International Trade
3/11/2015
Gina Tumbarello, director of international policy and trade
Wednesday, March 11, 2015
by: Gina Tumbarello, director of international policy and trade

Section: Spring 2015




Cuba is a member of the World Trade Organization and imports roughly 80 percent of its food worth $1.7 billion, but in 2014, according to the U.S. Cuba Trade Council, only 20 percent came from the U.S.


In December 2014, President Barack Obama announced he would be moving to normalize diplomatic relations with Cuba. Since then, the Departments of Treasury and Commerce have released new, looser regulations on doing business with Cuba. This does not, however, mean a lift of the broader trade embargo that has been in place since 1962.
 
U.S. agricultural products have had access to the Cuban market since 2001 under the Trade Sanctions Reform and Export Enhancement Act. Even though agriculture has had access to the Cuban market, regulatory and financial hurdles and restrictions have limited agricultural exports. Cuban buyers must pay in cash and in advance. Additionally, the money must be routed through a third-party bank in another country. These hurdles have made the U.S. a less attractive and less competitive source for agricultural products and have caused Cuba to often source these products from other countries that offer financing for purchases and other incentives. 
 
With the new relaxation of U.S. rules on Cuban payments to American businesses, Cuba will be allowed to pay for goods once they are delivered, rather than before they are ordered. However, U.S. law will still prohibit any form of credit to Cuba’s state-run import agencies, which frequently run low on cash and often ask for several years to pay for the goods they have ordered. Removing that barrier would require an act of Congress, which is exactly what Obama asked for in his State of the Union address to Congress. 
 
“Our shift in Cuba policy has the potential to end a legacy of mistrust in our hemisphere; removes a phony excuse for restrictions in Cuba; stands up for democratic values; and extends the hand of friendship to the Cuban people. And this year, Congress should begin the work of ending the embargo,” said Obama.
 
Cuba is a viable market, in close proximity—a mere 90 miles off the U.S. coast—and with a population of 11 million people and new customers for American products. Cuba is a member of the World Trade Organization and imports roughly 80 percent of its food worth $1.7 billion, but in 2014, according to the U.S. Cuba Trade Council, only 20 percent came from the U.S. 
 
There is a lot of potential in the Cuban market for U.S. agriculture, especially for U.S. feed and meat exports. According to the U.S. Census Bureau, in 2013 the U.S. exported $10.9 million in mixed feeds (HS code: 2309901050), which ranked as the U.S.’s No. 5 agricultural product exported to Cuba or 2.6 percent of U.S. total agricultural exports to Cuba. 
 
The U.S. Agriculture Coalition for Cuba (USACC)—which AFIA recently joined—is a coalition of agriculture and business groups that argue for the American industry to conduct commercially meaningful business in Cuba, it will take more than a relaxation of rules on Cuba; it will take a full end to the embargo, which can only be done by an act of Congress. USACC will push for Congress to take up legislation to end the embargo. Normalizing trade relations with Cuba would mean a more level playing field for the U.S. to compete in the Cuban market and will open a whole new customer base for U.S. agriculture. 
 
For more information on Cuba and other trade-related items, contact Gina Tumbarello, director of international policy and trade, at (703) 558-3561 or gtumbarello@afia.org.
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