U.S. & Cuba Trade Embargo

Emily Comer

Blog Post #1

21 April 2016

Following the overthrow of Fulgencio Batista by Fidel Castro in Havana in 1959, Castro increased Cuban trade with he Soviet Union and increased taxes on American imports. In return, the United States ceased Cuban sugar imports and placed a ban on exports to Cuba, which was then boosted into an embargo with travel restrictions. By 1961 there were no longer diplomatic ties between the United States and Cuba and the 1996 Helms-Burton Act enforced that by stating that the embargo would remain unless Cuba became a democratic government and was no longer under Castro. The only trade that occurs with the embargo in place is some medical and agricultural supplies from the United States. It is estimated in the article that this embargo between Cuba and the United States has created an economic loss of $1.126 trillion dollars in trade for Cuba. Since economic principles state that trade makes everyone better off, Cuba and the United States losing each other as trading partners due to the embargo must negatively affect them. With the two countries not being able to import or export to one another, they have to try to find alternatives, which could be importing and exporting elsewhere or producing the goods ontheir own. This can easily become costly and likely plays a role in Cuba’s slow economic growth. Based on the information from the UN Comtrade website, Cuba's imports are much higher than their exports, which means that the country has negative net exports. Also, because net exports and net capital outflow are equal to one another, this data shows that Cuba's net capital outflow is negative. This means that Cuba has to purchase many more goods from outside the country than they are selling. Since this is true, it can be determined that Cuba's has very little economic growth, compared to other countries with positive net exports and net capital outflow. Cuba's need to import more resources would not be as bad for their economy if there was not a trade embargo between them and the United States, because Cuba can get goods cheaper from its surrounding areas. Since the United States is close, it is likely that Cuba would be able to get its goods at a less detrimental price than they currently are paying from distant countries. In January 2015, the Unites States began allowing people to travel to Cuba for special purposes without a government license and airlines began flying normal commercial flights to the country. Also, it relaxed some of the economic sanctions like the allowing the use of U.S. credit cards and shipping construction materials to private companies in Cuba. A year later, in January 2016, and then again in March 2016, the trading and travel regulations became even lighter. Although things have gotten better, it isn't likely that Helms-Burton will be repealed soon, which means that the two countries will continue to negatively affect one another's economic growth because of the embargo. 

"U.S-Cuba Relations." Council on Foreign Relations. Council on Foreign Relations, n.d. 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. SAS, n.d. Web. 20 Apr. 2016. <http://www.sas.com/software/visual-analytics/demos/un-comtrade-basic.html>.