Trade Relations.fall 2009 (Team 7 --Cuban Embargo)

7/29/2019 Trade Relations.fall 2009 (Team 7 --Cuban Embargo)

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Jocelyn Mason

Kelly McFarlaneAnita Nyaga

Intl Trade RelationsDecember 9, 2009

US-Cuban Trade Relations

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Timeline

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Date Action

1959 President Eisenhower officially recognized thegovernment of Cuba, after the Cuban Revolution

October 19,1960

Prohibition of all exports from US to Cuba

January 3,1961

US withdrew diplomatic recognition of the Cubangovernment

1962 President Kennedy broadened the partial traderestrictions imposed by Eisenhower to a ban on alltrade with Cuba, except for non-subsidized sale offoods and medicines.

1963 Prohibited travel and financial transactions by U.S.citizens with Cuba

1975 US allows foreign subsidiaries of US companies tosell products in Cuba, and that it would no longerpenalize other nations for trade with Cuba


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Timeline Cont

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Date Action

1977 President Carter drops the ban on travel to Cuba

1978 President Carter allows remittances to be sent intoCuba

1981 President Reagan tightened the embargo and re-established the travel ban

1992 Cuban Democracy Act- prohibited foreign-basedsubsidiaries of US companies from trading withCuba, travel to Cuba by US citizens, and family

remittances to Cuba1996 Helms-Burton Act- prohibits any non-US company

that "knowingly traffics in property in Cubaconfiscated without compensation from a USperson" can be subjected to litigation andcompany's leadership can be refused entry into the

US


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Timeline Cont

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Date Action

1999 Changes to the embargo, which include:- Sales of some food and agricultural products toprivate individuals and non-governmentalorganizations,

- An increase in the number of charter flights toCuba- Increases the amount of money a US visitorcan spend on the island from $100 per day to$185 per day.

2001 US companies began selling food to Cuba forthe first time since the embargo began

2004 President Bush enforces the travel ban andbans vessels from traveling to Cuban ports fromUS ports

March 2009 President Obama signs a Congressionalspending bill easing economic sanctions and

travel restrictions for Cuban-Americans


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Embargo Restrictions

TravelRemittances

Export of goods into Cuba

Limit flight and port activityBusiness

Trade Partners

Subsidiaries5


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Goals of the Embargo

Government Reform

Human rights improvements

Limit trade opportunities

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US CUBA TRADE RELATIONSMAJOR ISSUES

The US embargo against Cuba is a financial,economic and commercial sanction that hasbeen in effect since 1960.

The embargo makes it illegal for UScorporations to do business with Cuba


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CUBAN ASSETS CONTROLREGULATIONSIssued on July 10th1963 under Trading With the Enemy Act

These regulations affect:

All US citizens and permanent residents

All organizations and individuals in the US

Subsidiaries and branches of US organizations all overthe world


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Anyone engaging in transactions that involve propertyin the US and any property that is under US

jurisdiction

These regulations are overseen by the Office ofForeign Assets Control (OFAC) which is under theTreasury Department


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RESTRICTIONS

Its illegal for US citizens to spend money or receive giftsin Cuba unless you have a US government license that isissued by OFAC


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RESTRICTIONS Cont.

Financial

CommercialEconomic

General license for travel

Visits

Ban on goods from Cuba

Remittances

Imports and exports


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President Obama recently directed the

Secretaries of State, Commerce and Treasury totake steps to:

Lift all restrictions on transactions related to the travel of

Cuban Americans to Cuba.Remove restrictions on remittances to family members inCuba.

Authorize U.S. telecommunications network providers toenter into agreements to establish fiber-optic cable and

satellite telecommunications facilities linking the United


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License U.S. telecommunications service providers toenter into roaming service agreements with Cuba's

telecommunications service providers.License U.S. satellite radio and satellite television service

providers to engage in transactions necessary to provideservices to customers in Cuba.

License persons subject to U.S. jurisdiction to activate and

pay U.S. and third-country service providers fortelecommunications, satellite radio and satellitetelevision services provided to individuals in Cuba.

Authorize the donation of certain consumertelecommunication devices without a license.

Add certain humanitarian items to the list of items eligiblefor export through licensing exceptions.


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US CUBA TRADE RELATIONSCRITICAL ISSUE

The critical issue here is the embargo itself.

This has led to some unintended

consequences such as:

Humanitarian issues

Castro is using the embargo as a scapegoat

for the countrys problems


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Arguments Supporting theEmbargo

Originally was in response to Cubas expropriation of ~$1.8billion of U.S.-owned property in late 1960s (according to theU.S. Foreign Claims Settlement Commission

An important symbolic protest of Cubas lack of political, civil,and economic freedoms and disrespect for human rights

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Arguments Supporting theEmbargo

Supporters of the U.S. embargo against Cuba have contributednearly $11 million to members of Congress since 2004

The top five recipients: Miami's three Cuban-American Republicanmembers of Congress, John McCain and New Jersey DemocraticSen. Robert Menendez

I will not apologize for the Cuban-American community practicingits constitutional, democratic right to support candidates whobelieve in freedom and democracy for the Cuban people overbusiness and tourism interests."

