Trade Embargo Between U.S. and Cuba

Trade Embargo Between U.S. and Cuba

Justin Snellings
Dr. Kassens
ECON 122
4/20/16

The relationship between the United States and Cuba has varied in the past 50 years. After the United States attempted to shut down Cuba's government in 1961, the Soviet Union began to build a missile station on the island which led to the Cuban Missile Crisis. The U.S. decided to create a policy against Cuba regarding diplomatic isolation and a trade embargo. A few decades later, there were add-ons to the policy which stated that Cuba must hold fair elections with a change to a democracy with the removal of Castro family. For the embargo to be lifted, the government must completely re-organize itself. Although the embargo includes many restrictions, there was an agreement for exports such as medical supplies and agricultural products from the U.S. As the years passed, the restrictions were reformed and less harsh. The relationship between Cuba and the United States improved. The countries were more open to each other until a U.S. citizen, Alan Gross, was arrested in Cuba. He was accused of attempting to destabilize the Cuban regime. Simultaneously, Raul Castro admitted that he wanted to secure the “Cuban Five”, which were Cuban intelligence officers were arrested in the United States in 1998 (Renwick, Lee, and McBride). Many believed that human rights were a major concern in Cuba. Much of the freedom was in question.

In 2014, President Obama came to an agreement with Raul Castro to restore full diplomatic ties. They agreed to swap prisoners which consisted of three of the “Cuban Five” and an intelligence asset for the U.S., Rolando Trujillo. Alan Gross was also released in the process. Furthermore, the U.S. agreed to ease restrictions on travel, banking, and remittances. Cuba also released 53 prisoners who were acknowledged by the United States as political dissidents.  The two countries bond grew after President Obama visited Cuba, meeting with Castro. He restated his call to lift the embargo but that Cuba still need changes to their political system. The public opinion varied in which the majority of Americans supported the diplomatic ties. The U.N. General Assembly approved a resolution against the trade embargo where 188 countries backed the decision (Renwick, Lee, and McBride). The United States was one of two countries who did not agree with the resolution. The embargo is reportedly unlikely to be lifted any time soon. 

The embargo impacted the trading process of the two countries significantly. Cuba reportedly announced that they have lost more than $1 trillion because of the trade restrictions (Renwick, Lee, and McBride). According to UN Comtrade, Cuba’s top imports include electrical equipment, machinery, and other products.These were products that Cuba was bringing in to sell domestically. The United States exports consisted of mostly machinery such as aircrafts and other products which negatively impacted Cuba’s net capital outflow because they lost a major source of their production. The amount of exports over imports for a country matches its net capital flow or trade balance. The embargo decreased the United States’ net capital outflow because they were not exporting machinery to Cuba along with electrical equipment (UN Comtrade). At the time, products were sold domestically rather than to foreign countries more often than not. Sugar, pharmaceuticals, and tobacco products were all big products that Cuba sold externally so the U.S. was not able to obtain those products (UN Comtrade). Although the trade balances for both countries are positive, the restrictions created a downfall in net exports. However, Raul Castro has acknowledged the necessary changes to the economy. Some of the changes include easier approaches to consumer goods, easier for citizens to travel abroad, and less restrictions on small businesses who are important to the economy (Renwick, Lee, and McBride). 

References

 Renwick, Danielle, Brianna Lee, and James McBride. "U.S.-Cuba Relations." Council on Foreign Relations. Council on Foreign Relations. Web. 20 Apr. 2016.

 http://www.cfr.org/cuba/us-cuba-relations/p11113

 "UN Comtrade Demo | SAS® Visual Analytics." UN Comtrade Demo | SAS® Visual Analytics. Web. 20 Apr. 2016.