S. has been able to work towards the end of this embargo. Castro has also stated he is making efforts to re-do the Cuban economy.

The trade in Cuba has suffered tremendously since the embargo; an estimated $1.126 trillion has been lost because of these restrictions (Renwick, Lee, and McBride). Sugar, a good exported to the U.S. from Cuba, is just one example of the exports affected. Of the 5 years reported on the UN Comtrade website, the amount of goods exported to the U.S. has fluctuated, ranging from $352 million in 2011 to $718 million in 2008 (“Top Exporters”). The amount of goods imported into the country has been on the rise since 1999, the first year Cuba reported to UN Comtrade. That year, imports reached a total of $4.39 billion. In 2006, the most recent report of Cuba, that import total had risen to $10.17 billion. (“Top Importers”). Even though there aren’t many years reported for Cuba, we can see that their total imports have been increasing over the years. The net exports for Cuba with the U.S. is typically a positive number in the hundreds of millions, $465 million in 2012 (“Data”).

            Since diplomatic ties between the U.S. and Cuba have been reestablished, Americans are allowed to invest in small businesses in Cuba. Because of this, Cuba’s net capital outflow is negative. There are more foreign purchases of domestic assets than domestic purchases of foreign assets. Since Castro’s efforts to reform the economy of Cuba, economic growth has been increasing. More people are traveling to Cuba, more investments are being made in small businesses, communication is more accessible, and Cubans are able to get good jobs.

Renwick, Danielle, Brianna Lee, and James McBride. “U.S.-Cuba Relations.” CFR Backgrounders. Council on Foreign Relations, 24 Mar. 2016. Web. 18 Apr. 2016.

“Top Importers and Top Exporters and Data.” Graphic. SAS. UN Comtrade, n.d. Web. 18 Apr. 2016.