Mauricio Claver-Carone, Director of the U.S.-CubaDemocrac PAC

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Arguments Against the Embargo

Cost to the United States vs. Cost to Cuba

U.S.: Estimates range from $1.2 - $4.84 billion/year in

lost sales and exports

Cuba:

$685 million annually (Cuban government estimate) Black markets

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Cost to the United States vs. Cost to Cuba

Beyond the economic costs, the blockade has deprivedU.S. citizens of Cubas medical breakthroughs:

First meningitis B vaccine Treatments for the eye disease retinitis pigmentosa

A preservative for un-refrigerated milk

CimaVax EGF: the first therapeutic vaccine for lung

cancer.19


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Popular Opinion:

CBS News/NYTimes Poll:

67% Americans think the US should re-establish diplomaticand trade relations with Cuba (20% say should not and13% unsure)

The UN has voted 18 times (187 3 with 2 abstentions)to condemn the embargo including this past October

The EU has also condemned the embargo20


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Special Interests Business industry leaders

Agriculture

U.S. travel industry

Religious and humanitarian leaders includingthe Vatican

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Benefits realized from the 2000 liberalization of the embargo

(The Trade Sanctions Reform and Export Enhancement Act):

Increases in commerce total sales of farm products toCuba have increased from near 0 to ~$700 million in

2008 Previously dead last, Cuba is now the 6th largest LatinAmerican customer for U.S. agricultural products

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Castro uses the embargo as ascapegoat for the economic andsocial welfare problems in Cuba

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Is trade embargo with Cubahurting U.S. interests?

- From CNNPolitics.com

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Video
http://edition.cnn.com/2009/POLITICS/05/04/cuba.embargo/http://edition.cnn.com/2009/POLITICS/05/04/cuba.embargo/


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"The embargo has been a failure by everymeasure. It has not changed the course ornature of the Cuban government. It has notliberated a single Cuban citizen. In fact, theembargo has made the Cuban people a bit moreimpoverished, without making them one bit more

free. At the same time, it has deprived Americansof their freedom to travel and has cost USfarmers and other producers billions of dollars ofpotential exports."

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Daniel Griswold, director of the Cato Institute'sCenter for Trade Policy Studies (June 2009)


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Lift the Ban26

Policy Proposal


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Sources

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http://www.cubatrade.org/

http://www.cubatrade.org/CubaExportStats.pdf

http://www.bis.doc.gov/policiesandregulations/regionalconsiderations/cuba.pdf

http://www.aei.org/outlook/8739

Robles, Francis. U.N. condemns Cuba embargo by U.S.http://www.mcclatchydc.com/251/story/77950.html . 10/29/2009

Pepper, Margot. The costs of the embargo.http://www.dollarsandsense.org/archives/2009/0309pepper.html

Clark, Lesley. Money talks: Report links donations, Cubaembargo support.http://www.mcclatchydc.com/251/story/78884.html. 11/16/2009

Gerz-Escandon, Jennifer. End the US-Cuba embargo: It's a win-

win. http://www.csmonitor.com/2008/1009/p09s02-coop.html
http://www.cubatrade.org/http://www.cubatrade.org/CubaExportStats.pdfhttp://www.bis.doc.gov/policiesandregulations/regionalconsiderations/cuba.pdfhttp://www.bis.doc.gov/policiesandregulations/regionalconsiderations/cuba.pdfhttp://www.aei.org/outlook/8739http://www.mcclatchydc.com/251/story/77950.html%2010/29/2009http://www.dollarsandsense.org/archives/2009/0309pepper.htmlhttp://www.mcclatchydc.com/251/story/78884.html.%2011/16/2009http://www.csmonitor.com/2008/1009/p09s02-coop.htmlhttp://www.csmonitor.com/2008/1009/p09s02-coop.htmlhttp://www.csmonitor.com/2008/1009/p09s02-coop.htmlhttp://www.csmonitor.com/2008/1009/p09s02-coop.htmlhttp://www.mcclatchydc.com/251/story/78884.html.%2011/16/2009http://www.dollarsandsense.org/archives/2009/0309pepper.htmlhttp://www.mcclatchydc.com/251/story/77950.html%2010/29/2009http://www.aei.org/outlook/8739http://www.bis.doc.gov/policiesandregulations/regionalconsiderations/cuba.pdfhttp://www.bis.doc.gov/policiesandregulations/regionalconsiderations/cuba.pdfhttp://www.cubatrade.org/CubaExportStats.pdfhttp://www.cubatrade.org/


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Sources

http://www.pollingreport.com/cuba.htm

http://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdf

http://www.treas.gov/offices/enforcement/ofac/progra

ms/ascii/cuba.txt\ http://www.nytimes.com/2009/04/13/us/politics/13cub

a-factsheet.html?_r=1&pagewanted=all

http://www.nytimes.com/2009/04/13/us/politics/13cub

a-factsheet.html?_r=2&pagewanted=all
http://www.pollingreport.com/cuba.htmhttp://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/ofac/programs/ascii/cuba.txt/http://www.treas.gov/offices/enforcement/ofac/programs/ascii/cuba.txt/http://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=2&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.nytimes.com/2009/04/13/us/politics/13cuba-factsheet.html?_r=1&pagewanted=allhttp://www.treas.gov/offices/enforcement/ofac/programs/ascii/cuba.txt/http://www.treas.gov/offices/enforcement/ofac/programs/ascii/cuba.txt/http://www.treas.gov/offices/enforcement/ofac/programs/ascii/cuba.txt/http://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.treas.gov/offices/enforcement/ofac/programs/cuba/cuba.pdfhttp://www.pollingreport.com/cuba.htm

Documents

Trade Relations.fall 2009 (Team 7 --Cuban Embargo)